Exam 10: Pricing: Understanding and Capturing Customer Value

Of the following, which is a poor reason for a company to set prices low? to prevent competition from entering the market to stabilize the market to create excitement for a product to prepare for an easy exit from a market to match a competitor

L.L.Bean sells its catalog items FOB-origin pricing.Who pays the freight charges?

For what types of products might marketers use market-penetration pricing?

Explain two different ways a consumer might view a price cut.

________ uses buyers' perceptions of what a product is worth, not the seller's cost, as the key to pricing. Customer value-based pricing Target return pricing Variable costs Price elasticity Product image

Which of the following presents the strongest reason that markup pricing is generally illogical? Sellers earn a fair return on their investment. By tying the price to cost, sellers simplify pricing. When all firms in the industry use this pricing method, prices tend to be similar. This method ignores demand. With a standard markup, consumers know when they are being overcharged.

Give an example of a cash discount.

Overhead cost is another term for variable cost.

Mach 3 razor blades must be used in the Mach 3 razor.Which type of pricing is most likely used? product line pricing optional-product pricing captive-product pricing by-product pricing allowance pricing

The practice of a manufacturer requiring a dealer to charge a set retail price for its product, also known as retail price maintenance, is illegal.

Break-even pricing, or a variation called ________, is when the firm tries to determine the price at which it will break even or make the profit it is seeking. competition-based pricing target return pricing fixed cost value-based pricing customer-based pricing

By definition, this type of pricing is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost. segmented pricing variable pricing flexible pricing cost-plus pricing reference pricing

EDLP is very similar to high-low pricing.

Scenario Quills, Inc., is a manufacturer of ball-point pens, pencils, and stationery.The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains.Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low.However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets. Quills started out with a market-penetration pricing strategy.What assumptions could be made about the market(s) Quills was serving?

Cost-based pricing relies on consumer perception of value to drive pricing.

If demand changes greatly with a small change in price, we say the demand is ________. inelastic variable elastic value-based fixed

When Johnny On the Spot, a house mover, sells boxes and pads that must be used in moving a household's furniture, the company is practicing by-product pricing.

If demand changes greatly with a small change in product price, the demand is inelastic.

If demand is elastic, will sellers consider lowering their prices? Explain.

When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.