Ch6 Mid 1

Question 1

Pricing strategy:
1
2
3

Answer 1

• Competitor pricing
• Cost to Firm
• Value to Customer

Question 2

Price Competition Intensifiers.

Answer 2

– Increasing number of competitors
– Increasing number of substituting offers
– Wider distribution of competitor and/or substitution offers
– An increasing surplus capacity in the industry

Question 3

Price Competition Inhibitors.

Inhibitors / مثبطات

Answer 3

– Non-price-related costs of using competing alternatives are high
– Personal relationships
– Switching costs are high
– Services are often time and location specific

Question 4

Rate Fences can be either ……….. or…………

Answer 4

physical or nonphysical

Question 5

refer to tangible product differences related to the different prices

Answer 5

physical fences

Question 6

refer to differences in consumption, transaction, or buyer characteristics, but the service is basically the same

Answer 6

nonphysical fences

Question 7

Bundled prices offer firms a certain level of guaranteed revenue and capacity utilization of add-on services from each customer, and it provides customers a clear idea in advance of how much they can expect to pay.

Answer 7

Price bundling:

Question 8

Selective price discounting targeted at specific market segments can offer important opportunities to attract new customers and fill the capacity that would otherwise go unused.

Answer 8

Discounting:

Question 9

Users get the basic service at no cost (typically funded by advertising) and can upgrade to a richer functionality for a subscription fee.

Answer 9

Freemium:

Question 10

This pricing strategy lets customers decide what they think the service was worth and what they are willing to pay.

Answer 10

Pay-What-You-Want Pricing:

Question 11

How should payment be made
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2
3

Answer 11

– Cash
– Credit and debit cards
– Tokens or vouchers

Question 12

When should payment be made?

Answer 12

Two basic ways are to ask customers to pay in advance or to bill them once service delivery has been completed.

Question 13

How should prices be communicated to the targetmarkets?

Answer 13

– Managers must decide whether or not to include information on pricing in advertising for the service.
– Salespeople and customer service representatives should be able to give immediate and accurate responses to customer queries about pricing, payment, and credit.
– Good signage at retail points of sale will save staff members from having to answer basic questions on prices.
– When the price is presented in the form of an itemized bill, marketers should make sure that it is both accurate and easy to understand.

Question 14

How much to charge?

Answer 14

– Realistic decisions on pricing are critical for financial solvency.
– All the relevant economic costs need to be recovered at different sales volumes and these set the relevant floor price.
– The elasticity of demand of the service from both the providers’ and customers’ perspectives will help to set a “ceiling” price for any given market segment.
– Firms need to analyze the intensity of price competition among the providers before they come to a final price.