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Exam 17: Pricing of Services

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Question 21

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What kind of pricing strategy explains why a traveler is willing to pay $400 to fly first class when he or she could get to the same destination by paying $125?

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Question 22

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You can get a haircut in one of the rural counties that surround Atlanta for $15. You will pay around $45 for the same haircut if you buy it in one of the five counties that make up the Atlanta area. Which type of competition-based pricing does this best exemplify?

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Question 23

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Since customers naturally look for price anchors, as well as familiar services, against which to judge focal services, price framing is an appropriate strategy to use for pricing many types of services.

A day after Continental Airlines 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., Canada, the Caribbean and Latin America, USAir and American Airlines matched Continental's fares. USAir and American Airlines are using a _____ strategy.

In order to find the best veterinarian service for her prized German shepherds, Vonda interviewed several different veterinarians and did extensive research before she found one she thought provided value. What kind of a nonmonetary cost did Vonda expend as she interviewed different vets?

In _____ pricing, a service firm determines price by calculating component costs of the service and adding a mark-up.

Value may be perceived differently because of consumers' idiosyncratic tastes, knowledge about the service, buying power and ability to pay.

Pizza Hut, Uncle Sam's, Domino's and Papa John's all deliver pizza in Cartersville, Georgia, a town of about 30,000. As a result, one would expect all of the pizza delivery services to use _____-based pricing.

What is the basic formula for cost-based pricing?

Initial consumer resistance to online bill paying resulted from a _____ cost in using a new service.

The process for installing Leo's new CD player took almost four hours, which Leo spent sitting in the Circuit City store waiting room. Leo paid _____ costs for the installation of his new CD player.

_____ costs represent other sources of sacrifice perceived by consumers when buying and using a service.

Price framing would be used when the customer defines value as:

Which of the following is NOT an effective pricing strategy to use when customers define value as "low price"?

Which of the following is NOT an example of an effective pricing strategy to use when the target market defines value as all that is received is all that is given?

Deana and Rod Li went on a one-week vacation at the Club Med Turkoise village, located in Turks and Caicos, a chain of islands in the Caribbean. Club Med's per person price of $1199 included round-trip air travel from New York, one-week accommodations, all meals, sports, activities and nightly entertainment. Club Med is using a _____ strategy.

All of the following examples are nonmonetary costs EXCEPT:

Derrick saves coupons from 10-minute oil and lubrication services (e.g., Jiffy Lube, Quick Lube and Speedi-Lube) and when he needs to have his car's oil changed, he chooses the oil and lubrication service that offers the best deal on a 10-minute oil change. For 10-minute oil and lubrication services, Derrick defines value as:

Cost-plus pricing is more likely to be used by lawyers than by the construction industry.

Prestige pricing is a special form of cost-plus pricing by service marketers who offer some sort of status service like providing cold storage for a mink coat or maintenance for a Rolls Royce.