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Exam 17: Pricing of Services

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Question 31

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A prestige pricing strategy is appropriate when customers define value as:

A) All that I get for all that I give
B) Everything I want in a service
C) Low price
D) Reliable service
E) The quality I get for the price I pay

F) B) and E)
G) A) and B)

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Question 32

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In which of the following situations would a penetration pricing strategy be inappropriate?

A) Sales volume of the service is very sensitive to price
B) Economies in unit costs can be achieved by operating at large volumes
C) A service faces threats of strong potential competition very soon after introduction
D) There is no class of buyers willing to pay a higher price to obtain the service
E) The service is a major improvement over past services

F) A) and B)
G) C) and D)

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Question 33

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When comparing the value of health clubs, Shaundra believes value comes from having a "women's only" nautilus room and "women's only" aerobic classes. Shaundra defines value as:

Which of the following statements describes a problem with demand-based pricing for services?

List three groups of service providers that typically use results-based pricing?

Many white-collar workers have heard the story about the busy executive who billed the doctor for keeping him waiting when the patient showed up promptly at his appointment time or has dreamed of doing it themselves. This is an example of the _____ costs of services.

Salespeople are often on the road three nights every week. They cannot afford to stay in the most luxurious of hotels, but they do appreciate amenities like a good mattress, a firm pillow and a comfortable work area. They want the price they pay to be commensurate with the amenities provided by the hotels. They tend to define value as:

Promotional pricing may be less meaningful for services, for which price anchors do not exist, than for goods, for which they do.

Kendra teaches swimming lessons at the YWCA pool. She will charge $75 per child for four weeks worth of lessons. Payment is not due until the child can swim the length of the pool. If the child cannot accomplish this task, he or she will be automatically enrolled in the next swimming lesson session until the child can swim the length of the pool. At that time, the parents will be expected to pay the $75. The YWCA is using a(n) _____ pricing strategy.

An inn near a ski resort would be using a synchro-pricing strategy if it had lower rates in the summer months than in its busy season.

_____ cost refers to the effort invested in identifying and selecting a service from your consideration set.

A resort that has identified young upper-middle class parents as a market segment charges $1,300 for a four-day, three-night package for a mother, father and two children. The package includes golf fees and tennis court fees for the parents and a five-hour a day adult-supervised camp for the children. The ordinary four-day, three-night package for four costs $1,000. A single day at the camp for any child between the ages of 3 and 11 is $50. What kind of market segmentation pricing strategy is the resort using?

Which of the following statements does NOT contain a reason why consumers lack accurate reference prices for services?

_____-based occurs when services are standardized across providers.

Tyler has done volunteer fundraising for years. She has recently decided it would be a good career move for her to become a full-time, paid fundraiser. She likes the idea of working with a variety of different organizations and then moving on to some new problem to tackle. She is trying to keep her operation simple. From what she has told you so far, you understand that she plans on using cost-plus pricing. What problems do you foresee if she uses this pricing technique? What type of a pricing strategy might be more appropriate and simpler?

The commissions paid to advertising agencies are paid by the media, not by the advertiser.

In which of the following service industries are you most likely to find the service provider using fee for service pricing?

In mixed-leader pricing, the price of a catered reception may be less if the bride buys her wedding cake from the same caterer and pays full price for the cake.

What kind of a pricing strategy is a crafts show using when it charges a lower entry fee for teenagers and senior citizens?

What two pricing strategies are most commonly used when the customer defines value as quality for the price paid?