A company’s decision to charge different prices for the same service sold in different market...

Context: Charging different prices for the same service in different market segments involves understanding the value derived from different customer groups.

Options Breakdown:

A. Internal rate of return (IRR): This is a financial metric for investment profitability, not directly related to pricing strategies.

B. Lifetime customer value (LCV): This metric evaluates the total revenue a business can expect from a customer over the duration of their relationship, making it crucial for segment-based pricing strategies.

C. Net present value (NPV): This measures the profitability of an investment, not specifically used for pricing decisions.

D. Return on investment (ROI): This measures the gain from an investment relative to its cost, not directly related to customer-based pricing strategies.

Correct Answer Justification: LCV provides insight into how much value different customer segments bring to the company over time, allowing businesses to tailor pricing strategies to maximize profitability from each segment.

References:

Marketing and pricing strategy literature

Studies on customer value and segmentation