Marketing for Hospitality and Tourism, 8e, Global Edition (Kotler)
Chapter 11 Pricing: Understanding and Capturing Customer Value
1) If a server in a restaurant convinces a patron to buy a t-shirt at the front counter, they are:
A) Upselling
B) Cross-selling
C) Split-selling
D) Overselling
2) For which goods could the demand slope curve upward?
A) Necessary goods
B) Prestige goods
C) Discretionary goods
D) Most goods
3) Which of the following is an example of an elastic demand situation?
A) Demand rises 4% if price falls 6%
B) Demand falls 8% when price increases 5%
C) Demand rises 7% if price falls 10%
D) Demand falls 7% when price increases 9%
4) The factor that sets the floor for a product’s price is:
A) Elasticity
B) Quality
C) Availability
D) Cost
5) In the short run, the most important pricing strategy is:
A) Survival
B) Penetration
C) Profit maximization
D) Sales maximization
6) Which of the following is NOT a factor affecting price sensitivity?
A) Total expenditure effect
B) Customer satisfaction effect
C) End-benefit effect
D) Unique value effect
7) The basic break-even price is:
A) Variable costs divided by selling price
B) Fixed costs divided by selling price
C) Fixed costs divided by contribution
D) Contribution divided by variable costs
8) Charging $0.99 instead of $1.00, or using 3s in the price instead of 7s, is an attempt to engage
in:
A) Competition-based pricing
B) Psychological pricing
C) Yield management
D) Price discrimination
9) Which of the following statements is TRUE?
A) Price points are rare if not non-existent in the hospitality industry.
B) Today, yield management is used by everyone.
C) Excess capacity is a good reason to cut prices.
D) Business travelers are usually more price-sensitive than pleasure travelers.
10) Hotels often use this strategy when the economy slumps:
A) Price gouging
B) Survival
C) Price hike
D) Price maintenance
11) In the first few months upon opening a new hotel, a hotel company wanting to achieve
market share leadership is most likely to:
A) Try to influence supply
B) Try to influence demand by offering buy three nights, get fourth free, packages
C) Use low opening rates to influence demand
D) Charge a high price
12) A restaurant seeking to establish an exclusive clientele is likely to:
A) Deflate food and beverage prices
B) Inflate food and beverage prices
C) Keep prices similar to other restaurants in the area
D) Use geographic marketing techniques
13) Costs that do NOT vary with production levels are called:
A) Non-operating costs
B) Variable costs
C) Fixed costs
D) Permanent costs
14) With increased demand, or higher guest/customer traffic, the total costs are likely to:
A) Increase
B) Decrease
C) Stay the same
D) Remain undetermined
15) A hotel trying to sell its food and beverage facilities, meeting rooms, retails, etc. to its guests,
is an example of:
A) Up-selling
B) Down-stream selling
C) Cross-selling
D) Internal promotion
16) When employees try to sell a higher priced alternative to a potential customer, it is called:
A) Up-selling
B) Down-stream selling
C) Cross-selling
D) Internal promotion
17) An executive fully reimbursed for all travel expenses is most likely to be attracted to a(n):
A) Discount rate offer for a hotel room and a free breakfast the next day
B) Discount rate offer for a hotel room and a restaurant offering a $9.99 dinner special
C) Limited service property with free breakfast and free evening cocktails
D) Upscale hotel, having a room-service breakfast, and eating lunch and dinner in a more
expensive restaurant.
18) Customers are more price-sensitive when the price of the product accounts for a large share
of the total cost of the:
A) Flight ticket
B) Perceived benefit
C) End benefit
D) Monthly budget
19) The more someone spends on a product, the more ________ he or she is to the product’s
price.
A) Sensitive
B) Insensitive
C) Neither sensitive nor insensitive
D) Comfortable
20) During periods of weak demand, very few competitors escape the effect of a ________
market.
A) Weak
B) Strong
C) Volatile
D) Spiraling
21) The establishment of price based largely on those of competitors, is called:
A) Cost based pricing
B) Value based pricing
C) Going-rate pricing
D) Break-even pricing
22) The strategy of setting a high price when the market is price-insensitive, is called:
A) Market-penetration pricing
B) Market skimming pricing
C) Target profit pricing
D) Going-rate pricing
23) Pricing based on segmentation of the market and pricing differences based on price elasticity
characteristics of these segments, is called:
A) Elasticity pricing
B) Inelastic pricing
C) Market segmentation
D) Discriminatory pricing
24) With a product or service price change, the action affects buyers, however, competitors,
distributors, and suppliers are insulated from the price change affects.
25) A restaurant seeking to establish a heavy demand is likely to offer high quality products for
high prices.
26) Upselling is part of effective revenue management.
27) Fixed costs are the same as overhead.
28) When pricing, creative judgment can be as important as technical expertise.
29) Target profit pricing refers to the profit a company can make from a particular target market.
30) Value-based pricing is based on the seller’s perception of value.
31) Product-bundling involves combining several products into a package with a reduced price.
32) Value-pricing is a very safe way to price.
33) One major benefit to yield management is that it is removed from any ethical problems.
34) Going-rate pricing is an example of competition-based pricing.
35) A firm considering a price change has to worry about competitors’ reactions.
36) Identify and define the internal factors affecting a firm’s pricing decisions.
37) How important is price among the elements of the marketing mix?
38) What can a business learn from a demand curve for their product?
39) Which costs come together to make up a product’s total cost?
40) What do we know about a product when we understand its price elasticity? What determines
the price elasticity of demand?