Exam 15: Pricing of Services

In talking to a travel agent,T.J.Matthews learned that he would have to pay the same amount of money for a three-day/two night package right outside the gates of Walt Disney World for his family of four as he would for a five-day/four-night stay at a hotel that was about fifty miles away from Walt Disney World.Matthews decided the farther hotel was a much better value.Matthews defined value as:

Search costs are the costs invested to identify and choose from services you desire.

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 $1499 included round-trip air travel from New York,one-week accommodations,all meals,sports,activities and nightly entertainment.Club Med is using a _____ strategy.

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:

The three types of complementary pricing are:

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

Accountants,architects,interior decorators,marriage counselors,and lawyers typically use a _____ pricing strategy.

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.

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.

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

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

In a _____ pricing strategy,new services are introduced at high prices with large promotional expenditures.

College activities boards (CABs)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 CABs that actually have the authority to hire the musicians they represent.Give specific examples with each.

The ad for legal services that Marla saw indicated the lawyers would receive no money unless their client did.To Marla,this statement indicated the legal firm offering this service was using:

_____ 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.

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

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

Which of the following statements describes a problem in cost-based pricing for services?

Which of the following approaches to pricing considers that customers may judge quality on the basis of price?

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