A day after US Airways announced its new low fares for the autumn on travel from New York (i.e.,Newark and LaGuardia Airports)to selected cities in the U.S.and Canada,American Airlines matched their fares.American Airlines is using a _____ strategy.
A) Value pricing
B) Price signaling
C) Demand-based pricing
D) Going-rate pricing
E) Price trimming

Question

Quizplus · Accepted Answer

American Airlines is using a price signaling strategy by matching the discount fares offered by US Airways. This is a tactic commonly used by competitors to signal to the market that they are also offering low prices and to prevent customers from flocking to the other airline. Value pricing, demand-based pricing, going-rate pricing, and price trimming all involve setting prices based on different factors, but they do not necessarily involve matching competitor prices in the same way that price signaling does.

A Day After US Airways Announced Its New Low Fares