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Para 1
Pricing is the most influential medium of communication that companies can use with their customers. Prices send unequivocal messages about what the firm believes in, what it thinks of its customers, and how it wants to interact with them.Summary
Pricing – means of communication with consumers, helps build perceptions.Para 2
The traditional approach for fixing the price by ‘running the numbers’ only aims at maximizing short term profits. Using this mechanical and antagonistic approach solely may not be a sustainable long-term strategy since present day consumers disseminate information about a firm’s prices, exploiting social media platforms to publicize policies that they believe are unfair. And they don’t hesitate to abandon companies that cross the line. For example, when Bank of America announced in September 2011 that it would start charging a $5 monthly debit card fee, the public outcry was so intense that the bank soon rescinded the plan. But the damage was done and account closings increased significantly.Summary
Traditional approach – short time focus, not sustainable long term as people may revolt using social media. Example given of the same.Para 3
Pricing instead should be strategically used to create shared value for both the company as well as the customers. The key step towards such pricing would be to humanize the process by focusing on consumer relations and not solely on the transactions. Attempts should be made to innovatively design pricing models to facilitate a better consumer experience. Recognizing that many of its customers disliked shipping costs and long waits for delivery, Amazon introduced a service, which, for an annual fee, provides two-day shipping on all orders, thereby eliminating the pain of paying associated with each order. This pricing scheme not only rewards high-volume customers but, more strategically, it also helped Amazon change buying behavior by encouraging customers to do more of their shopping with the company.Summary
Use strategic pricing to create shared value. Amazon example given.Para 4
Promoting transparency and avoiding complicated pricing plans and obscure contractual terms is another vital practice. A firm that is transparent about the way it makes money fosters engagement and builds trust and goodwill among customers. Hidden costs and consumer traps may help for generating short term revenues but are disadvantageous on a long-term basis. Lastly, companies must closely understand and be able to influence the perceived standards of fairness of the price of their product or service.Summary
Promoting transparency + simplifying pricing– another best practice. Benefits => engagement and trust.Question 1
The passage is primarily concerned with:Answer Choice Analysis
Question 2
By using the phrase ‘running the numbers’ the author is referring to what practice?Answer Choice Analysis
Question 3
According to the passage, which of the following describes present day consumer most accurately?Question 4
The author of the passage is LEAST likely to make which of the following recommendations to businessmen.Answer Choice Analysis
Para 1
Pricing is the most influential medium of communication that companies can use with their customers. Prices send unequivocal messages about what the firm believes in, what it thinks of its customers, and how it wants to interact with them.Summary
Pricing – means of communication with consumers, helps build perceptions.Para 2
The traditional approach for fixing the price by ‘running the numbers’ only aims at maximizing short term profits. Using this mechanical and antagonistic approach solely may not be a sustainable long-term strategy since present day consumers disseminate information about a firm’s prices, exploiting social media platforms to publicize policies that they believe are unfair. And they don’t hesitate to abandon companies that cross the line. For example, when Bank of America announced in September 2011 that it would start charging a $5 monthly debit card fee, the public outcry was so intense that the bank soon rescinded the plan. But the damage was done and account closings increased significantly.Summary
Traditional approach – short time focus, not sustainable long term as people may revolt using social media. Example given of the same.Para 3
Pricing instead should be strategically used to create shared value for both the company as well as the customers. The key step towards such pricing would be to humanize the process by focusing on consumer relations and not solely on the transactions. Attempts should be made to innovatively design pricing models to facilitate a better consumer experience. Recognizing that many of its customers disliked shipping costs and long waits for delivery, Amazon introduced a service, which, for an annual fee, provides two-day shipping on all orders, thereby eliminating the pain of paying associated with each order. This pricing scheme not only rewards high-volume customers but, more strategically, it also helped Amazon change buying behavior by encouraging customers to do more of their shopping with the company.Summary
Use strategic pricing to create shared value. Amazon example given.Para 4
Promoting transparency and avoiding complicated pricing plans and obscure contractual terms is another vital practice. A firm that is transparent about the way it makes money fosters engagement and builds trust and goodwill among customers. Hidden costs and consumer traps may help for generating short term revenues but are disadvantageous on a long-term basis. Lastly, companies must closely understand and be able to influence the perceived standards of fairness of the price of their product or service.Summary
Promoting transparency + simplifying pricing– another best practice. Benefits => engagement and trust.Question 1
The passage is primarily concerned with:Answer Choice Analysis
Question 2
By using the phrase ‘running the numbers’ the author is referring to what practice?Answer Choice Analysis
Question 3
According to the passage, which of the following describes present day consumer most accurately?Question 4
The author of the passage is LEAST likely to make which of the following recommendations to businessmen.Answer Choice Analysis
Para 1
Pricing is the most influential medium of communication that companies can use with their customers. Prices send unequivocal messages about what the firm believes in, what it thinks of its customers, and how it wants to interact with them.Summary
Pricing – means of communication with consumers, helps build perceptions.Para 2
The traditional approach for fixing the price by ‘running the numbers’ only aims at maximizing short term profits. Using this mechanical and antagonistic approach solely may not be a sustainable long-term strategy since present day consumers disseminate information about a firm’s prices, exploiting social media platforms to publicize policies that they believe are unfair. And they don’t hesitate to abandon companies that cross the line. For example, when Bank of America announced in September 2011 that it would start charging a $5 monthly debit card fee, the public outcry was so intense that the bank soon rescinded the plan. But the damage was done and account closings increased significantly.Summary
Traditional approach – short time focus, not sustainable long term as people may revolt using social media. Example given of the same.Para 3
Pricing instead should be strategically used to create shared value for both the company as well as the customers. The key step towards such pricing would be to humanize the process by focusing on consumer relations and not solely on the transactions. Attempts should be made to innovatively design pricing models to facilitate a better consumer experience. Recognizing that many of its customers disliked shipping costs and long waits for delivery, Amazon introduced a service, which, for an annual fee, provides two-day shipping on all orders, thereby eliminating the pain of paying associated with each order. This pricing scheme not only rewards high-volume customers but, more strategically, it also helped Amazon change buying behavior by encouraging customers to do more of their shopping with the company.Summary
Use strategic pricing to create shared value. Amazon example given.Para 4
Promoting transparency and avoiding complicated pricing plans and obscure contractual terms is another vital practice. A firm that is transparent about the way it makes money fosters engagement and builds trust and goodwill among customers. Hidden costs and consumer traps may help for generating short term revenues but are disadvantageous on a long-term basis. Lastly, companies must closely understand and be able to influence the perceived standards of fairness of the price of their product or service.Summary
Promoting transparency + simplifying pricing– another best practice. Benefits => engagement and trust.Question 1
The passage is primarily concerned with:Answer Choice Analysis
Question 2
By using the phrase ‘running the numbers’ the author is referring to what practice?Answer Choice Analysis
Question 3
According to the passage, which of the following describes present day consumer most accurately?Question 4
The author of the passage is LEAST likely to make which of the following recommendations to businessmen.Answer Choice Analysis
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