Pricing Strategy and Revenue Management

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What is the objective of maximizing revenue from a fixed capacity?

To cover fully allocated costs

To maximize demand

To vary prices and target segments over time (correct)

To minimize costs

What is the objective of covering costs?

To develop a user base

To gain profit and achieve full capacity utilization

To cover fully allocated costs, including corporate overhead (correct)

To maximize revenue

What is the benefit of achieving high capacity utilization?

It increases costs

It adds to the value created for all customers (correct)

It decreases revenue

It reduces the value created for customers

Why is encouraging trial and adoption of a service important?

To generate large revenues from continued usage Signup and view all the answers

What is the objective of building a large user base?

To achieve economies of scale and a competitive cost advantage Signup and view all the answers

What is the main benefit of effective pricing?

It is central to financial success Signup and view all the answers

What is the primary goal of effective pricing in service firms?

To make the largest possible long-term contribution or profit Signup and view all the answers

What are the three foundations of a pricing strategy?

Value to Customer, Unit Cost to Firm, and Revenue Management Signup and view all the answers

What is a key objective of service pricing?

To make the largest possible long-term contribution or profit Signup and view all the answers

What is the primary objective of effective pricing in a company?

To gain profit and cover costs Signup and view all the answers

What is a key consideration in setting service prices?

Both Competitor Pricing and Fairness and Ethical Concerns Signup and view all the answers

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 Signup and view all the answers

Which pricing strategy is based on the idea of setting prices relative to financial costs?

Cost-Based Pricing Signup and view all the answers

What is the purpose of break-even analysis in pricing?

To identify the fixed and variable costs of a product Signup and view all the answers

How many questions do marketers need to answer to design an effective service-pricing strategy?

6 Signup and view all the answers

What is the main goal of Value-Based Pricing?

To relate price to the value perceived by the customer Signup and view all the answers

Why do companies use a 'we-will-not-be-undersold' positioning strategy?

To promise the best possible service at the best possible price Signup and view all the answers

What are the three foundations of pricing strategy?

Value-Based, Cost-Based, and Competition-Based Pricing Signup and view all the answers

What type of cost is associated with mental effort, perceived risk, and anxiety?

Psychological costs Signup and view all the answers

What is the main factor that affects the choice of clinic for a chest x-ray?

Non-price-related costs of using competing alternatives Signup and view all the answers

What is the term for the intensity of price competition in a market?

Price-Competition intensifiers Signup and view all the answers

What is an example of a sensory cost in a service environment?

Uncomfortable seating Signup and view all the answers

What is the foundation of pricing that takes into account the costs of production and distribution?

Cost-Based Pricing Signup and view all the answers

What is the term for the costs associated with switching to a different product or service?

Switching costs Signup and view all the answers

What is a key factor to consider when determining the price of a service?

Competitors' prices Signup and view all the answers

What basis for pricing involves charging customers based on the outcome of the service?

Outcome of service or cost-saving generated Signup and view all the answers

What is a consideration when deciding how to communicate prices to customers?

Psychological pricing points Signup and view all the answers

What is a key aspect of executing a service pricing strategy?

Collecting payment from customers Signup and view all the answers

What is a factor in determining the price of a service related to a specific task?

Execution of a specific task Signup and view all the answers

What is a consideration when deciding how much to charge for a service?

Customer's willingness to pay Signup and view all the answers