Podcast
Questions and Answers
In discriminatory pricing, what factor is NOT considered when setting different prices?
In discriminatory pricing, what factor is NOT considered when setting different prices?
- Differences in consumer income
- Differences in product quality
- Differences in cost of production (correct)
- Differences in location
What is the purpose of Cebu Pacific's 'piso fare' seat sales?
What is the purpose of Cebu Pacific's 'piso fare' seat sales?
- To maintain high ticket prices year-round
- To attract customers during off-peak seasons (correct)
- To encourage ticket purchases during peak travel times
- To reduce the overall cost of air travel
What is a common example of psychological pricing?
What is a common example of psychological pricing?
- Offering a flat rate for all customers regardless of age
- A haircut priced at $499 rather than $500 (correct)
- Discounting a service during a specific season
- A product sold for $20 instead of $19.99
What is the main objective of promotional pricing?
What is the main objective of promotional pricing?
How do buffet restaurants typically implement discriminatory pricing?
How do buffet restaurants typically implement discriminatory pricing?
What is the primary goal of Market Penetration Pricing?
What is the primary goal of Market Penetration Pricing?
What is an example of Product Bundling Pricing?
What is an example of Product Bundling Pricing?
How do volume discounts typically attract customers?
How do volume discounts typically attract customers?
What pricing strategy addresses seasonality in the tourism market?
What pricing strategy addresses seasonality in the tourism market?
Which of the following is a characteristic of diving tourism in the Philippines?
Which of the following is a characteristic of diving tourism in the Philippines?
Which pricing approach focuses on competitive positioning within the tourism market?
Which pricing approach focuses on competitive positioning within the tourism market?
What is a potential customer misconception about discounts based on time of purchase?
What is a potential customer misconception about discounts based on time of purchase?
What strategy is exemplified by hotels offering a free room for every ten booked?
What strategy is exemplified by hotels offering a free room for every ten booked?
What is considered the most important factor affecting the price of a product?
What is considered the most important factor affecting the price of a product?
How does demand for a product typically relate to its price?
How does demand for a product typically relate to its price?
What pricing strategy is characterized by setting high prices to target an elite customer base?
What pricing strategy is characterized by setting high prices to target an elite customer base?
Which of the following factors does NOT influence price determination?
Which of the following factors does NOT influence price determination?
What is the upper limit of the price range determined by?
What is the upper limit of the price range determined by?
Market skimming pricing is most effective in which of the following scenarios?
Market skimming pricing is most effective in which of the following scenarios?
Which pricing strategy aims to capture a specific segment of the market by positioning a product as high-end?
Which pricing strategy aims to capture a specific segment of the market by positioning a product as high-end?
What is one of the roles of government regulation in price determination?
What is one of the roles of government regulation in price determination?
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Study Notes
Factors Affecting Price Determination
- Cost of the Product: The most important factor when setting a price. Includes cost of production, distribution, selling, and promotion. It acts as a benchmark for pricing.
- Demand for the Product: The upper limit of price range depends on the product's utility and demand in the market. The law of demand dictates that lower price equals higher demand.
- Price of Competitors: Pricing strategies, product features, distribution channels, and promotional efforts of competitors must be considered.
- Government Regulation: Protects citizens from unfair pricing practices. May impose laws and regulations on pricing for essential goods.
Pricing Strategies
- Prestige Pricing: Used for luxurious products and services to project exclusivity and attract a high-end clientele, often targeting Class A markets. Example: El Nido Resorts in the Philippines.
- Market Skimming Pricing: Used when the market is price-insensitive, meaning high demand and low supply. Aims for high profit margins. Example: Early diving businesses in the Philippines.
- Market Penetration Pricing: Sets a low initial price to quickly penetrate the market, attract buyers, and gain market share. Example: Paradise Island & Beach Resort in Samal Island, Davao compared to Pearl Farm Resort.
- Product Bundling Pricing: Offers a discounted price for a package of products or services. Attracts buyers due to the cost savings compared to purchasing items individually. Example: Club Punta Fuego in Batangas summer promos.
- Volume Discounts: Rewards high-volume or frequent users. Attracts larger purchases or long-term partnerships. Example: Hotels offering free rooms for bookings of 10 or more rooms.
- Discounts Based on Time of Purchase: Reduces prices during off-season or if purchased in advance. Aims to attract buyers during periods of lower demand. Example: Cebu Pacific 'piso fare' seat sales.
- Discriminatory Pricing: Offers different prices based on factors other than cost, often to maximize revenue per customer. Example: Buffet restaurants charging different rates for seniors, children, and adults.
- Psychological Pricing: Sets prices slightly lower than a whole number, creating the perception of a lower price. Example: Hair salons charging 499 instead of 500 for a haircut.
- Promotional Pricing: Offers discounts or incentives for a limited time, especially during product introductions or special events. Example: A newly opened restaurant offering free dessert to their first 100 customers.
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