Deck 6: The Pricing of Services

Question 1

Consumers exchange their money,time,and effort for the bundle of benefits the service offers.Economic theory suggests that consumers will have a(n) ____ that captures the value they place on these benefits.

A)lower price threshold
B)reservation price
C)consumer surplus
D)image value
E)product value

Answer 1

B

Question 2

If the goal of the pricing strategy is to reduce the amount of perceived risk associated with the purchase and appeal to target markets that value certainty,then the appropriate pricing strategy would be:

A)relationship pricing.
B)price bundling.
C)mixed bundling.
D)efficiency pricing.
E)flat-rate pricing.

Answer 2

E

Question 3

All of the following are a form of satisfaction-based pricing except:

A)offering guarantees.
B)benefit-driven pricing.
C)flat-rate pricing.
D)relationship pricing.
E)none of these are exceptions.

Answer 3

D

Question 4

A consumer's price sensitivity will increase as:

A)the perceived number of substitutes increase.
B)switching costs increase.
C)the shared costs for the expenditure increase.
D)the perceived unique value of the service increases.
E)the customer's ability to build an inventory decreases.

Question 5

Which of the following statements about the pricing of services (compared to the pricing of goods) is false?

A)The demand for services tends to be more elastic than the demand for goods.
B)Cost-oriented pricing is more difficult for services.
C)Comparing prices of competitors is more difficult for service consumers.
D)Self-service is a viable competitive alternative.
E)Consumers are less able to stockpile services by taking advantage of discount prices.

Question 6

Which of the following statements about the pricing of services (compared to the pricing of goods) is true?

A)The demand for services tends to be more elastic than the demand for goods.
B)Cost-oriented pricing is less difficult for services.
C)Comparing prices of competitors is less difficult for service consumers.
D)Self-service is a viable competitive alternative.
E)Consumers are more able to stockpile services by taking advantage of discount prices.

Question 7

When pricing a service,the service provider should consider all of the following except _____ considerations.

A)demand
B)cost
C)customer
D)intuitive
E)product

Question 8

A consumer's price sensitivity will decrease as:

A)the perceived number of substitutes increase.
B)switching costs decrease.
C)the shared costs with third parties increase.
D)the perceived unique value of the service decreases.
E)the customer's ability to build an inventory increases.

Question 9

Which of the following is NOT a criteria for effective price discrimination?

A)The segments should be identifiable,and a mechanism must exist to price them differently.
B)Different groups of consumers should have similar responses to price.
C)Segments should be large enough to be profitable.
D)Incremental revenues should exceed incremental costs.
E)Customers should not be confused.

Question 10

The negative effect of cross-price elasticity in which the increasing price of one service decreases the demand for another service is said to be:

A)unitary.
B)substitutes.
C)complementary.
D)inelastic.
E)elastic.

Question 11

Which of the following statements about the pricing of services (compared to the pricing of goods) is false?

A)The demand for services tends to be more inelastic than the demand for goods.
B)Cost-oriented pricing is more difficult for services.
C)Comparing prices of competitors is more difficult for service consumers.
D)Self-service is a viable competitive alternative.
E)Consumers are more able to stockpile services by taking advantage of discount prices.

Question 12

If the cross-price elasticity is such that increasing the price of one service results in increased demand for another service,the two services are:

A)unitary.
B)substitutes.
C)complementary.
D)inelastic.
E)elastic.

Question 13

A buyer's perception of value is considered a trade-off between:

A)product value and psychic cost.
B)total customer value and total customer cost.
C)image value and energy cost.
D)service value and monetary cost.
E)personnel value and time cost.

Question 14

The mental energy spent by customers to acquire a service is referred to as:

A)image costs.
B)monetary price.
C)energy costs.
D)psychic costs.
E)time costs.

Question 15

A willingness to pay more for a service because of the top-notch reputation of the company providing it is related to _____ value.

A)psychic
B)image
C)service
D)product
E)personnel

Question 16

Total customer value consists of all of the following components except _____ value.

A)product
B)service
C)image
D)time
E)personnel

Question 17

A consumer's price sensitivity will decrease as:

A)the perceived number of substitutes increase.
B)switching costs increase.
C)the shared costs for the expenditure decreases.
D)the perceived unique value of the service decreases.
E)the customer's ability to build an inventory increases.

Question 18

A consumer's price sensitivity will increase as:

A)the perceived number of substitutes decrease.
B)switching costs increase.
C)the shared costs for the expenditure increase.
D)the perceived unique value of the service increases.
E)the customer's ability to build an inventory increases.

Question 19

Total customer cost consists of all of the following components except _____ cost.

A)monetary
B)social
C)time
D)psychic
E)energy

Question 20

Which of the following statements about the pricing of services (compared to the pricing of goods) is true?

A)The demand for services tends to be more elastic than the demand for goods.
B)Cost-oriented pricing is more difficult for services.
C)Comparing prices of competitors is less difficult for service consumers.
D)Self-service is not a viable competitive alternative.
E)Consumers are more able to stockpile services by taking advantage of discount prices.

Question 21

Adaptive pricing strategies include all of the following except:

A)altering the product size.
B)using new distribution channels.
C)requiring purchase minimums.
D)offering two-for-one deals.
E)offering guarantees.

Question 22

Discuss satisfaction-based,relationship,and efficiency approaches to pricing.

Question 23

Effective service providers enhance the ____ value of services.

A)product
B)service
C)image
D)time
E)personnel

Question 24

Charging customers different prices for essentially the same service is called:

A)price discrimination.
B)supply and demand.
C)aggregrate pricing.
D)substitutes.
E)complementary.

Question 25

The pricing strategy that charges customers for services actually used as opposed to overall "membership" fees is:

A)relationship pricing.
B)price bundling.
C)benefit-driven pricing.
D)flat-rate pricing.
E)efficiency pricing.

Question 26

Discuss the circumstances under which price segmentation is most effective.

Question 27

Discuss the concept of cross-price elasticity as it relates to service pricing.

Question 28

Costs that are planned and are accrued during the operating period regardless of the level of production and sales are called _____ costs.

A)fixed
B)direct variable
C)average
D)marginal
E)future

Question 29

Southwest Airlines appeals to economically minded consumers who are looking for the best price by flying shorter,more direct routes to less congested,less expensive airports.This is an example of:

A)relationship pricing.
B)price bundling.
C)benefit-driven pricing.
D)flat-rate pricing.
E)efficiency pricing.

Question 30

Discuss how consumers relate value and price.

Question 31

Which pricing strategy encourages the customer to expand his/her dealings with the service provider?

A)relationship pricing
B)efficiency pricing
C)benefit-driven pricing
D)flat-rate pricing
E)aggregate pricing

Question 32

Sheila saw the advertised price for carpet cleaning as too low and instead went with a higher-priced competitor.Sheila saw the price as a(n):

A)signpost.
B)quality cue.
C)reservation price.
D)dual entitlement.
E)adaptive price.

Question 33

Studies suggest that price is more likely to be used as a cue to quality under which of the following conditions?

A)when price is the primary differential information available
B)when alternatives are heterogeneous
C)prior to purchase
D)when comparative price differences are relatively large
E)all of these

Question 34

Which of the following represents a variable cost for an airline?

A)fleet costs
B)labor costs
C)fuel costs
D)both fuel and labor costs
E)both fleet and fuel costs

Question 35

The actual dollar pricepaid by the consumerfor a product is _____ cost.

A)image
B)monetary
C)energy
D)psychic
E)time

Question 36

Like many services,the demand for medical care tends to be more ____ in that an increase in price does not greatly affect demand.

A)inelastic
B)elastic
C)tangible
D)complementary
E)sensitive

Question 37

All of the following are cost considerations associated with service pricing except:

A)​Service consumers are more likely to use price as a cue to quality.
B)Cost-oriented pricing is more difficult for services.
C)Consumers may not know the actual price they will pay until the service is completed.
D)Services tend to be characterized by a high fixed-cost to variable-cost ratio.
E)None of these are exceptions.

Question 38

The technique that allows consumers to either buy Service A and Service B together or purchase one service separately is called _____ bundling.

A)long-term
B)relations
C)mixed
D)product
E)individual

Question 39

The pricing strategy that is a form of relationship pricing is:

A)activity-based costing.
B)price bundling.
C)benefit-driven pricing.
D)flat-rate pricing.
E)efficiency pricing.

Question 40

Discuss the demand considerations that differentiate the pricing of services from the pricing of goods.

Question 41

In general,what guidelines should a service provider follow when formulating a pricing strategy?