Copy of BUSI103 Exam 1 Review Questions - Google Docs

Strategic Pricing

The process of setting prices based on a product's perceived value, market demand, and competition.

Willingness to Pay (WTP)

The maximum price that a consumer is willing to pay for a good or service.

Value Stick framework

A tool to analyze how different pricing strategies affect value creation, customer acquisition, and overall profitability.

Trade-offs in pricing strategies

The compromises that must be made between short-term gains, long-term customer loyalty, exclusivity, and market penetration.

Cost structure

The relationship between fixed and variable costs in a business, which affects pricing strategies and profitability.

Fixed Costs

Costs that do not change with the level of output, such as rent or salaries.

Variable Costs

Costs that vary directly with the level of production, such as materials or labor.

Hidden Costs of Remote Work

Unanticipated expenses related to remote work, such as increased tech costs, onboarding challenges, and employee engagement issues.

Onboarding challenges

Difficulties faced by companies in integrating new employees remotely, affecting their productivity and adaptation.

Sustainability in Cost Leadership

The practice of incorporating eco-friendly processes into business strategies while maintaining a competitive pricing advantage.

Regulatory pressure

Government or institutional demands that compel businesses to comply with laws, which can affect cost structures and operations.

Consumer expectations in sustainability

The growing demand from consumers for businesses to adopt sustainable practices, which can impact a company's marketing and operational strategies.

What is the Value Stick?

A visual framework that measures the total value a company creates by examining the difference between willingness to pay (WTP) and willingness to sell (WTS).

How can businesses increase WTP?

By improving product or service quality, offering complementary products or services, and leveraging network effects.

How can businesses decrease WTS?

By increasing compensation or making jobs more attractive through better working conditions, flexibility, or career development opportunities.