Deck 15: The Pricing Decision

Question 1

A hotel that offers a New Year's Eve package for couples at a more expensive rate would be an example of what kind of value added feature?

A) Experiential
B) Trust
C) Social
D) Identification with the organization

Answer 1

C

Question 2

The property taxes for a hotel are a semivariable cost.

Answer 2

False

Question 3

What is the optimal pricing strategy to use for most hospitality products?

A) Value based pricing
B) Contribution margin pricing
C) Break even pricing
D) Cost plus pricing

Answer 3

A

Question 4

A product's break even price is calculated by dividing fixed costs by the product's profit margin.

Question 5

A skim strategy for pricing works best when:

A) Many competitors are located nearby
B) The product offered is easily replicated by competitors
C) Perceived value of the product is very important to the customer
D) Customers are not price sensitive

Question 6

These are examples of the ways to change price, except:

A) Change the quality of goods and services provided by the seller
B) Change the form of payment
C) Change the market perception of the goods and services
D) Change the time and place of payment

Question 7

Value based pricing:

A) Forces managers to keep in touch with the needs and preferences of the customer
B) Is semi- dependent on the cost of the product
C) Includes a customer's perceived value of the product
D) Both A and C

Question 8

Revenue per available customer in a hotel would include internet charges.

Question 9

A 500 room hotel has a $150 average room rate, and is running at 85% occupancy. What is the hotel's RevPAR?

A) $750,000
B) $127.50
C) $63,750
D) $12,750

Question 10

Why is revenue management suitable for the hotel industry?

A) A hotel room has a fixed number of hotel rooms; you can't increase capacity
B) The necessary software is now available at reasonable prices
C) The product is perishable
D) Both A and C

Question 11

A major problem with cost- percentage pricing is that:

A) It makes high cost items expensive to most customers
B) It's completely based on costs
C) It ignores the customer's perception of value for the price paid
D) All of the above

Question 12

Markup pricing is heavily used in the restaurant industry.

Question 13

The most basic element that revenue management depends on is:

A) A product with a high perceived value
B) Volume discounts with groups
C) Maximized profits
D) Demand forecasting

Question 14

For a restaurant, the cost of beef is a(n) cost.

A) Fixed
B) Operating
C) Stagnant
D) Variable

Question 15

A new offering that internet sites, such as Expedia, have is price bundling. Why?

A) It is more cost effective to book everything at one sitting
B) It makes the trip cheaper for the consumer.
C) It takes less time for the computer system to process everything at once
D) It hides the cost of each part of the trip

Question 16

Match pricing's main goal is to:

A) Compare high margins at the expense of high sales volume
B) Use other variables to determine market price
C) Establish a benchmark price for the product in the industry
D) Offer the same price as a direct competitor

Question 17

The main reason that penetration pricing strategies work for Jet Blue, Southwest, and Ryan Air is:

A) Their customers are not price sensitive
B) They all match each other's prices
C) They have a lower cost structure
D) They have competitive protection against each other

Question 18

"Leaving money on the table" refers to businesses that price their products:

A) Less than the reservation price
B) Exactly the same as the reservation price
C) Without taking the reservation price into account
D) More than the reservation price

Question 19

Product costs are the most important thing to take into account when pricing the hospitality product.

Question 20

Why is the price important to marketers?

A) It is the revenue producing part of the marketing mix
B) It is a force in attracting attention and creating sales
C) It can have an effect on customer loyalty
D) All of the above

Question 21

A customer is likely to buy something over their reservation price if they perceive enough value.

Question 22

Psychological pricing includes the visibility factor of hospitality products.

Question 23

The fair market share of a hotel is always greater than a hotel's yield percentage.

Question 24

Temporal value is concerned with adjusting prices based on different times of the year.

Question 25

A reference price is the price customers have in mind when buying a product based on previous purchases or prior knowledge.