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Exam 17: Pricing of Services

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Question 1

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The most commonly known form of results-based pricing is a practice called mixed bundling.

A) True
B) False

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Question 2

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Celeste has a 4-year old daughter and often employs one of the many teenagers in her neighborhood who regularly baby-sit. When one of the teens raised her price to $5.75 per hour, all of the other babysitters followed suite. Not surprisingly, when another teen tried to increase his babysitting hours by lowering his rate to $5.25, all of the other teens made the same reduction in their rates. What kind of a competition-based strategy does this example depict?

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Question 3

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_____-based pricing is used when there are a small number of large service providers.

American Airlines BreakAway fares offer travelers substantial savings on nonstop flights from Newark, New Jersey to Los Angeles from mid-August to mid-October. The round-trip airfare is $299 for customers who depart on Friday and return the following Monday or Tuesday. American Airlines is using a(n) _____ differential.

After moving to Orlando, Florida, Kaori opened both a savings and a checking account at Barnett Bank. Although Barnett had a higher minimum balance requirement for free checking than the other two banks she considered, Kaori chose Barnett because it was located closer to her home than the other banks. Kaori would rather expend other costs than _____ costs.

When the customer defines value as low price, the service provider should use prestige pricing.

In which of the following service industries would you most likely find the service provider using competition-based pricing?

The price for an all-day trip to the Alpine Spa is $175 and includes an hour-long massage, a facial, a manicure and pedicure and a hair styling and make-up application. Any of these services can be purchased individually for the total cost of almost $300. What kind of pricing strategy is Alpine Spa using?

Name three different types of bundling strategies.

Price visibility does not influence reference prices when selecting a stockbroker.

What are the three strategies associated with the complementary pricing of a service?

One of the reasons used to explain why customers evaluate goods and services differently is:

In talking to a travel agent, T. J. Matthews learned that he could get a three-day/two night package near Disneyworld for his family of four or for the same amount of money, he could have a five-day/four-night stay at a hotel that was about fifty miles away from Disneyworld. Matthews decided the farther hotel was a much better value. Matthews defined value as:

What type of pricing strategy will most likely be used by marriage counselors, bridal consultants, public accountants and tax attorneys?

_____ occurs in markets with a high concentration of sellers. Any price offered by one company will be matched by its competitors in order to avoid giving the low-price seller a distinct advantage.

College activities boards (CAB) have the responsibility for hiring the entertainment that appears on college campuses. They have limited budgets and when dealing with them, talent agencies have to remember they often define value as low prices. Describe how a talent agency might use this information in pricing to those on CAB that actually have the authority to hire the musicians they represent. Give specific examples with each.

The New York Yankees, a major league baseball team, offer half-price tickets for high school and college students every Wednesday home game at Yankee Stadium. The New York Yankees are using a(n) _____ pricing strategy.

Which of the following is an example of competition-based pricing strategy?

If a family has one child enrolled in Kid's Corral day care center, it costs $75 per week. If a family has two children enrolled in Kid's Corral, it costs $135. Step-by-Step is using a(n) _____ differential.

Which of the following statements does NOT describe how consumers typically define value?