Marissa Rodrigues

FYBBAT&T 2125
Marketing 2
1. One way of increasing revenue is through upselling. Give examples from the hospitality or
travel industries of when upselling can result in a more satisfied guest.
Ans. upselling is important in the hospitality industry as it gives the hotel an opportunity to
suggest additional services that will enhance the guest stay. It is key to increasing hotel
profitability and guest satisfaction. An example from the hospitality industry is to offer
restaurant guests with a variety of items on the menu or to suggest them with the
specialties that the restaurant offers, in such a way restaurant employees can successfully
upsell their items to their guests by adding a personal opinion of their favourite menu items
and by describing the food offered by them.
2. You have just been hired as the dining room manager at a local hotel. The manager asks
you to evaluate the menu prices to see if they need to be adjusted. How would you go
about this task?
Ans. As me being a dining room manager, to evaluate the menu prices the first thing I would
take into consideration would be consumer perception of the price and value. The value-
based pricing method can help me understand the buyer’s perceptions of value, and adjust
the menu items. Another method would be to evaluate the prices of competitors and
determine where my own restaurant would stand within this scale. Cost plus pricing can
also determine proper menu prices because it takes into consideration material costs,
labour costs and overhead costs which contribute to the total price.
3. A number of factors affecting price sensitivity are discussed in this chapter. Provide some
examples of the application of these factors in the hospitality or travel businesses.
Ans. One actor that affects price sensitivity is the unique value effect. For example, a hotel
that serves a wide range of delicious food including gourmet breakfasts to their guests.
Guests may get attracted to this hotel because of the perceived value that comes with
staying there. The gourmet breakfast creates an attractive option for the guests and also
gives the hotel a competitive strength among the other hotels. Another factor that affects
price sensitivity is price quality effect. For example, a hotel that raises its room rates in order
to appeal to a particular class of people.
4.Many restaurants have unbundled their products to lower prices. For example, some
restaurants that normally included a salad bar with all meals now offer a dinner price that
includes the salad bar and a lower a la carte that does not. Why do you think these
restaurants are unbundling their Products? When is the price bundling effective?
Ans. These restaurants are unbundling their products because their customer’s wants are
less than a bundled package deal therefore, they prefer unbundling their products to meet
the needs of their consumers. This also benefits them in reaching different customers by
offering them what they want with ease. Unbundling products may also increase revenue in
certain cases. Price bundling is effective when you have a wide variety of products or
services to offer or when you want to increase the value of low-volume items.
5.Give an example of an effective use of price discrimination. Support your reasons for
thinking that it is a good example.
Ans. For example the airline industry charges a higher price to last minute customers who
are desperate to get the last seat. Whereas, customers who booked their seats months in
advance will benefit with a lower price. Not only does the airline benefit from the cash
payment, but also from the certainty that the seats will get filled. Therefore, this is a good
example of price discrimination used by the airline industry.
6. Does yield management create and maintain customers, or is it a short-term approach to
increasing revenue?
Ans. Yield management helps you understand customer expectations well and makes it
easier for you to cater to the right customers and carry out price changes driven by
customer preference. Includes a better ability to predict customer wants and needs, a more
effective pricing strategy, an expansion of available markets and a stronger relationship
between the company divisions. It maximizes revenue production for the same number of
units, by taking advantage of the forecast of high demand and low demand periods.
7. Airlines and hotels give bonus frequent flyer miles, gifts, and free companion tickets to
attract the business traveller. These promotions are often provided in lieu of a price cut. The
traveller benefits personally, although their company does not get the benefit of lower
rates. Is this ethical?
Ans. A company paying for its employees on business conferences and business trips but not
benefitting from lower rates. On the contrary, the company’s money is being spent on the
personal benefits of the travellers. It is ethical because the business will gain good will and
have a good reputation with the customers since they will personally market the company’s
product.