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Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services.After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill.Glenwood's objective is to generate more income per customer on an annual basis.The hospital has previously priced its services by charging a flat fee for an office visit, a fee for each vaccine and a fee for each type of examination beyond the basic office visit.Most customers pay the flat office fee and a fee for a rabies vaccine.Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine and additional vaccines that prevent heartworm, kennel cough and fleas.Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program rather than as a one-time annual visit.
-Glenwood's closest competitor, Hearthstone Pet Hospital, currently charges $60 for each basic office visit.If Glenwood were to price its basic office visit at $45, it would most likely be employing which type of pricing?
A)Customary pricing
B)Penetration pricing
C)Prestige pricing
D)Price skimming
E)Cost-based pricing

Question

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Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services.After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill.Glenwood's objective is to generate more income per customer on an annual basis.The hospital has previously priced its services by charging a flat fee for an office visit, a fee for each vaccine and a fee for each type of examination beyond the basic office visit.Most customers pay the flat office fee and a fee for a rabies vaccine.Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine and additional vaccines that prevent heartworm, kennel cough and fleas.Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program rather than as a one-time annual visit.
-Glenwood's closest competitor, Hearthstone Pet Hospital, currently charges $60 for each basic office visit.If Glenwood were to price its basic office visit at $45, it would most likely be employing which type of pricing?
A)Customary pricing
B)Penetration pricing
C)Prestige pricing
D)Price skimming
E)Cost-based pricing

Quizplus · Accepted Answer

Penetration pricing involves setting a lower price than competitors to attract customers and gain market share. By offering a lower price for the basic office visit, Glenwood is attempting to attract more customers and encourage them to use their new pricing strategy.

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