Because services like cruises and car rentals are perishable, many marketers use which of the following strategies to maximize revenue?

• A. Fixed pricing
• B. Price discrimination
• C. Advertising only during peak seasons
• D. Product bundling

Answer: (B)

Verified step by step guidance

1. Understand the concept of perishability in services: Perishable services, such as cruises and car rentals, cannot be stored for later sale. If the service capacity is not sold at a given time, the revenue opportunity is lost forever.
2. Recognize the challenge: Because these services are perishable, firms want to maximize revenue by selling as many units as possible before the service time expires.
3. Identify pricing strategies: Fixed pricing means charging the same price to all customers regardless of demand fluctuations, which may not maximize revenue for perishable services.
4. Understand price discrimination: This strategy involves charging different prices to different customers based on their willingness to pay, timing, or other factors, allowing firms to capture more consumer surplus and increase revenue.
5. Conclude why price discrimination is effective: By adjusting prices according to demand and customer segments, firms can fill more capacity and reduce revenue loss from unsold perishable services.