Podcast
Questions and Answers
Cebu Pacific implements 'piso fare' seat sales to attract customers during peak seasons.
Cebu Pacific implements 'piso fare' seat sales to attract customers during peak seasons.
False
Discriminatory pricing is a strategy where different prices are charged for the same product based on customer demographics.
Discriminatory pricing is a strategy where different prices are charged for the same product based on customer demographics.
True
Psychological pricing often involves setting prices slightly higher than a round number to create a perception of value.
Psychological pricing often involves setting prices slightly higher than a round number to create a perception of value.
False
Promotional pricing is typically used during the initial stages of a product launch or during special events to encourage sales.
Promotional pricing is typically used during the initial stages of a product launch or during special events to encourage sales.
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Buffet restaurants charge the same price for all customers regardless of age.
Buffet restaurants charge the same price for all customers regardless of age.
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The cost of production is the least important factor affecting the price of a product.
The cost of production is the least important factor affecting the price of a product.
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Demand for a product increases as the price decreases, according to the law of demand.
Demand for a product increases as the price decreases, according to the law of demand.
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Prestige pricing is used primarily for budget-friendly products.
Prestige pricing is used primarily for budget-friendly products.
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Government regulations can have an impact on product pricing to protect citizens from unfair practices.
Government regulations can have an impact on product pricing to protect citizens from unfair practices.
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Market skimming pricing is employed when the demand for a product is low.
Market skimming pricing is employed when the demand for a product is low.
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The competence of competitors does not play any significant role in price determination.
The competence of competitors does not play any significant role in price determination.
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Utility of the product is the seller's concern in price determination.
Utility of the product is the seller's concern in price determination.
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Market Penetration Pricing involves setting a low initial selling price to quickly attract buyers.
Market Penetration Pricing involves setting a low initial selling price to quickly attract buyers.
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El Nido Resorts is an example of a business using market skimming pricing.
El Nido Resorts is an example of a business using market skimming pricing.
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Volume Discounts are only applicable to customers who book just one room.
Volume Discounts are only applicable to customers who book just one room.
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Product Bundling Pricing offers a reduced rate compared to individual purchases.
Product Bundling Pricing offers a reduced rate compared to individual purchases.
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Discounts Based on Time of Purchase do not consider seasonality in tourism.
Discounts Based on Time of Purchase do not consider seasonality in tourism.
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The proliferation of dive resorts in the Philippines has made diving more expensive over time.
The proliferation of dive resorts in the Philippines has made diving more expensive over time.
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Paradise Island & Beach Resort charges higher rates than Pearl Farm Resort.
Paradise Island & Beach Resort charges higher rates than Pearl Farm Resort.
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Special rates for booking 10 rooms can provide one free room as a form of Volume Discount.
Special rates for booking 10 rooms can provide one free room as a form of Volume Discount.
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The purpose of time-based discounts is to encourage customers to purchase during peak season.
The purpose of time-based discounts is to encourage customers to purchase during peak season.
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Study Notes
Factors Affecting Price Determination
- Product cost is the primary factor impacting price and includes production, distribution, selling, and promotion costs.
- Demand depends on product utility and price, with higher demand at lower prices.
- Competitor pricing, their offerings, features, and distribution channels also influence pricing decisions.
- Government regulations protect consumers from unfair practices and may impose price limitations on essential goods.
Pricing Strategies
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Prestige Pricing positions products/services as luxurious and exclusive, attracting high-end clientele.
- Example: El Nido Resorts cater to the high-end market with villa rates starting at 30,500 pesos per night.
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Market Skimming Pricing sets high prices when demand exceeds supply and consumers are price-insensitive.
- Example: Diving in the Philippines was initially expensive due to limited supply but became more affordable with the growth of diving businesses.
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Market Penetration Pricing utilizes a low initial price to quickly gain market share and attract a wider audience.
- Example: Paradise Island & Beach Resort in Samal Island, Davao has lower rates than the upscale Pearl Farm Resort, aiming for broader customer appeal.
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Product Bundling Pricing offers combined products/services at a discounted price compared to individual purchases.
- Example: Club Punta Fuego in Batangas offers summer promos with bundled activities at a reduced price than if purchased separately.
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Volume Discounts provide lower rates for frequent or large-quantity purchases.
- Example: Hotels offer special rates for customers booking multiple rooms, such as 10 rooms for one room free.
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Discounts Based on Time of Purchase utilize price reductions for purchases during off-season or advance bookings.
- Example: Cebu Pacific offers 'piso fare' promotions for air tickets during low-demand periods.
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Discriminatory Pricing employs different prices based on customer segments rather than cost differences.
- Example: Buffet restaurants offer distinct prices for seniors, children, and adults despite the same food options.
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Psychological Pricing sets prices slightly below a whole number to create a perception of lower cost.
- Example: Hair salons may charge 499 instead of 500 for a haircut, suggesting a more affordable price.
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Promotional Pricing offers discounts and incentives during product launch or for special events like anniversaries or festivals.
- Example: A new restaurant may offer complimentary dessert for its first 100 customers.
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Description
This quiz explores the key factors that influence price determination, including product costs, demand, competitor pricing, and government regulations. Additionally, it discusses various pricing strategies such as prestige pricing and market skimming, providing examples to illustrate these concepts. Test your understanding of these essential marketing principles.
