Question II (10 marks)

Instructions: Based on the root words provided, add a suitable affix or affixes (prefix or suffix or both prefix and suffix) for the blanks. The newly-formed word must fit the context of the text.

Example: (0)

Some labour and material costs are rising due to (0) ________ (short), as is customer demand.

Answer: shortage

Covid limitations are beneficial in some parts of the world and the economy is booming in some sectors. Some labour and material costs are rising due to (0) ________ (short) in

demand. Many brands have high pricing power at the moment, making price hikes almost inevitable. Brand managers may be clued in on the size of their price increase, but it is uneasy to communicate this (1) ________ (welcome) news to customers.

Many companies, and even entire industries, routinely raise prices without ever telling customers. In the consumer packaged goods space, for instance, it is a common practice to reduce quantity and maintain the price. This increases the per-unit amount paid by shoppers but keeps the more (2) ________ (vision) package price unchanged. Alternatively, brands may cut down on trade promotions, couponing, and other forms of discounting, raising prices indirectly. For instance, when faced with a shortage and soaring prices for chicken, KFC recently removed in- store (3) ________ (promote) for its crowd-pleasing $30 fill-up bucket.

However, these below-the-radar options are (4) ________ (available) for products sold with subscriptions, leases, or contracts. In these cases, the manager must communicate to customers that prices have increased before the next billing cycle. This task is mined with pitfalls. When performed poorly, the news can lead to (5) ________ (desire) outcomes like customer complaints, social media outrage, and even worse, having to walk back the price increase, or losing customers altogether.

To avoid such fiascos and to blunt customer (6) ________ (resent), here are three actions that managers should take when communicating a price increase. They are backed by evidence found in academic research and my own experiences working with companies.

In emails and letters to customers, well-loved brands such as Netflix, Microsoft, Sling, and YouTube TV have all referred to a price increase as updating price or adjusting price in the past. This is common practice because managers are (7) ________ (nature) reluctant to tell customers they are raising prices. While this may seem like a small thing, strategic messaging can cause serious harm, affecting negatively the (8) ________ (relation) with loyal customers. Decades worth of consumer psychology research has (9) ________ (consistent) found that attempts to conceal bad news rarely pay off for brands. Customers know that brands are trying to influence their opinions and behaviour and appreciate it when they use helpful, transparent,

and (10) ________ (inform) influence methods