Exam 14: Developing Pricing Strategies and Programs

A company decided to conduct a market survey for its new MP3 player which it had priced at $150. However, in the survey, 95 percent of the participants said that the maximum they would pay for the MP3 player is $100. This is an example of which of the following possible consumer reference prices?

A company does not set a final price until the product is finished or delivered. This is known as ________.

Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be-not the marketer's stated price.

Deducting the desired profit margin from the price at which a product will sell, given its appeal and competitors' prices, is known as ________.

Predatory pricing, which refers to the concept of selling below cost with the intention of destroying competition, is lawful under certain conditions.

Offset is a form of countertrade where sellers receive full payment in cash and agree to spend a substantial amount of the money in the country where they are trading within a stated time period.

While shopping at the mall, Jane was asked by one of the sales representatives at the cosmetics counter to try out a new lipstick that her company was test marketing. The company representative asks her how much she would be willing to pay for the lipstick. After trying it out, Jane is of the opinion that $5 is just the right price for it. What type of a reference price is Jane using?

Traditionally, price was never a major determinant of buyer choice.

Price discrimination in all forms is illegal in the United States.

When a company maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation, it is known as ________.

________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and record keeping.

Costs that differ directly with the level of production are known as ________.

Armac Ltd. is a sluice-box manufacturer based in China. A sluice-box is used for gold prospecting. Armac is interested in selling a few of its machines to an American mining company, but it wants 95 percent of the machines' price in gold and the rest in ores recovered by using the machines. This is an example of a ________.

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 ________.

Market skimming pricing makes sense under all the following conditions, EXCEPT ________.

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 has come down to $399. What kind of pricing did Apple adopt?

Total costs consist of the sum of the fixed and variable costs for any given level of production.

After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to ________.

The airline industries implement yield pricing by offering discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.

Fred's company has recently sold its resin-producing plant to a local concern in India. As part of the sales price, his company agrees to accept as partial payment the production of the resin at an agreed upon price for six years. This is an example of what type of countertrade?