30 Questions
What is the objective of maximizing revenue from a fixed capacity?
To vary prices and target segments over time
What is the objective of covering costs?
To cover fully allocated costs, including corporate overhead
What is the benefit of achieving high capacity utilization?
It adds to the value created for all customers
Why is encouraging trial and adoption of a service important?
To generate large revenues from continued usage
What is the objective of building a large user base?
To achieve economies of scale and a competitive cost advantage
What is the main benefit of effective pricing?
It is central to financial success
What is the primary goal of effective pricing in service firms?
To make the largest possible long-term contribution or profit
What are the three foundations of a pricing strategy?
Value to Customer, Unit Cost to Firm, and Revenue Management
What is a key objective of service pricing?
To make the largest possible long-term contribution or profit
What is the primary objective of effective pricing in a company?
To gain profit and cover costs
What is a key consideration in setting service prices?
Both Competitor Pricing and Fairness and Ethical Concerns
What is the concept of net value in service pricing?
The difference between the value to the customer and the unit cost to the firm
Which pricing strategy is based on the idea of setting prices relative to financial costs?
Cost-Based Pricing
What is the purpose of break-even analysis in pricing?
To identify the fixed and variable costs of a product
How many questions do marketers need to answer to design an effective service-pricing strategy?
6
What is the main goal of Value-Based Pricing?
To relate price to the value perceived by the customer
Why do companies use a 'we-will-not-be-undersold' positioning strategy?
To promise the best possible service at the best possible price
What are the three foundations of pricing strategy?
Value-Based, Cost-Based, and Competition-Based Pricing
What type of cost is associated with mental effort, perceived risk, and anxiety?
Psychological costs
What is the main factor that affects the choice of clinic for a chest x-ray?
Non-price-related costs of using competing alternatives
What is the term for the intensity of price competition in a market?
Price-Competition intensifiers
What is an example of a sensory cost in a service environment?
Uncomfortable seating
What is the foundation of pricing that takes into account the costs of production and distribution?
Cost-Based Pricing
What is the term for the costs associated with switching to a different product or service?
Switching costs
What is a key factor to consider when determining the price of a service?
Competitors' prices
What basis for pricing involves charging customers based on the outcome of the service?
Outcome of service or cost-saving generated
What is a consideration when deciding how to communicate prices to customers?
Psychological pricing points
What is a key aspect of executing a service pricing strategy?
Collecting payment from customers
What is a factor in determining the price of a service related to a specific task?
Execution of a specific task
What is a consideration when deciding how much to charge for a service?
Customer's willingness to pay
This quiz assesses your understanding of pricing strategies, revenue management, and financial concepts in service firms. Topics covered include the importance of pricing, the pricing tripod, cost-based pricing limitations, and value-based pricing.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
