Question 1

What are the three foundations of the pricing "tripod"?

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Question 2

Relate fairness perceptions to DVD rental late fees.

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Question 3

Which company is an example of dynamic pricing in the Internet access business?
A) AOL
B) easyInternetcafe
C) Vox1
D) Earthlink
E) Barbados Internet Forums

Accepted Answer

easyInternetcafe is an example of dynamic pricing in the Internet access business. They offered customers discounted rates for using the internet during off-peak hours and charged premium rates during peak hours.

Question 4

Discuss how service firms can minimize non-monetary purchase costs.

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Question 5

Which of the following is the best example of a service firm that attracts customers with low base prices and then piles on additional fees.
A) Rental cars
B) Fast food
C) Education
D) Roofing
E) Consulting

Accepted Answer

Rental car companies are known for advertising low base prices but then adding on additional fees for things like insurance, gas, and extra equipment.

Question 6

Which of the following is the best example of a service industry that utilizes price complexity?
A) Fast food
B) Education
C) Cellular phone
D) Moving/transportation
E) Roofing

Accepted Answer

The cellular phone industry utilizes complex pricing structures with various plans, data limits, and contract terms. Customers may have to choose between prepaid plans, postpaid plans, unlimited data plans, and family plans, each with different price points and restrictions.

Question 7

Draw a graph of the relationship between price per seat on an airline and demand for seats. Label each price bucket.

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Question 8

Name two e-tailers that utilize traditional auction models.

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Question 9

Airlines, hotels, and car rental firms are not very good at varying prices in response to the price sensitivity and needs of different market segments.

Accepted Answer

Airlines, hotels, and car rental firms are actually very adept at varying prices in response to the price sensitivity and needs of different market segments, often using sophisticated yield management and dynamic pricing strategies to maximize revenue.

Question 10

Amazon.com is a good example of a firm that aggravated its customers with dynamic pricing.

Accepted Answer

Amazon.com faced backlash from customers when it was revealed that they were using dynamic pricing strategies, which led to different customers being charged different prices for the same products based on their browsing and purchasing history.

Question 11

Give an example of a tradeoff between monetary and non-monetary costs associated with patronizing a dental clinic.

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Question 12

Describe the concept of price elasticity and draw a graph comparing consumers with high and low elasticity.

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Question 13

Which of the following is NOT listed in the chapter as a firm that uses online reverse auctions?
A) Priceline.com
B) Hotwire.com
C) eBay.com
D) Lowestfare.com
E) All of the above use online reverse auctions.

Accepted Answer

eBay.com is not listed in the chapter as a firm that uses online reverse auctions, while the other options (Priceline.com, Hotwire.com, and Lowestfare.com) are all mentioned as examples.

Question 14

What are the four distinct categories of non-monetary costs?

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Question 15

Yield management computers can determine who is likely to not show up or take other flights.

Accepted Answer

Yield management systems use data and algorithms to predict the likelihood of no-shows and cancellations, allowing airlines to maximize revenue by overbooking flights or offering incentives for customers to switch to alternative flights.

Question 16

Discounting to win new business is one of the best strategies for firms wishing to develop a loyal customer base.

Accepted Answer

Discounting can attract customers initially, but it often attracts price-sensitive customers who may leave for competitors when better discounts are offered elsewhere. Building loyalty typically requires focusing on quality, customer service, and value, rather than just low prices.

Question 17

What are two ways in which companies can improve customer perceptions and satisfaction regarding revenue management?

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Question 18

What is price customization?

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Question 19

What are two examples of situations that increase price competition?

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Question 20

Tickets.com is a good example of a firm that successfully generated more revenue by implementing dynamic pricing.

Accepted Answer

Tickets.com implemented dynamic pricing to adjust ticket prices in real-time based on factors such as demand, availability, and timing. This allowed them to generate more revenue by pricing tickets at their optimal value, rather than a fixed price that may not reflect market conditions.

Quiz 6: Setting Prices and Implementing Revenue Management