PRICING STRATEGY FINAL EXAM

When the demand fluctuations occur during predictable periods, sellers of services often develop a price structure such that their prices are higher during the time periods of peak demand.

One common means by which time of purchase is used as a price-segmentation fence is by offering items at recurring discounts that are more or less predictable over time.

Sellers often set lower prices for brief, irregularly occurring time periods in order to communicate to customers and potential customers information about the existence of products and the benefits of these products. Because marketing communication is known as “promotion,” these temporary low prices are termed ____________________.

When promotional discounts are simple price decreases, they are often referred to as “sales.” Cents-off coupons and rebate offers are slightly more complicated forms of promotional discounts. Promotional discounts to product resellers, such as wholesalers and retailers (i.e., “the trade”), are examples of what are known as __________________.

Desires to communicate an __________ to the receiver, in this case the customer or potential customer. A temporary low price can provide a means for this communication by leading the receiver to take a target action that will have the effect of getting across the intended message.

When Fuji wanted to communicate that its 35mm film was equal in quality to the accepted market leader, Kodak, it offered generous promotional discounts to encourage _. Fuji’s management calculated that once consumers tried Fuji film, they would see for themselves that it worked as well as Kodak film. By means of this discount-induced trial, the intended message would be communicated.

The target action could also be the consumer’s purchase of more units of a product than usual. This action is often referred to as________________.

A discount for early purchase, also known as an_______________, is often used in the pricing of service products.

An ____________ is a graph showing the cumulative number of purchases of a service product as a function of the amount of time before the service is performed.

Just as early purchase can be used as a price-segmentation fence, so can purchasing a produc later than other customers. For example, airlines have long offered deep discounts, known as _________, to travelers who can delay their purchase of a ticket until just before the flight takes off.