Question

True or False: 1. Loyalty programs are typically the best way to increase loyalty and decrease churn. 2. One good reason to do cost-plus pricing is that it is easy to implement. 3. The primary goal of price discrimination is to make high WTP customers better off at the expense of low WTP customers. 4. The idea of the DCE is that you should aim to help your customers to get the best possible experience given the current technology. 5. If you run an informative advertisement and you find that it didn’t work very well, it is actually OK because it probably helped with brand building which will only materialize over a number of years. This is one advantage of doing informative ads. 6. Suppose you work for the marketing division of United Airlines. One of your maintenance workers discovered a new material that scientists have named “softonium” when cleaning out the air conditioning vents at O’Hare airport. It turns out, softonium is produced for free by the air conditioning vents and takes up no space. It can be installed into the economy class seats of all airplanes at zero cost, making them 25% more comfortable. You might not want to install the softonium, even though it helps your customers meet their needs of comfortable transportation from point A to point B and can be produced and installed at zero cost.

Answer 1

1 True- Since loyalty programs aim is to reward customers with loyalty points who are regular flyer in order to retain them.

2 True- Because in cost plus pricing one has to add material cost, labour cost, overhead cost and then some margin on it in order to come to the price of the product.

3 False: Since high willingness to pay(WTP) customers are willing to pay the high price for any product with some fancy, attractive or premium services/differentiated packaging, etc and for example in case of Airlines who differentiate seats basis economy class and business class and charge high price for business class and low price for economy class as per their customers willingness to pay for the given service level.

4 True- Since through DCE(Data Communication Equipment) and with ICT(Information and Communication Technology) one can can give better service experience to their customers in order to enhance the service level and retain them.