The Practice of Using Dynamic Pricing Was Started in the 1980’s

question 36

Multiple Choice

The practice of using dynamic pricing was started in the 1980’s by American Airlines as an effort to compete with a now out-of-business discounter airline, People’s Express. Dynamic pricing then moved to other industries, including hotels and car rental companies, but only became popular when e-commerce arrived.
You are a consultant to a number of different organizations that use dynamic pricing, including American Airlines, St. Louis Cardinals, Coca Cola, and Marriott International. You are advising your clients of the use of dynamic pricing. Here are some questions that they have raised:
-Which of the following statements about dynamic pricing is false?

• A)A Revenue Optimization System is an industry example of dynamic pricing
• B)Dynamic pricing is a pricing strategy where the price of a product changes frequently based on complex algorithms
• C)Prices can go down as well as up
• D)Using dynamic pricing,sellers and service providers monitor changes in prices of competitors' goods

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Definitions:

White Knight

A corporation or individual that acquires a corporation on the verge of being taken over by forces deemed undesirable by the company's board or management.

Hostile Takeover

An acquisition attempt by a company or investor to acquire another company against the wishes of the target company's management and board of directors.

Joint Venture

Typically, an agreement between firms to create a separate, co-owned entity established to pursue a joint goal.

Existing Firms

Companies or enterprises that have been established and are currently operative in the marketplace.