BADM 326 - final exam Questions With 100% Correct Answers
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Course
BADM326
Institution
BADM326
BADM 326 - final exam Questions With
100% Correct Answers
Segmented pricing - answer• Pricing based on market segments
• Logic is based on differences among buyers on terms of - price sensitivities, costs and
competition
• Buyers and competition are not likely to be cooperative with your...
BADM 326 - final exam Questions With
100% Correct Answers
Segmented pricing - answer✔• Pricing based on market segments
• Logic is based on differences among buyers on terms of - price sensitivities, costs and
competition
• Buyers and competition are not likely to be cooperative with your price segmentation efforts
• Some forms of segmented pricing may be illegal
DQ: Which segments are more price sensitive? - Personal vs. Business Travelers -
answer✔personal travelers
- more options
- business travelers have a more set travel destination
-business traveler's costs are usually covered by the company so they aren't looking at the price
DQ: Which segments are more price sensitive? - New to Market vs. Experienced Buyers -
answer✔experienced buyers
- they have more knowledge so are more aware of the prices
DQ: Which segments are more price sensitive? - Light Users vs. Heavy Users - answer✔heavy
users
- spend a lot of money on these products so budget is more constrained
DQ: Which segments are more price sensitive? - Students/Retired vs. Employed -
answer✔students/retired
- smaller income and are more price sensitive because of that
DQ: Steinway, a tiny but well-regarded New York piano maker in the 1850's grew quickly after
Doretta Steinway, the founder's daughter, got the idea of offering free piano lessons with the sale
of each piano
- Can you explain this as a segmented pricing tactic?
- What are the segments and why would their price sensitivities be different? - answer✔- trying
to attract new users
- increase the price of pianos because a service is added
- old users value the nice piano
- new users will value the lesson
----they act in a form of a discount
-new customers are more price sensitive because they don't realize the value of a nice piano
DQ: Which segments are more costly to serve? - Peak vs. Off-Peak Purchasers - answer✔peak
are more costly to serve because they need to make supply more available to be able to serve
more customers
DQ: Which segments are more costly to serve? - New Customers vs. Established Customers -
answer✔new customers because of the added expenses of familiarizing the new customers with
the business and the way things are done (making a new customer account)
DQ: Which segments are more costly to serve? - Light Users vs. Heavy Users - answer✔light
users
- heavy users buy more at one time
- it takes more to entice a light user
Mechanism for Price Segmentation - answer✔1. By buyer identification
2. By purchase location
3. By time of purchase
4. By purchase quantity
--- Volume discounts
--- Order discounts
--- Step discounts
--- Two-part pricing
5. By product design
6. By product bundling
7. By tie-ins and metering
Segmentation by buyer information - answer✔Buyers have obvious characteristics that
distinguish them: consumers who are price insensitive can be charged more than those who are
price sensitive
Ex: student and senior discounts
segmenting by purchase location - answer✔If customers in one market segment purchase at
different locations, they can be segmented by location
Ex: Buying online vs. in-store
McDonald's prices in different locations
segmenting by time of purchase - answer✔If customers in different market segments purchase at
different times, one can segment them by time of purchase
Ex: Restaurants, lunch specials
Fashion clothing (discounted when out of season)
meat or vegetable (discounted after "used by date")
Peak-load pricing (demand varies at different time, but the product is not storable)
What type of pricing is airplane pricing? - answer✔time of purchase
- cheaper to buy a ticket day of flight
Coke's new vending machines that changes prices with the temperature. How did it work? -
answer✔• Price Discrimination
--- Selling the same product to different groups of buyers at different prices.
--- "Hot" day v.s. "Cold" day prices
• Economic Rationale
- Higher price (hot) → higher profit
- Lower price (cold) induces sales → higher profit
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