Exam 16: Developing Pricing Strategies and Programs

When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?

NV Inc. has launched a touch sensitive handset in the Indian market and priced the same at INR 9500. Although many people are checking it out and showing interest about purchasing it, the majority of them are holding themselves back because they feel that it is not worth INR 9500. They compare the handset's feature with that of its other competitors offering the same features and come to a conclusion that it is worth INR 8500 and nothing more than that. What kind of a reference price are the consumers using?

Consumers are less price sensitive ________.

When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) ________ price.

A market-penetration pricing strategy is most suitable when ________.

A low price buys market share but not market loyalty. The same customers will shift to any lower-priced product that may come along. This is called the ________ trap.

Which of the following is true regarding price elasticity?

In ________ pricing, the firm bases its price largely on competitor's prices.

________ auctions let would-be suppliers submit only one bid; they cannot know the other bids.

Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building.

Consumers are less price sensitive when ________.

What are the different possible consumer reference prices?

If demand hardly changes with a small change in price, the demand is said to be ________.

Generally, consumers prefer small price increases on a regular basis to sudden, sharp increases.

In a price-war trap, higher-priced competitors match the firm's lower prices but have longer staying power because of deeper cash reserves.

What is third-degree price discrimination?

Briefly describe the different types of pricing objectives.

In reality, it is very easy for firms to estimate their demand and cost functions.

When a product is more distinctive, it leads to less price sensitivity.

Costs that do not vary with production levels or sales revenue are known as ________ costs.