L4 Pricing Strategies

Question 1

Why is price considered one of the most important determinants of consumption?


Answer 1

Because it influences consumer purchase decisions and product market positioning

Question 2

What does Economic Value to Customer (EVC) represent?


Answer 2

EVC represents the estimated value customers place on products or services

Question 3

What factors contribute to customer value?


Answer 3

Benefits or costs associated with availability, convenience, functionality, relationship, and brand image

Question 4

Why is market research important in developing a pricing strategy?

Answer 4

It helps assess the value and understand consumer preferences and behaviors

Question 5

What are the two methods mentioned for assessing customer value?


Answer 5

Qualitative Method and Quantitative Method

Question 6

What is the significance of User Generated Content (UGC) in pricing strategies?


Answer 6

UGC provides valuable insights into customer needs and preferences for product development

Question 7

Why may the qualitative method for assessing customer value have errors?

Answer 7

Qualitative Method may have errors in measurement because of the difference between intention and behavior

Question 8

What types of data can UGC include?


Answer 8

Posts, videos, web logs, and customer navigational details

Question 9

What is first-degree price discrimination?


Answer 9

It is a pricing strategy that enables personalized pricing based on individual contexts.

Question 10

How can digital technologies facilitate price discrimination?


Answer 10

They enable price discrimination at more affordable costs through detailed customer data

Question 11

What is dynamic pricing?


Answer 11

Dynamic pricing is when prices fluctuate based on real-time supply and demand

Question 12

How can firms apply machine learning in pricing strategies?


Answer 12

By using algorithms to analyze data and predict optimal prices based on customer sentiment and behavior

Question 13

What is the importance of calculating marginal utility?


Answer 13

It helps determine the benefit gained from consuming one additional unit of a product or service

Question 14

How does perfect price discrimination affect consumer surplus?

Answer 14

In perfect price discrimination, the producer captures all consumer surplus, leaving consumers with no economic benefit beyond the good or service itself.

Question 15

What is a potential issue with AI-driven pricing algorithms?


Answer 15

AI-driven pricing algorithms often operate as “black boxes,” making it difficult for consumers and regulators to understand how prices are set.

Question 16

How might AI-enabled price discrimination contribute to economic inequalities?


Answer 16

AI might charge higher prices to less affluent or less informed consumers based on their willingness to pay more out of necessity.

Question 17

What is second-degree price discrimination?


Answer 17

Second-degree price discrimination involves charging different prices based on the amount or quantity consumed.

Question 18

What does “versioning” mean in the context of price discrimination?


Answer 18

Versioning involves offering different versions of a product at different prices based on features.

Question 19

What is third-degree price discrimination?


Answer 19

Third-degree price discrimination occurs when a company charges different prices to different consumer groups.

Question 20

What is the “pink tax”?


Answer 20

The “pink tax” refers to the phenomenon where products marketed towards women are often priced higher than similar products marketed towards men.

Question 21

What is Bundling?

Answer 21

Combining two or more products together and charging one price for the bundle

Question 22

Why do companies bundle their products with other companies?

Answer 22

Bundling can be a great strategy for lock-in and amplifying network effect, can form oligopoly