APPLE QUIZ Flashcards
what is the primary purpose of yield management
to maximize profits through dynamic pricing
this is often a reaction of firms to price reductions made by competitors in various ways
reacting to price reductions
a serious violation of antitrust laws where businesses conspire to set prices rather than allowing market forces to determine them is called
price fixing
it aims to ensure fair competiton and protect consumers in the marketplace
law of pricing
this strategy aims to encourage trial and establish a customer base, setting a low initial price to quickly attract customers and gain market share
penetration pricing
this strategy can help recover development costs quickly but may limit early market penetration setting a high initial price to maximize profits from early adopters willing to pay more.
skimming pricing
it refers to strategy of adjusting prices at different stages of a product’s life cycle, which typically includes four main phase: introduction, growth, maturity, and decline
product life cycling
which of the following industries is not typically associated with yield management?
grocery stores
what does dynamic pricing allow sellers to do
adjust prices based on real-time demand
in the fixed allotment approach, how is capacity divided among fare classes
into specific fare classes with a set number of seats
dynamic nesting in yield management helps to
optimize bookings without rejecting high fare reservations
what happens when all seats in lower-priced fare classes are booked under dynamic nesting?
protection levels for higher fare classes are immediately covered
a key characteristic of markets using yield pricing is that
customers display sporadic purchasing behavior
to manage cancellations, what can airlines do according to yield management strategies?
add canceled seats back to booking limits of fare classes
what is booking control in the context of yield management
steering customers to higher-priced options when lower-priced ones are unavailable
what is the main risk associated with the fixed allotment approach
selling cheaper seats instead of higher priced seats
from a market perspective, yield management is favored by ____ markets , with multiple customers exhibiting different willingness to pay that is partially correlated with the time of purchase
large
yield management uses _____ to manage the availability of price increases
booking control
what is the dominant approach to booking control in yield management
dynamic nesting
because future demand is uncertain, capacity allocation decisions must be made using
probabilities
yield management uses capacity allocation rules to determine ______ of price classes
booking limits
this refers to underlying market conditions and characteristics that can initiate or exacerbate price wars
reacting to price reductions
a scenario in game theory that illustrates how two rational individuals may not cooperate, even if it is in their best interest to do so.
prisoner’s dilemma
this occurs when competing businesses lower prices in an aggressive manner to gain market share, attract customers, or respond to competitor actions
price wars
a strategy where businesses sell more reservations than available inventory, anticipating that a certain percentage of customers will cancel or not show up
overbooking
this occurs when customer do not show up for their reservations
no shows
this refers to customers who cancel their booking where yield management strategies often account for cancellation rated when pricing and availability
cancellations
a more flexible approach where fare classes are adjusted based on real-time demand and booking patterns
dynamic nesting
the practice of allocating a set of number of seats or inventory at specific fare classes for a given period
fixed allotment
a pricing strategy that helps businesses optimize revenue by managing the availability and pricing of their products or services, particularly in industries with perishable inventory, such as airlines, hotels, and car rentals.
yield management.
