Question 1

Define and distinguish between the four types of markets recognized by economists. What kind of market is the internet at this time?

Accepted Answer

The answer of Define and distinguish between the four types...

Question 2

Menu pricing is the strategy of offering different prices to different customers.

Accepted Answer

Menu pricing refers to the practice of setting a list of prices for the various goods or services a business offers, not varying prices between customers.

Question 3

A key issue for companies who have an online and an offline presence is how to coordinate pricing between the two channels.

Accepted Answer

The answer of A key issue for companies who have...

Question 4

With value segment pricing the seller recognizes that not all customers provide equal value to the firm.

Accepted Answer

Value segment pricing is based on the understanding that different customer segments derive different levels of value from a product or service, and thus, are willing to pay different prices. This approach allows sellers to maximize their revenue by tailoring prices to the perceived value among different customer segments.

Question 5

In the narrowest sense, price is the amount of money charged for a product. However, a much broader definition of price may be more accurate. What factors are accounted for in a broader definition of price? Give real life examples of each.

Accepted Answer

The answer of In the narrowest sense, price is the...

Question 6

In a "flash sale," a site member may be eligible to purchase a product at a deep discount for a limited time.

Accepted Answer

Flash sales are events where products are sold at significantly reduced prices for a short period of time, and site members or the general public may have the opportunity to purchase these discounted items.

Question 7

Price dispersion is the observed spread between the highest and lowest price for a given product.

Accepted Answer

Price dispersion refers to the variation in prices across sellers of the same item, highlighting differences in the highest and lowest prices available for that product in the market.

Question 8

The internet is always considered a low cost option for selling products and services. From a firm's perspective what are some factors that add to the expense of doing business on the internet and why?

Accepted Answer

The answer of The internet is always considered a low...

Question 9

The objective of competition-based pricing is to price according to the company's costs or demand.

Accepted Answer

Competition-based pricing focuses on setting prices based on competitors' strategies, prices, costs, and market offerings, rather than solely on the company's own costs or demand.

Question 10

What factors might explain the wide price dispersion on the internet? In your opinion, which of these factors has the biggest effect on the spread between online prices?

Accepted Answer

The answer of What factors might explain the wide price...

Question 11

What are the three types of pricing strategies marketers can employ both online and offline? Give an example of a website that uses each of these strategies.

Accepted Answer

The answer of What are the three types of pricing...

Question 12

Online sellers are less willing to negotiate than offline sellers, giving more power to seller.

Accepted Answer

Online platforms often provide tools and environments that facilitate negotiation, such as messaging systems and offer functions, allowing both sellers and buyers to negotiate prices and terms more freely compared to some traditional offline settings.

Question 13

Today's buyer must be quite sophisticated to understand even the simple dollar cost of a product.

Accepted Answer

Today's market is filled with complex pricing strategies, discounts, financing options, and hidden costs, making it challenging for buyers to understand the true cost of a product without a sophisticated understanding of these factors.

Question 14

The internet is currently an efficient market.

Accepted Answer

The internet, while facilitating access to vast amounts of information and enabling more efficient communication and transactions, is not an efficient market in itself due to issues like misinformation, digital divide, market manipulation, and lack of transparency in some sectors.

Question 15

There are several attributes of the internet that may allow for cost savings online. Define and give examples of at least four.

Accepted Answer

The answer of There are several attributes of the internet...

Question 16

Giving high-value customers the first shot at discounts will reinforce their loyalty.

Accepted Answer

Offering high-value customers early access to discounts can make them feel valued and appreciated, which in turn reinforces their loyalty to the brand or company. This strategy can enhance customer satisfaction and encourage repeat business.

Question 17

The seller's perspective on pricing includes both internal and external factors affecting pricing levels.

Accepted Answer

The seller's perspective on pricing involves considering both internal factors, such as cost of production and profit margins, and external factors, such as market demand, competition, and customer expectations, to determine the optimal pricing levels.

Question 18

In terms of dynamic pricing, negotiation is most often initiated by the seller.

Accepted Answer

The answer of In terms of dynamic pricing, negotiation is...

Quiz 10: Price: the Online Value