Class Notes (1,100,000)
CA (620,000)
UOttawa (30,000)
ADM (3,000)
Lecture 9

ADM3322 Lecture 9: Chapter 6 - Setting Prices and Implementing Revenue Management


Department
Administration
Course Code
ADM 3322
Professor
Marzena Cedzynski
Lecture
9

This preview shows pages 1-3. to view the full 26 pages of the document.
!
!"#$%&'"()!'")%!!%*+,-%).%"-,*%.)$#"(%+,/0).+"#+%0,%.
!"#$%&#'&()%&*+,-&%,%.%+(&*/&.0"1%(#+2&.#3&()0(&2%+%"0(%'&"%4%+5%
!"#$#+2&0,'*&#+4*,4%'&1+*6#+2&*5"&$5'(*.%"'&
!
789&&&&://%$(#4%&!"#$#+2 #'&;%+("0,&(*&<#+0+$#0,&=5$$%''
78>&&&&&&!"#$#+2&=("0(%2-&=(0+?'&*+&@)"%%&A%2'
78B&&&&C%4%+5%&D0+02%.%+(E&F)0(&#(&#'&0+?&G*6&#(&F*"1'
78H&&&&:()#$0,&;*+$%"+' #+&=%"4#$%&!"#$#+2
78I&&&&!5((#+2&=%"4#$%&!"#$#+2&#+(*&!"0$(#$%
*1#2+%")3)'4+5,/%)
!
J50,#(-&*/&*5"&'%"4#$%&')*5,?&"%/,%$(&()%&K"#$%
!
L/&6%&#+$"%0'%&K"#$%&6%&)04%&(*&.01%&()0(&$)0+2%&(*&()%&"%'(&*/&()%&.0"1%(#+2&.#3&
!
;*.K0+#%'&$0+&M5#,?&?%.0+?&M-&)04#+2&%+*52)&"%4%+5%&(*&$*4%"&()%&$*'('&N
F)%+&$*.K0+#%'&)04%&"%'("#$(%?&$0K0$#(-&%828&'K*"(#+2&%4%+(8&@)%+&()%&$*.K0+-&6#,,&("-&
(*&0(("0$(&.03&K%*K,%&(*&*M(0#+&0&O<5,,&)*5'%O8&@)%-&K"*4#?%&$*'(5.%"'&6#()&%3K%"#%+$%&
N
6789:);<=>?:)
!
3@A)%!!%*+,-%)2",*,/0),.)*%/+"#5)+')!,/#/*,#5).4**%..
P-&%+$*5"02#+2&+%6&5'%"'&(*&5'%&0+?&0?0K(&()%&M"0+?&N
6789:8?B)4C<D)6>C<
!
3@E)2",*,/0).+"#+%0F).+#/;.)'/)+1"%%)5%0.
!
;*'('Q&$*.K%(#(#*+Q&*MR%$(#4%'Q&40,5%'
!
@)%&$*.K0+#%'&()0(&K*'#(#*+&()%.'%,4%'&()%-&)04%&$*.K%(#(#4%&0?40+(02%
!
:828&S.0T*+&0?0K('&,%0?%"&'("0(%2-&*"&,*''U,%0?%"&'("0(%2-8&N
L+&$,0''&4#?%*E&V%//&P%T*'
!
+G<)2D8H8?B)+D8IJ:
:.K)0'#T%'&%3K%+'%&$0(%2*"#%'&W0"M#("0"-&*4%")%0?'&0,,*$0(#*+XN
D0-&"%'5,(&#+&"%?5$#+2&40,5%&2%+%"0(%?&/*"&$5'(*.%"'N
@"0?#(#*+0,&$*'(#+2 0KK"*0$)
!
A#+1&"%'*5"$%&%3K%+'%' (*&40"#%(-&0+?&$*.K,%3#(-&*/&2**?'Y'%"4#$%'&K"*?5$%?N
Z#%,?'&0$$5"0(%&$*'(&#+/*".0(#*+N
S$(#4#(-UM0'%?&$*'(#+2 WSP;X&.0+02%.%+(&'-'(%.'
!
*JCKL6>C<:)2D8H8?B
[0,5%&%3$)0+2%&6#,,&+*(&(01%&K,0$%&5+,%''&$5'(*.%"&'%%'&K*'#(#4%&+%(&40,5% #+&("0+'0$(#*+
!
\%(&[0,5%&]&
.#+5'&WUX&&
S,,&!%"$%#4%?&P%+%/#(' (*&;5'(*.%"&W^"*''&[0,5%X&
->97<L6>C<:)2D8H8?B
S,,&!%"$%#4%?&_5(,0-' WD*+%-Q&@#.%Q&D%+(0,Y!)-'#$0,&://*"(X
F#()&()#'&%`50(#*+&-*5&$0+&%#()%"&#+$"%0'%&()%&M%+%/#('&*"&"%?5$%&()%&*5(,0-'&(*&#+$"%0'%&()%&+%(&
40,5%8&
!
D*+%(0"-&K"#$%&#'&+*(&*+,-&K%"$%#4%?&*5(,0-&#+&K5"$)0'#+2Q&5'#+2&0&'%"4#$%
!
F)%+&,**1#+2&0(&$*.K%(#+2&'%"4#$%'Q&$5'(*.%"'&0"%&.0#+,-&$*.K0"#+2&"%,0(#4%& +%(&40,5%'
!
://%$(#4%&$*..5+#$0(#*+&0+?&K%"'*+0,&N
&&&&%3K,0+0(#*+&(*&$*+4%-&40,5%
C%?5$%&"%,0(%?U.*+%(0"-&$*'('&N
U@#.%&;*'('
U!)-'#$0,&;*'('
U!'-$)*,*2#$0,&WD%+(0,X&;*'('
U=%+'*"-&;*'('&W5+K,%0'0+(&'#2)('Q&'*5+?'Q&/%%,Q&(0'(%'Q&'.%,,'X
C%?5$%&+*+U.*+%(0"-&$*'('N
[%"-&*/(%+&'%"4#$%&$*.K0+#%'&)04%&(*&"%.%.M%"&)*6&(*&$*+4%-&40,5%&(*&$5'(*.%"'
!
$>?>B8?B)2<DH<IK8J?)JM)->97<)
!
!
;<M8?8?B)+JK>9)4C<D)*JCKC
<*"&$,#+#$&;&()%"%&#'&+*+U.*+%(0"-&$*'(&'04%?&)%"%&0+?&()0(&#'&(#.%&N
;,#+#$&;&)0'&M%((%"&*K%"0(#+2&)*5"'N
_+%&*/&()%&M%+%/#('&*/&2*#+2&(*&()%&.*"%&%3K%+'#4%&K,0$%&L/&-*5&0"%&'04#+2&60#(#+2&
(#.%&
!
:'(#.0(%?&60#(#+2&0(&$,#+#$& #'&0&M%+%/#(&0'&6%,,&#/&#('&,%''%"N
!
+D>:8?B)'MM)$J?<K>DN)>?:)/J?L=J?<K>DN)*JCKC
\*+UK"#$%U"%,0(%?&$*'(' */&5'#+2&$*.K%(#+2&0,(%"+0(#4%'&0"%&)#2)N
!%"'*+0,&"%,0(#*+')#K' .0((%"N
=6#($)#+2&$*'(' 0"%&)#2)N
@#.%&0+?&,*$0(#*+ 'K%$#/#$#(-&"%?5$%'&$)*#$%N
!"#$%&;*.K%(#(#*+&#'&C%?5$%? F)%+E
!
*J=I<K8K8J?L6>C<:)2D8H8?B
=5M'(#(5(%&'%"4#$%'&(*&-*5"&'%"4#$%&()0(&#'&040#,0M,%&(*&$5'(*.%"'&
!
3@O)"%-%/4%)$#/#0%$%/+P)&1#+),+),.)#/;)1'&),+)&'"(.
;)0"2%&?#//%"%+(&40,5%&'%2.%+('&?#//%"%+(&K"#$%' /*"&'0.%&K"*?5$(&M0'%?&*+&K"#$%&
'%+'#(#4#(-
N
C%4%+5%&.0+02%.%+(&#'&K"#$%&$5'(*.#T0(#*+&
!
C%,0(#4%,-&)#2)&/#3%?&$0K0$#(-N
G#2)&/#3%?&$*'(&'("5$(5"%N
!%"#')0M,%&#+4%+(*"-N
[0"#0M,%&0+?&5+$%"(0#+&?%.0+?N
[0"-#+2&$5'(*.%"&K"#$%&'%+'#(#4#(-N
D*'(&%//%$(#4%&6)%+E
!
F)0(&K"#$%' (*&$)0"2%&6#()#+&%0$)&K"#$%&M5$1%(N
G*6&.0+-&'%"4#$%&5+#(' (*&0,,*$0(%&(*&%0$)&M5$1%(N
C%4%+5%&.0+02%.%+(&5'%'&.0()%.0(#$0,&.*?%,'&(*&%30.#+%&)#'(*"#$0,&?0(0 0+?&"%0,&(#.%
#+/*".0(#*+&(*&?%(%".#+%E
!
C0(%&/%+$%' ?%(%"&$5'(*.%"'&6#,,#+2&(*&K0-&.*"%&/"*.&("0?#+2&?*6+&(*&,*6%"&K"#$%'&W.#+#.#T%&
$*+'5.%"&'5"K,5'X
!
$>Q8=8R8?B)"<S<?7<)MDJ=)#S>89>T9<)*>I>H8KN)>K)>)08S<?)+8=<)
G52%&$)0+2%&#+&?%.0+?&0'&0&"%'5,(&*/&$)0+2%&#+&K"#$%&N
!
2D8H<)%9>CK8H8KN
!
!)-'#$0,&/%+$%'&0"%&K"*?5$(&"%,0(%?
!
:828&,0"2%"&'%0('&*+&0&K,0+%&N
=*.%()#+2&4%"-&(0+2#M,%&N
F%&0??&'*.%()#+2&(*&M0'#$&K"*?5$('
!
S??&(*&0.%+#(#%'
!
=%"4#$%&,%4%,
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)2GNC8H>9
@#.#+2Q&,*$0(#*+&0+?&/,%3#M#,#(-& */&()%&("0+'0$(#*+&#('%,/N
L/&6%&M5-&%828&0&(#$1%(&0)%0?&*/&(#.%&6%&.0-&2%(&0&?#'$*5+(N
F%&K0-&/*"&$*+4%+#%+$%&*/&'%0(&040#,0M#,#(-&,0'(&.#+5(%
!
L/&6%&M5-&0&6%%1&M%/*"%&()%&/,#2)(&()%&K"#$%&.0-M%&4%"-&)#2)N
a%K%+?#+2&*+&,*$0(#*+&0+?&M**1#+2&K"#$%&6#,,&M%&?#//%"%+(&N
;0+&-*5&"%/5+?&()%&(#$1%(b&_"&#/&-*5&$)0+2%Q&$0+$%,&*"&"%'$)%?5,%&()%&/,#2)(bN
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)/J?L2GNC8H>9
@#.%Q&?5"0(#*+Q&0+?&,*$0(#*+&*/&$*+'5.K(#*+N
a%K0"(5"%&*/&-*5"&/,#2)(c
F)%+&0"%&-*5&2*#+2&(*&$*+'5.%b&
!
L/&-*5&/,-&*+&6%%1%+?'&#('&?#//%"%+(&/,#2)(&K"#$%'
!
a%K%+?#+2&*+&,*$0(#*+&'*.%&)*(%,'&6#,,&M%&$)%0K%"&*+&6%%1%+?'&*"&'*.%&$)%0K%"&
?5"#+2&()%&6%%1'
!
@#.%N
F)%"%&#'&()%&)*(%,
!
L+&()%&$#(-Q&*5('#?%
!
@)0(&6#,,&?#//%"&()%&K"#$%
!
A*$0(#*+&*/&$*+'5.K(#*+N
!
Z*5&.0-&M%&%,#2#M,%& /*"&?#'$*5+(&M%$05'%&-*5&0"%&0&/"%`5%+(&/,-%"N
;*"K*"0(%&.%.M%"')#K'&N
;*.#+2&6#()&.*"%&K%*K,%&0'&*KK*'%?&(*&*+%d2"*5K&K0$102%'8N
!
@)%&$*.K0+-&6*5,?&?#4#?%&()%&K"#$%&M5$1%('&N
@)%&?#//%"%+$%&()%&K"#$%&$5'(*.%"&#'&K0-#+2&0+?&6*5,?&)04%&(*&K0-&#/&()%&*K(#*+&60'&+*(&
040#,0M,%&
N
!
"<9>K8?B)2D8H<)67HU<KC)>?:)!<?H<C)KJ);<=>?:)*7DS<
3@V)%+1,*#5)*'/*%"/.),/).%"-,*%)2",*,/0
F%&(%+?&(*&5+?%"%'(#.0(%&$*'(&0+?&40,5%&*/&()%&M5'#+%''N
Customers)are)vulnerable when)service)is)hard)to)evaluate)as)they)assume)that)higher)price)
indicates)better)quality
!
G0"?&(*&5+?%"'(0+?&N
a#//#$5,(&(*&$0,$5,0(%&/5,,&$*'('&#+&0?40+$%&*/&'%"4#$%N
D0+-&'%"4#$%'&)04%&$*.K,%3&K"#$#+2 '$)%?5,%'N
G#??%+&$)0"2%'N
D0+-&1#+?'&*/&/%%'N
J5*(%?&K"#$%&M%#+2&?#//%"%+(&/"*.&0$(50,&K"#$%
!
J5*(%?&K"#$%' +*(&()%&*+,-&K"#$%'N
;5'(*.%"'&/%%,&$*+'("0#+%?Q&%3K,*#(%?N
;5'(*.%"'&/0$%&5+/0#"&/#+%'&0+?&K%+0,(#%'N
[%"-&*/(%+&6%&)04%&(**&.0+-&"%'("#$(#*+'&0+?&"%25,0(#*+'&0+?&6%&.0-&K0-&K%+0,(#%'&0'&
()%"%&0"%&'*&.0+-&()#+2'&6%&0"%&+*(&0M,%&(*&$*+'#?%"&0(&*+$%&
!
@**&.0+-&"5,%' 0+?&"%25,0(#*+'N
%KG8H>9)*J?H<D?C)8?)2D8H8?B
a%'#2+&$,%0"Q&,*2#$0, 0+?&/0#" K"#$%&'$)%?5,%'&0+?&/%+$%'&N
e'%&)#2)&K5M,#')%?&K"#$%'&0+?&K"%'%+(&/%+$%'&0'&*KK*"(5+#(#%'&/*"&?#'$*5+(' "0()%"&()0+&`5*(#+2&
,*6%"&K"#$%'&0+?&5'#+2&/%+$%&0'&M0'#'&(*&#.K*'%&'5"$)0"2%'
N
;*..5+#$0(%&$*+'5.%"&M%+%/#(' */&"%4%+5%&.0+02%.%+(N
e'%&M5+?,#+2 (*&f)#?%g&?#'$*5+('N
@01%&$0"%&*/&,*-0,&$5'(*.%"'N
e'%&'%"4#$%&"%$*4%"- (*&$*.K%+'0(%&/*"&*4%"M**1#+2N
;<C8B?8?B)!>8D?<CC)8?KJ)"<S<?7<)$>?>B<=<?K)
!"#$#+2&("#K*?&.*?%, #'&0&5'%/5,&(*&5'%&/*"&$*'('Q&K"#$%&'%+'#(#4#(-&*/&$5'(*.%"'&0+?&
$*.K%(#(*"'
N
a%K%+?'&*+&6)%()%"&?#'$*5+('&0"%&*//%"%?N
S+-&K'-$)*,*2#$0,&K"#$#+2&K*#+(' 5'%?bN
G*6&.5$)&(*&$)0"2%bN
;*.K,%(#+2&0&(0'1N
S?.#''#*+&(*&0&'%"4#$%&K%"/*".0+$%N
@#.%&M0'%?&W)*5"Q&6%%1Q&.*+()Q&*"&-%0"XN
D*+%(0"-&40,5%&*/&'%"4#$%&?%,#4%"%?&W%828Q&h&$*..#''#*+XN
;*+'5.K(#*+&*/&K)-'#$0,&"%'*5"$%'&&W%828Q&/**?&0+?&M%4%"02%'XN
a#'(0+$%UM0'%?&W%828Q&("0+'K*"(0(#*+XN
F)0(&M0'#'&/*"&K"#$#+2b&N
=%"4#$%&K"*4#?%" *"&'K%$#0,#'(&#+(%".%?#0"#%'N
F)*&')*5,?&$*,,%$(&K0-.%+(bN
A*$0(#*+&0(&6)#$)&()%&'%"4#$%&#'&?%,#4%"%?N
;*+4%+#%+(,-U,*$0(%?&"%(0#,&*5(,%(&*"&#+(%".%?#0"-&W%828Q&M0+1XN
!5"$)0'%"i'&)*.%&WM-&.0#,YK)*+%Y#+(%"+%(XN
F)%"%&')*5,?&K0-.%+(&M%&.0?%bN
L+&0?40+$%N
_+$%&'%"4#$%&?%,#4%"-&)0'&M%%+&$*.K,%(%?N
F)%+&')*5,?&K0-.%+(&M%&.0?%bN
;0')&Y&;)%`5%N
@*1%+'&*"&4*5$)%"'N
a%M#(&;0"?&Y&;"%?#(&;0"?N
=(*"%?&40,5%&$0"?N
:U'-'(%.&W%828Q&K0-K0,XN
G*6&')*5,?&K0-.%+(&M%&.0?%bN
C%,0(%&()%&K"#$%&(*&()0(&*/&$*.K%(#+2&K"*?5$('N
e'%&'0,%'K%*K,%&0+?&$5'(*.%"&'%"4#$%&"%K"%'%+(0(#4%'N
^**?&'#2+02%&0(&"%(0#,& K*#+('N
:+'5"%&K"#$%&#'&0$$5"0(%&0+?&#+(%,,#2#M,%N
G*6&(*&$*..5+#$0(%&K"#$%'bN
27KK8?B).<DS8H<)2D8H8?B)8?KJ)2D>HK8H<
.4$$#"F)'!)*1#2+%")3
^%+%"0(#+2&"%4%+5%'&0+?&K"*/#(Q&M5#,?#+2&?%.0+?Q&0+?&?%4%,*K#+2&5'%"&M0'%N
!"#$#+2&*MR%$(#4%'&$0+&#+$,5?%
;*'(UM0'%?&K"#$#+2N
;*.K%(#(#*+UM0'%?&K"#$#+2N
[0,5%UM0'%?&K"#$#+2N
@)"%%&.0#+&/*5+?0(#*+'&(*&K"#$#+2&0&'%"4#$%
<#".&.5'(&M%&060"%&*/&$*.K%(#(#4%&K"#$#+2&M5(&.0-&M%&)0"?%"&(*&$*.K0"%&/*"&'%"4#$%'&()0+&/*"&2**?'
D03#.#T%'&"%4%+5%&/"*.&0&2#4%+&$0K0$#(-&0(&0&K*#+(&#+&(#.%
D0+02%&?%.0+?&0+?&'%(&K"#$%'&/*"&%0$)&'%2.%+(&$,*'%"&(*&K%"$%#4%?&40,5%
e'%&*/&"0(%&/%+$%'
C%4%+5%&.0+02%.%+(&
;*.K,%3&K"#$#+2&'$)%?5,%'
e+/0#"+%''&0+?&.#'"%K"%'%+(0(#*+&#+&0?4%"(#'#+2&
G#??%+&$)0"2%'
@**&.0+-&"5,%'&0+?&"%25,0(#*+'
:()#$0,&#''5%'&#+&K"#$#+2
Lecture'9:'Chapter'6'/Setting'Prices'and'Implementing'
Revenue'Management''
@)5"'?0-Q&_$(*M%"& jQ&>k9I
jEHB&SD

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

!
!"#$%&'"()!'")%!!%*+,-%).%"-,*%.)$#"(%+,/0).+"#+%0,%.
!"#$%&#'&()%&*+,-&%,%.%+(&*/&.0"1%(#+2&.#3&()0(&2%+%"0(%'&"%4%+5%
!"#$#+2&0,'*&#+4*,4%'&1+*6#+2&*5"&$5'(*.%"'&
!
789&&&&://%$(#4%&!"#$#+2 #'&;%+("0,&(*&<#+0+$#0,&=5$$%''
78>&&&&&&!"#$#+2&=("0(%2-&=(0+?'&*+&@)"%%&A%2'
78B&&&&C%4%+5%&D0+02%.%+(E&F)0(&#(&#'&0+?&G*6&#(&F*"1'
78H&&&&:()#$0,&;*+$%"+' #+&=%"4#$%&!"#$#+2
78I&&&&!5((#+2&=%"4#$%&!"#$#+2&#+(*&!"0$(#$%
*1#2+%")3)'4+5,/%)
!
J50,#(-&*/&*5"&'%"4#$%&')*5,?&"%/,%$(&()%&K"#$%
!
L/&6%&#+$"%0'%&K"#$%&6%&)04%&(*&.01%&()0(&$)0+2%&(*&()%&"%'(&*/&()%&.0"1%(#+2&.#3&
!
;*.K0+#%'&$0+&M5#,?&?%.0+?&M-&)04#+2&%+*52)&"%4%+5%&(*&$*4%"&()%&$*'('&N
F)%+&$*.K0+#%'&)04%&"%'("#$(%?&$0K0$#(-&%828&'K*"(#+2&%4%+(8&@)%+&()%&$*.K0+-&6#,,&("-&
(*&0(("0$(&.03&K%*K,%&(*&*M(0#+&0&O<5,,&)*5'%O8&@)%-&K"*4#?%&$*'(5.%"'&6#()&%3K%"#%+$%&
N
6789:);<=>?:)
!
3@A)%!!%*+,-%)2",*,/0),.)*%/+"#5)+')!,/#/*,#5).4**%..
P-&%+$*5"02#+2&+%6&5'%"'&(*&5'%&0+?&0?0K(&()%&M"0+?&N
6789:8?B)4C<D)6>C<
!
3@E)2",*,/0).+"#+%0F).+#/;.)'/)+1"%%)5%0.
!
;*'('Q&$*.K%(#(#*+Q&*MR%$(#4%'Q&40,5%'
!
@)%&$*.K0+#%'&()0(&K*'#(#*+&()%.'%,4%'&()%-&)04%&$*.K%(#(#4%&0?40+(02%
!
:828&S.0T*+&0?0K('&,%0?%"&'("0(%2-&*"&,*''U,%0?%"&'("0(%2-8&N
L+&$,0''&4#?%*E&V%//&P%T*'
!
+G<)2D8H8?B)+D8IJ:
:.K)0'#T%'&%3K%+'%&$0(%2*"#%'&W0"M#("0"-&*4%")%0?'&0,,*$0(#*+XN
D0-&"%'5,(&#+&"%?5$#+2&40,5%&2%+%"0(%?&/*"&$5'(*.%"'N
@"0?#(#*+0,&$*'(#+2 0KK"*0$)
!
A#+1&"%'*5"$%&%3K%+'%' (*&40"#%(-&0+?&$*.K,%3#(-&*/&2**?'Y'%"4#$%'&K"*?5$%?N
Z#%,?'&0$$5"0(%&$*'(&#+/*".0(#*+N
S$(#4#(-UM0'%?&$*'(#+2 WSP;X&.0+02%.%+(&'-'(%.'
!
*JCKL6>C<:)2D8H8?B
[0,5%&%3$)0+2%&6#,,&+*(&(01%&K,0$%&5+,%''&$5'(*.%"&'%%'&K*'#(#4%&+%(&40,5% #+&("0+'0$(#*+
!
\%(&[0,5%&]&
.#+5'&WUX&&
S,,&!%"$%#4%?&P%+%/#(' (*&;5'(*.%"&W^"*''&[0,5%X&
->97<L6>C<:)2D8H8?B
S,,&!%"$%#4%?&_5(,0-' WD*+%-Q&@#.%Q&D%+(0,Y!)-'#$0,&://*"(X
F#()&()#'&%`50(#*+&-*5&$0+&%#()%"&#+$"%0'%&()%&M%+%/#('&*"&"%?5$%&()%&*5(,0-'&(*&#+$"%0'%&()%&+%(&
40,5%8&
!
D*+%(0"-&K"#$%&#'&+*(&*+,-&K%"$%#4%?&*5(,0-&#+&K5"$)0'#+2Q&5'#+2&0&'%"4#$%
!
F)%+&,**1#+2&0(&$*.K%(#+2&'%"4#$%'Q&$5'(*.%"'&0"%&.0#+,-&$*.K0"#+2&"%,0(#4%& +%(&40,5%'
!
://%$(#4%&$*..5+#$0(#*+&0+?&K%"'*+0,&N
&&&&%3K,0+0(#*+&(*&$*+4%-&40,5%
C%?5$%&"%,0(%?U.*+%(0"-&$*'('&N
U@#.%&;*'('
U!)-'#$0,&;*'('
U!'-$)*,*2#$0,&WD%+(0,X&;*'('
U=%+'*"-&;*'('&W5+K,%0'0+(&'#2)('Q&'*5+?'Q&/%%,Q&(0'(%'Q&'.%,,'X
C%?5$%&+*+U.*+%(0"-&$*'('N
[%"-&*/(%+&'%"4#$%&$*.K0+#%'&)04%&(*&"%.%.M%"&)*6&(*&$*+4%-&40,5%&(*&$5'(*.%"'
!
$>?>B8?B)2<DH<IK8J?)JM)->97<)
!
!
;<M8?8?B)+JK>9)4C<D)*JCKC
<*"&$,#+#$&;&()%"%&#'&+*+U.*+%(0"-&$*'(&'04%?&)%"%&0+?&()0(&#'&(#.%&N
;,#+#$&;&)0'&M%((%"&*K%"0(#+2&)*5"'N
_+%&*/&()%&M%+%/#('&*/&2*#+2&(*&()%&.*"%&%3K%+'#4%&K,0$%&L/&-*5&0"%&'04#+2&60#(#+2&
(#.%&
!
:'(#.0(%?&60#(#+2&0(&$,#+#$& #'&0&M%+%/#(&0'&6%,,&#/&#('&,%''%"N
!
+D>:8?B)'MM)$J?<K>DN)>?:)/J?L=J?<K>DN)*JCKC
\*+UK"#$%U"%,0(%?&$*'(' */&5'#+2&$*.K%(#+2&0,(%"+0(#4%'&0"%&)#2)N
!%"'*+0,&"%,0(#*+')#K' .0((%"N
=6#($)#+2&$*'(' 0"%&)#2)N
@#.%&0+?&,*$0(#*+ 'K%$#/#$#(-&"%?5$%'&$)*#$%N
!"#$%&;*.K%(#(#*+&#'&C%?5$%? F)%+E
!
*J=I<K8K8J?L6>C<:)2D8H8?B
=5M'(#(5(%&'%"4#$%'&(*&-*5"&'%"4#$%&()0(&#'&040#,0M,%&(*&$5'(*.%"'&
!
3@O)"%-%/4%)$#/#0%$%/+P)&1#+),+),.)#/;)1'&),+)&'"(.
;)0"2%&?#//%"%+(&40,5%&'%2.%+('&?#//%"%+(&K"#$%' /*"&'0.%&K"*?5$(&M0'%?&*+&K"#$%&
'%+'#(#4#(-
N
C%4%+5%&.0+02%.%+(&#'&K"#$%&$5'(*.#T0(#*+&
!
C%,0(#4%,-&)#2)&/#3%?&$0K0$#(-N
G#2)&/#3%?&$*'(&'("5$(5"%N
!%"#')0M,%&#+4%+(*"-N
[0"#0M,%&0+?&5+$%"(0#+&?%.0+?N
[0"-#+2&$5'(*.%"&K"#$%&'%+'#(#4#(-N
D*'(&%//%$(#4%&6)%+E
!
F)0(&K"#$%' (*&$)0"2%&6#()#+&%0$)&K"#$%&M5$1%(N
G*6&.0+-&'%"4#$%&5+#(' (*&0,,*$0(%&(*&%0$)&M5$1%(N
C%4%+5%&.0+02%.%+(&5'%'&.0()%.0(#$0,&.*?%,'&(*&%30.#+%&)#'(*"#$0,&?0(0 0+?&"%0,&(#.%
#+/*".0(#*+&(*&?%(%".#+%E
!
C0(%&/%+$%' ?%(%"&$5'(*.%"'&6#,,#+2&(*&K0-&.*"%&/"*.&("0?#+2&?*6+&(*&,*6%"&K"#$%'&W.#+#.#T%&
$*+'5.%"&'5"K,5'X
!
$>Q8=8R8?B)"<S<?7<)MDJ=)#S>89>T9<)*>I>H8KN)>K)>)08S<?)+8=<)
G52%&$)0+2%&#+&?%.0+?&0'&0&"%'5,(&*/&$)0+2%&#+&K"#$%&N
!
2D8H<)%9>CK8H8KN
!
!)-'#$0,&/%+$%'&0"%&K"*?5$(&"%,0(%?
!
:828&,0"2%"&'%0('&*+&0&K,0+%&N
=*.%()#+2&4%"-&(0+2#M,%&N
F%&0??&'*.%()#+2&(*&M0'#$&K"*?5$('
!
S??&(*&0.%+#(#%'
!
=%"4#$%&,%4%,
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)2GNC8H>9
@#.#+2Q&,*$0(#*+&0+?&/,%3#M#,#(-& */&()%&("0+'0$(#*+&#('%,/N
L/&6%&M5-&%828&0&(#$1%(&0)%0?&*/&(#.%&6%&.0-&2%(&0&?#'$*5+(N
F%&K0-&/*"&$*+4%+#%+$%&*/&'%0(&040#,0M#,#(-&,0'(&.#+5(%
!
L/&6%&M5-&0&6%%1&M%/*"%&()%&/,#2)(&()%&K"#$%&.0-M%&4%"-&)#2)N
a%K%+?#+2&*+&,*$0(#*+&0+?&M**1#+2&K"#$%&6#,,&M%&?#//%"%+(&N
;0+&-*5&"%/5+?&()%&(#$1%(b&_"&#/&-*5&$)0+2%Q&$0+$%,&*"&"%'$)%?5,%&()%&/,#2)(bN
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)/J?L2GNC8H>9
@#.%Q&?5"0(#*+Q&0+?&,*$0(#*+&*/&$*+'5.K(#*+N
a%K0"(5"%&*/&-*5"&/,#2)(c
F)%+&0"%&-*5&2*#+2&(*&$*+'5.%b&
!
L/&-*5&/,-&*+&6%%1%+?'&#('&?#//%"%+(&/,#2)(&K"#$%'
!
a%K%+?#+2&*+&,*$0(#*+&'*.%&)*(%,'&6#,,&M%&$)%0K%"&*+&6%%1%+?'&*"&'*.%&$)%0K%"&
?5"#+2&()%&6%%1'
!
@#.%N
F)%"%&#'&()%&)*(%,
!
L+&()%&$#(-Q&*5('#?%
!
@)0(&6#,,&?#//%"&()%&K"#$%
!
A*$0(#*+&*/&$*+'5.K(#*+N
!
Z*5&.0-&M%&%,#2#M,%& /*"&?#'$*5+(&M%$05'%&-*5&0"%&0&/"%`5%+(&/,-%"N
;*"K*"0(%&.%.M%"')#K'&N
;*.#+2&6#()&.*"%&K%*K,%&0'&*KK*'%?&(*&*+%d2"*5K&K0$102%'8N
!
@)%&$*.K0+-&6*5,?&?#4#?%&()%&K"#$%&M5$1%('&N
@)%&?#//%"%+$%&()%&K"#$%&$5'(*.%"&#'&K0-#+2&0+?&6*5,?&)04%&(*&K0-&#/&()%&*K(#*+&60'&+*(&
040#,0M,%&
N
!
"<9>K8?B)2D8H<)67HU<KC)>?:)!<?H<C)KJ);<=>?:)*7DS<
3@V)%+1,*#5)*'/*%"/.),/).%"-,*%)2",*,/0
F%&(%+?&(*&5+?%"%'(#.0(%&$*'(&0+?&40,5%&*/&()%&M5'#+%''N
Customers)are)vulnerable when)service)is)hard)to)evaluate)as)they)assume)that)higher)price)
indicates)better)quality
!
G0"?&(*&5+?%"'(0+?&N
a#//#$5,(&(*&$0,$5,0(%&/5,,&$*'('&#+&0?40+$%&*/&'%"4#$%N
D0+-&'%"4#$%'&)04%&$*.K,%3&K"#$#+2 '$)%?5,%'N
G#??%+&$)0"2%'N
D0+-&1#+?'&*/&/%%'N
J5*(%?&K"#$%&M%#+2&?#//%"%+(&/"*.&0$(50,&K"#$%
!
J5*(%?&K"#$%' +*(&()%&*+,-&K"#$%'N
;5'(*.%"'&/%%,&$*+'("0#+%?Q&%3K,*#(%?N
;5'(*.%"'&/0$%&5+/0#"&/#+%'&0+?&K%+0,(#%'N
[%"-&*/(%+&6%&)04%&(**&.0+-&"%'("#$(#*+'&0+?&"%25,0(#*+'&0+?&6%&.0-&K0-&K%+0,(#%'&0'&
()%"%&0"%&'*&.0+-&()#+2'&6%&0"%&+*(&0M,%&(*&$*+'#?%"&0(&*+$%&
!
@**&.0+-&"5,%' 0+?&"%25,0(#*+'N
%KG8H>9)*J?H<D?C)8?)2D8H8?B
a%'#2+&$,%0"Q&,*2#$0, 0+?&/0#" K"#$%&'$)%?5,%'&0+?&/%+$%'&N
e'%&)#2)&K5M,#')%?&K"#$%'&0+?&K"%'%+(&/%+$%'&0'&*KK*"(5+#(#%'&/*"&?#'$*5+(' "0()%"&()0+&`5*(#+2&
,*6%"&K"#$%'&0+?&5'#+2&/%+$%&0'&M0'#'&(*&#.K*'%&'5"$)0"2%'
N
;*..5+#$0(%&$*+'5.%"&M%+%/#(' */&"%4%+5%&.0+02%.%+(N
e'%&M5+?,#+2 (*&f)#?%g&?#'$*5+('N
@01%&$0"%&*/&,*-0,&$5'(*.%"'N
e'%&'%"4#$%&"%$*4%"- (*&$*.K%+'0(%&/*"&*4%"M**1#+2N
;<C8B?8?B)!>8D?<CC)8?KJ)"<S<?7<)$>?>B<=<?K)
!"#$#+2&("#K*?&.*?%, #'&0&5'%/5,&(*&5'%&/*"&$*'('Q&K"#$%&'%+'#(#4#(-&*/&$5'(*.%"'&0+?&
$*.K%(#(*"'
N
a%K%+?'&*+&6)%()%"&?#'$*5+('&0"%&*//%"%?N
S+-&K'-$)*,*2#$0,&K"#$#+2&K*#+(' 5'%?bN
G*6&.5$)&(*&$)0"2%bN
;*.K,%(#+2&0&(0'1N
S?.#''#*+&(*&0&'%"4#$%&K%"/*".0+$%N
@#.%&M0'%?&W)*5"Q&6%%1Q&.*+()Q&*"&-%0"XN
D*+%(0"-&40,5%&*/&'%"4#$%&?%,#4%"%?&W%828Q&h&$*..#''#*+XN
;*+'5.K(#*+&*/&K)-'#$0,&"%'*5"$%'&&W%828Q&/**?&0+?&M%4%"02%'XN
a#'(0+$%UM0'%?&W%828Q&("0+'K*"(0(#*+XN
F)0(&M0'#'&/*"&K"#$#+2b&N
=%"4#$%&K"*4#?%" *"&'K%$#0,#'(&#+(%".%?#0"#%'N
F)*&')*5,?&$*,,%$(&K0-.%+(bN
A*$0(#*+&0(&6)#$)&()%&'%"4#$%&#'&?%,#4%"%?N
;*+4%+#%+(,-U,*$0(%?&"%(0#,&*5(,%(&*"&#+(%".%?#0"-&W%828Q&M0+1XN
!5"$)0'%"i'&)*.%&WM-&.0#,YK)*+%Y#+(%"+%(XN
F)%"%&')*5,?&K0-.%+(&M%&.0?%bN
L+&0?40+$%N
_+$%&'%"4#$%&?%,#4%"-&)0'&M%%+&$*.K,%(%?N
F)%+&')*5,?&K0-.%+(&M%&.0?%bN
;0')&Y&;)%`5%N
@*1%+'&*"&4*5$)%"'N
a%M#(&;0"?&Y&;"%?#(&;0"?N
=(*"%?&40,5%&$0"?N
:U'-'(%.&W%828Q&K0-K0,XN
G*6&')*5,?&K0-.%+(&M%&.0?%bN
C%,0(%&()%&K"#$%&(*&()0(&*/&$*.K%(#+2&K"*?5$('N
e'%&'0,%'K%*K,%&0+?&$5'(*.%"&'%"4#$%&"%K"%'%+(0(#4%'N
^**?&'#2+02%&0(&"%(0#,& K*#+('N
:+'5"%&K"#$%&#'&0$$5"0(%&0+?&#+(%,,#2#M,%N
G*6&(*&$*..5+#$0(%&K"#$%'bN
27KK8?B).<DS8H<)2D8H8?B)8?KJ)2D>HK8H<
.4$$#"F)'!)*1#2+%")3
^%+%"0(#+2&"%4%+5%'&0+?&K"*/#(Q&M5#,?#+2&?%.0+?Q&0+?&?%4%,*K#+2&5'%"&M0'%N
!"#$#+2&*MR%$(#4%'&$0+&#+$,5?%
;*'(UM0'%?&K"#$#+2N
;*.K%(#(#*+UM0'%?&K"#$#+2N
[0,5%UM0'%?&K"#$#+2N
@)"%%&.0#+&/*5+?0(#*+'&(*&K"#$#+2&0&'%"4#$%
<#".&.5'(&M%&060"%&*/&$*.K%(#(#4%&K"#$#+2&M5(&.0-&M%&)0"?%"&(*&$*.K0"%&/*"&'%"4#$%'&()0+&/*"&2**?'
D03#.#T%'&"%4%+5%&/"*.&0&2#4%+&$0K0$#(-&0(&0&K*#+(&#+&(#.%
D0+02%&?%.0+?&0+?&'%(&K"#$%'&/*"&%0$)&'%2.%+(&$,*'%"&(*&K%"$%#4%?&40,5%
e'%&*/&"0(%&/%+$%'
C%4%+5%&.0+02%.%+(&
;*.K,%3&K"#$#+2&'$)%?5,%'
e+/0#"+%''&0+?&.#'"%K"%'%+(0(#*+&#+&0?4%"(#'#+2&
G#??%+&$)0"2%'
@**&.0+-&"5,%'&0+?&"%25,0(#*+'
:()#$0,&#''5%'&#+&K"#$#+2
@)5"'?0-Q&_$(*M%"& jQ&>k9I jEHB&SD

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

!
!"#$%&'"()!'")%!!%*+,-%).%"-,*%.)$#"(%+,/0).+"#+%0,%.
!"#$%&#'&()%&*+,-&%,%.%+(&*/&.0"1%(#+2&.#3&()0(&2%+%"0(%'&"%4%+5%
!"#$#+2&0,'*&#+4*,4%'&1+*6#+2&*5"&$5'(*.%"'&
!
789&&&&://%$(#4%&!"#$#+2 #'&;%+("0,&(*&<#+0+$#0,&=5$$%''
78>&&&&&&!"#$#+2&=("0(%2-&=(0+?'&*+&@)"%%&A%2'
78B&&&&C%4%+5%&D0+02%.%+(E&F)0(&#(&#'&0+?&G*6&#(&F*"1'
78H&&&&:()#$0,&;*+$%"+' #+&=%"4#$%&!"#$#+2
78I&&&&!5((#+2&=%"4#$%&!"#$#+2&#+(*&!"0$(#$%
*1#2+%")3)'4+5,/%)
!
J50,#(-&*/&*5"&'%"4#$%&')*5,?&"%/,%$(&()%&K"#$%
!
L/&6%&#+$"%0'%&K"#$%&6%&)04%&(*&.01%&()0(&$)0+2%&(*&()%&"%'(&*/&()%&.0"1%(#+2&.#3&
!
;*.K0+#%'&$0+&M5#,?&?%.0+?&M-&)04#+2&%+*52)&"%4%+5%&(*&$*4%"&()%&$*'('&N
F)%+&$*.K0+#%'&)04%&"%'("#$(%?&$0K0$#(-&%828&'K*"(#+2&%4%+(8&@)%+&()%&$*.K0+-&6#,,&("-&
(*&0(("0$(&.03&K%*K,%&(*&*M(0#+&0&O<5,,&)*5'%O8&@)%-&K"*4#?%&$*'(5.%"'&6#()&%3K%"#%+$%&
N
6789:);<=>?:)
!
3@A)%!!%*+,-%)2",*,/0),.)*%/+"#5)+')!,/#/*,#5).4**%..
P-&%+$*5"02#+2&+%6&5'%"'&(*&5'%&0+?&0?0K(&()%&M"0+?&N
6789:8?B)4C<D)6>C<
!
3@E)2",*,/0).+"#+%0F).+#/;.)'/)+1"%%)5%0.
!
;*'('Q&$*.K%(#(#*+Q&*MR%$(#4%'Q&40,5%'
!
@)%&$*.K0+#%'&()0(&K*'#(#*+&()%.'%,4%'&()%-&)04%&$*.K%(#(#4%&0?40+(02%
!
:828&S.0T*+&0?0K('&,%0?%"&'("0(%2-&*"&,*''U,%0?%"&'("0(%2-8&N
L+&$,0''&4#?%*E&V%//&P%T*'
!
+G<)2D8H8?B)+D8IJ:
:.K)0'#T%'&%3K%+'%&$0(%2*"#%'&W0"M#("0"-&*4%")%0?'&0,,*$0(#*+XN
D0-&"%'5,(&#+&"%?5$#+2&40,5%&2%+%"0(%?&/*"&$5'(*.%"'N
@"0?#(#*+0,&$*'(#+2 0KK"*0$)
!
A#+1&"%'*5"$%&%3K%+'%' (*&40"#%(-&0+?&$*.K,%3#(-&*/&2**?'Y'%"4#$%'&K"*?5$%?N
Z#%,?'&0$$5"0(%&$*'(&#+/*".0(#*+N
S$(#4#(-UM0'%?&$*'(#+2 WSP;X&.0+02%.%+(&'-'(%.'
!
*JCKL6>C<:)2D8H8?B
[0,5%&%3$)0+2%&6#,,&+*(&(01%&K,0$%&5+,%''&$5'(*.%"&'%%'&K*'#(#4%&+%(&40,5% #+&("0+'0$(#*+
!
\%(&[0,5%&]&
.#+5'&WUX&&
S,,&!%"$%#4%?&P%+%/#(' (*&;5'(*.%"&W^"*''&[0,5%X&
->97<L6>C<:)2D8H8?B
S,,&!%"$%#4%?&_5(,0-' WD*+%-Q&@#.%Q&D%+(0,Y!)-'#$0,&://*"(X
F#()&()#'&%`50(#*+&-*5&$0+&%#()%"&#+$"%0'%&()%&M%+%/#('&*"&"%?5$%&()%&*5(,0-'&(*&#+$"%0'%&()%&+%(&
40,5%8&
!
D*+%(0"-&K"#$%&#'&+*(&*+,-&K%"$%#4%?&*5(,0-&#+&K5"$)0'#+2Q&5'#+2&0&'%"4#$%
!
F)%+&,**1#+2&0(&$*.K%(#+2&'%"4#$%'Q&$5'(*.%"'&0"%&.0#+,-&$*.K0"#+2&"%,0(#4%& +%(&40,5%'
!
://%$(#4%&$*..5+#$0(#*+&0+?&K%"'*+0,&N
&&&&%3K,0+0(#*+&(*&$*+4%-&40,5%
C%?5$%&"%,0(%?U.*+%(0"-&$*'('&N
U@#.%&;*'('
U!)-'#$0,&;*'('
U!'-$)*,*2#$0,&WD%+(0,X&;*'('
U=%+'*"-&;*'('&W5+K,%0'0+(&'#2)('Q&'*5+?'Q&/%%,Q&(0'(%'Q&'.%,,'X
C%?5$%&+*+U.*+%(0"-&$*'('N
[%"-&*/(%+&'%"4#$%&$*.K0+#%'&)04%&(*&"%.%.M%"&)*6&(*&$*+4%-&40,5%&(*&$5'(*.%"'
!
$>?>B8?B)2<DH<IK8J?)JM)->97<)
!
!
;<M8?8?B)+JK>9)4C<D)*JCKC
<*"&$,#+#$&;&()%"%&#'&+*+U.*+%(0"-&$*'(&'04%?&)%"%&0+?&()0(&#'&(#.%&N
;,#+#$&;&)0'&M%((%"&*K%"0(#+2&)*5"'N
_+%&*/&()%&M%+%/#('&*/&2*#+2&(*&()%&.*"%&%3K%+'#4%&K,0$%&L/&-*5&0"%&'04#+2&60#(#+2&
(#.%&
!
:'(#.0(%?&60#(#+2&0(&$,#+#$& #'&0&M%+%/#(&0'&6%,,&#/&#('&,%''%"N
!
+D>:8?B)'MM)$J?<K>DN)>?:)/J?L=J?<K>DN)*JCKC
\*+UK"#$%U"%,0(%?&$*'(' */&5'#+2&$*.K%(#+2&0,(%"+0(#4%'&0"%&)#2)N
!%"'*+0,&"%,0(#*+')#K' .0((%"N
=6#($)#+2&$*'(' 0"%&)#2)N
@#.%&0+?&,*$0(#*+ 'K%$#/#$#(-&"%?5$%'&$)*#$%N
!"#$%&;*.K%(#(#*+&#'&C%?5$%? F)%+E
!
*J=I<K8K8J?L6>C<:)2D8H8?B
=5M'(#(5(%&'%"4#$%'&(*&-*5"&'%"4#$%&()0(&#'&040#,0M,%&(*&$5'(*.%"'&
!
3@O)"%-%/4%)$#/#0%$%/+P)&1#+),+),.)#/;)1'&),+)&'"(.
;)0"2%&?#//%"%+(&40,5%&'%2.%+('&?#//%"%+(&K"#$%' /*"&'0.%&K"*?5$(&M0'%?&*+&K"#$%&
'%+'#(#4#(-
N
C%4%+5%&.0+02%.%+(&#'&K"#$%&$5'(*.#T0(#*+&
!
C%,0(#4%,-&)#2)&/#3%?&$0K0$#(-N
G#2)&/#3%?&$*'(&'("5$(5"%N
!%"#')0M,%&#+4%+(*"-N
[0"#0M,%&0+?&5+$%"(0#+&?%.0+?N
[0"-#+2&$5'(*.%"&K"#$%&'%+'#(#4#(-N
D*'(&%//%$(#4%&6)%+E
!
F)0(&K"#$%' (*&$)0"2%&6#()#+&%0$)&K"#$%&M5$1%(N
G*6&.0+-&'%"4#$%&5+#(' (*&0,,*$0(%&(*&%0$)&M5$1%(N
C%4%+5%&.0+02%.%+(&5'%'&.0()%.0(#$0,&.*?%,'&(*&%30.#+%&)#'(*"#$0,&?0(0 0+?&"%0,&(#.%
#+/*".0(#*+&(*&?%(%".#+%E
!
C0(%&/%+$%' ?%(%"&$5'(*.%"'&6#,,#+2&(*&K0-&.*"%&/"*.&("0?#+2&?*6+&(*&,*6%"&K"#$%'&W.#+#.#T%&
$*+'5.%"&'5"K,5'X
!
$>Q8=8R8?B)"<S<?7<)MDJ=)#S>89>T9<)*>I>H8KN)>K)>)08S<?)+8=<)
G52%&$)0+2%&#+&?%.0+?&0'&0&"%'5,(&*/&$)0+2%&#+&K"#$%&N
!
2D8H<)%9>CK8H8KN
!
!)-'#$0,&/%+$%'&0"%&K"*?5$(&"%,0(%?
!
:828&,0"2%"&'%0('&*+&0&K,0+%&N
=*.%()#+2&4%"-&(0+2#M,%&N
F%&0??&'*.%()#+2&(*&M0'#$&K"*?5$('
!
S??&(*&0.%+#(#%'
!
=%"4#$%&,%4%,
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)2GNC8H>9
@#.#+2Q&,*$0(#*+&0+?&/,%3#M#,#(-& */&()%&("0+'0$(#*+&#('%,/N
L/&6%&M5-&%828&0&(#$1%(&0)%0?&*/&(#.%&6%&.0-&2%(&0&?#'$*5+(N
F%&K0-&/*"&$*+4%+#%+$%&*/&'%0(&040#,0M#,#(-&,0'(&.#+5(%
!
L/&6%&M5-&0&6%%1&M%/*"%&()%&/,#2)(&()%&K"#$%&.0-M%&4%"-&)#2)N
a%K%+?#+2&*+&,*$0(#*+&0+?&M**1#+2&K"#$%&6#,,&M%&?#//%"%+(&N
;0+&-*5&"%/5+?&()%&(#$1%(b&_"&#/&-*5&$)0+2%Q&$0+$%,&*"&"%'$)%?5,%&()%&/,#2)(bN
!
(<N)*>K<BJD8<C)JM)">K<)!<?H<CP)/J?L2GNC8H>9
@#.%Q&?5"0(#*+Q&0+?&,*$0(#*+&*/&$*+'5.K(#*+N
a%K0"(5"%&*/&-*5"&/,#2)(c
F)%+&0"%&-*5&2*#+2&(*&$*+'5.%b&
!
L/&-*5&/,-&*+&6%%1%+?'&#('&?#//%"%+(&/,#2)(&K"#$%'
!
a%K%+?#+2&*+&,*$0(#*+&'*.%&)*(%,'&6#,,&M%&$)%0K%"&*+&6%%1%+?'&*"&'*.%&$)%0K%"&
?5"#+2&()%&6%%1'
!
@#.%N
F)%"%&#'&()%&)*(%,
!
L+&()%&$#(-Q&*5('#?%
!
@)0(&6#,,&?#//%"&()%&K"#$%
!
A*$0(#*+&*/&$*+'5.K(#*+N
!
Z*5&.0-&M%&%,#2#M,%& /*"&?#'$*5+(&M%$05'%&-*5&0"%&0&/"%`5%+(&/,-%"N
;*"K*"0(%&.%.M%"')#K'&N
;*.#+2&6#()&.*"%&K%*K,%&0'&*KK*'%?&(*&*+%d2"*5K&K0$102%'8N
!
@)%&$*.K0+-&6*5,?&?#4#?%&()%&K"#$%&M5$1%('&N
@)%&?#//%"%+$%&()%&K"#$%&$5'(*.%"&#'&K0-#+2&0+?&6*5,?&)04%&(*&K0-&#/&()%&*K(#*+&60'&+*(&
040#,0M,%&
N
!
"<9>K8?B)2D8H<)67HU<KC)>?:)!<?H<C)KJ);<=>?:)*7DS<
3@V)%+1,*#5)*'/*%"/.),/).%"-,*%)2",*,/0
F%&(%+?&(*&5+?%"%'(#.0(%&$*'(&0+?&40,5%&*/&()%&M5'#+%''N
Customers)are)vulnerable when)service)is)hard)to)evaluate)as)they)assume)that)higher)price)
indicates)better)quality
!
G0"?&(*&5+?%"'(0+?&N
a#//#$5,(&(*&$0,$5,0(%&/5,,&$*'('&#+&0?40+$%&*/&'%"4#$%N
D0+-&'%"4#$%'&)04%&$*.K,%3&K"#$#+2 '$)%?5,%'N
G#??%+&$)0"2%'N
D0+-&1#+?'&*/&/%%'N
J5*(%?&K"#$%&M%#+2&?#//%"%+(&/"*.&0$(50,&K"#$%
!
J5*(%?&K"#$%' +*(&()%&*+,-&K"#$%'N
;5'(*.%"'&/%%,&$*+'("0#+%?Q&%3K,*#(%?N
;5'(*.%"'&/0$%&5+/0#"&/#+%'&0+?&K%+0,(#%'N
[%"-&*/(%+&6%&)04%&(**&.0+-&"%'("#$(#*+'&0+?&"%25,0(#*+'&0+?&6%&.0-&K0-&K%+0,(#%'&0'&
()%"%&0"%&'*&.0+-&()#+2'&6%&0"%&+*(&0M,%&(*&$*+'#?%"&0(&*+$%&
!
@**&.0+-&"5,%' 0+?&"%25,0(#*+'N
%KG8H>9)*J?H<D?C)8?)2D8H8?B
a%'#2+&$,%0"Q&,*2#$0, 0+?&/0#" K"#$%&'$)%?5,%'&0+?&/%+$%'&N
e'%&)#2)&K5M,#')%?&K"#$%'&0+?&K"%'%+(&/%+$%'&0'&*KK*"(5+#(#%'&/*"&?#'$*5+(' "0()%"&()0+&`5*(#+2&
,*6%"&K"#$%'&0+?&5'#+2&/%+$%&0'&M0'#'&(*&#.K*'%&'5"$)0"2%'
N
;*..5+#$0(%&$*+'5.%"&M%+%/#(' */&"%4%+5%&.0+02%.%+(N
e'%&M5+?,#+2 (*&f)#?%g&?#'$*5+('N
@01%&$0"%&*/&,*-0,&$5'(*.%"'N
e'%&'%"4#$%&"%$*4%"- (*&$*.K%+'0(%&/*"&*4%"M**1#+2N
;<C8B?8?B)!>8D?<CC)8?KJ)"<S<?7<)$>?>B<=<?K)
!"#$#+2&("#K*?&.*?%, #'&0&5'%/5,&(*&5'%&/*"&$*'('Q&K"#$%&'%+'#(#4#(-&*/&$5'(*.%"'&0+?&
$*.K%(#(*"'
N
a%K%+?'&*+&6)%()%"&?#'$*5+('&0"%&*//%"%?N
S+-&K'-$)*,*2#$0,&K"#$#+2&K*#+(' 5'%?bN
G*6&.5$)&(*&$)0"2%bN
;*.K,%(#+2&0&(0'1N
S?.#''#*+&(*&0&'%"4#$%&K%"/*".0+$%N
@#.%&M0'%?&W)*5"Q&6%%1Q&.*+()Q&*"&-%0"XN
D*+%(0"-&40,5%&*/&'%"4#$%&?%,#4%"%?&W%828Q&h&$*..#''#*+XN
;*+'5.K(#*+&*/&K)-'#$0,&"%'*5"$%'&&W%828Q&/**?&0+?&M%4%"02%'XN
a#'(0+$%UM0'%?&W%828Q&("0+'K*"(0(#*+XN
F)0(&M0'#'&/*"&K"#$#+2b&N
=%"4#$%&K"*4#?%" *"&'K%$#0,#'(&#+(%".%?#0"#%'N
F)*&')*5,?&$*,,%$(&K0-.%+(bN
A*$0(#*+&0(&6)#$)&()%&'%"4#$%&#'&?%,#4%"%?N
;*+4%+#%+(,-U,*$0(%?&"%(0#,&*5(,%(&*"&#+(%".%?#0"-&W%828Q&M0+1XN
!5"$)0'%"i'&)*.%&WM-&.0#,YK)*+%Y#+(%"+%(XN
F)%"%&')*5,?&K0-.%+(&M%&.0?%bN
L+&0?40+$%N
_+$%&'%"4#$%&?%,#4%"-&)0'&M%%+&$*.K,%(%?N
F)%+&')*5,?&K0-.%+(&M%&.0?%bN
;0')&Y&;)%`5%N
@*1%+'&*"&4*5$)%"'N
a%M#(&;0"?&Y&;"%?#(&;0"?N
=(*"%?&40,5%&$0"?N
:U'-'(%.&W%828Q&K0-K0,XN
G*6&')*5,?&K0-.%+(&M%&.0?%bN
C%,0(%&()%&K"#$%&(*&()0(&*/&$*.K%(#+2&K"*?5$('N
e'%&'0,%'K%*K,%&0+?&$5'(*.%"&'%"4#$%&"%K"%'%+(0(#4%'N
^**?&'#2+02%&0(&"%(0#,& K*#+('N
:+'5"%&K"#$%&#'&0$$5"0(%&0+?&#+(%,,#2#M,%N
G*6&(*&$*..5+#$0(%&K"#$%'bN
27KK8?B).<DS8H<)2D8H8?B)8?KJ)2D>HK8H<
.4$$#"F)'!)*1#2+%")3
^%+%"0(#+2&"%4%+5%'&0+?&K"*/#(Q&M5#,?#+2&?%.0+?Q&0+?&?%4%,*K#+2&5'%"&M0'%N
!"#$#+2&*MR%$(#4%'&$0+&#+$,5?%
;*'(UM0'%?&K"#$#+2N
;*.K%(#(#*+UM0'%?&K"#$#+2N
[0,5%UM0'%?&K"#$#+2N
@)"%%&.0#+&/*5+?0(#*+'&(*&K"#$#+2&0&'%"4#$%
<#".&.5'(&M%&060"%&*/&$*.K%(#(#4%&K"#$#+2&M5(&.0-&M%&)0"?%"&(*&$*.K0"%&/*"&'%"4#$%'&()0+&/*"&2**?'
D03#.#T%'&"%4%+5%&/"*.&0&2#4%+&$0K0$#(-&0(&0&K*#+(&#+&(#.%
D0+02%&?%.0+?&0+?&'%(&K"#$%'&/*"&%0$)&'%2.%+(&$,*'%"&(*&K%"$%#4%?&40,5%
e'%&*/&"0(%&/%+$%'
C%4%+5%&.0+02%.%+(&
;*.K,%3&K"#$#+2&'$)%?5,%'
e+/0#"+%''&0+?&.#'"%K"%'%+(0(#*+&#+&0?4%"(#'#+2&
G#??%+&$)0"2%'
@**&.0+-&"5,%'&0+?&"%25,0(#*+'
:()#$0,&#''5%'&#+&K"#$#+2
Lecture'9:'Chapter'6'/Setting'Prices'and'Implementing'
Revenue'Management''
@)5"'?0-Q&_$(*M%"& jQ&>k9I jEHB&SD
You're Reading a Preview

Unlock to view full version