03. Pricing

Question 1

3 based pricing, and which one RM uses

Answer 1

1. Cost based
2. Competition based
3. Demand based (RM)

Question 2

4 pricing strategy

Answer 2

1. Peneration: low price
2. equal pricing: same as everyone
3. Surrounding pricing: capture middle market
4. Skimming pricing strategy: High price first, then lower them overtime

Question 3

CUSTOMER VALUE-BASED PRICING (DEMAND BASED PRICING)

Answer 3

• Use a product or service delivered to a predefined customer segment as the main factor to set price
• Effective revenue managers understand that all rationale buyers do seek to gain an increase in value when they are assessing a potential purchase.

Question 4

Price matching guarantee (PMG)

Answer 4

A firm’s promise to refund the customer if they find a place that offers lower price than them

Question 5

Why use PMG

Answer 5

eliminate the incentive for under-pricing
anti-competitive tactic
- Guaranteed price matching leads to higher prices

Question 6

Decoy effect (Biases):

Answer 6

if you place a $50 product after a 30$ product, the 50$ will not look so expensive anymore,

Question 7

Single rate fencing (Static Pricing):

Answer 7

When the seller charges one price to all customers

Question 8

Differential pricing

Answer 8

when seller charges different pricings to different customers with justifiable reasons, this allows them to better tap into more potential demands

Question 9

Dynamic pricing

Answer 9

When a firm constantly adjust the price depending on the demand in the market

Question 10

How can you do Dynamic pricing

Answer 10

• A degree of market power in setting prices
• Consumers with different elasticities of demand and willingness to pay
• An ability for the firm to be aware of how demand fluctuates
• Prevent reselling between the different prices.

Question 11

Dynamic pricing pros vs cons

Answer 11

pros: 
incrase revenue 
stimulate demand in low season
avoide excess supply 
con: 
customer unfairness perception 
cients distrust 
high cost for tracking the market

Question 12

what are Rate Fences

Answer 12

prevent customers who are willing to pay a higher amount to have access to a discount
allow customers to Self-Segment on the basis of their willingness to pay

Question 13

3 physical and non physical rate fences

Answer 13

Physical:
Basic product(room size), amenities, service level
Non-physical:
Transcation characteristics(time of booking)
cinsumption characteristics (happy hour at 5pm)
Buyer characteristics (group vs transient)