Exam 9: Pricing: Understanding and Capturing Customer Value

Identify a few situations in which price cuts or price increases might be necessary.

Which of the following statements about break-even analysis is most likely true?

Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company's pricing approach is referred to as ________.

________ pricing involves setting prices based on the expenses involved in producing, distributing, and selling a product plus a fair rate of return for a company's effort and risk.

Lovely Skin is establishing a pricing strategy for a new moisturizer. The total cost to produce each unit is $3.50. The company has decided to add a $1.50 markup, so the unit price to distributors will be $5. Lovely Skin is using a ________ approach to price the new moisturizer.

The first Target store opened in 1962. Its initial strategy was to set prices low to attract a large number of buyers quickly and win a large market share. This is referred to as ________.

Computer Works is a computer accessories manufacturer based in Brazil. All customers in South America pay the same freight charge, $20, when they order products from the company. All customers in North America pay a freight charge of $50. The company's pricing strategy is referred to as ________ pricing.

Rent, electricity, and executive salaries that do not vary with production or sales level are referred to as ________ costs.

Netcorp, an Internet service provider, charges its users a fixed rental fee for its basic package, which has a download limit. If a user exceeds this download limit, an additional fee is charged for every download. In this case, the firm's pricing strategy is referred to as ________ pricing.

With reference to the different types of markets, compare pure competition with monopolistic competition.

________ prices are carried in buyers' minds and used when looking at a given product.

What external factors affect the pricing decisions made by organizations?

Explain the concept of price elasticity.

________ pricing is when a firm tries to determine the price at which it will break even or earn the profit it is seeking.

Wilkinson & Company sells plumbing supplies across the United States. Wilkinson uses Chicago as its central location for determining freight costs regardless of the city from which products are actually shipped. For example, a Dallas customer pays the freight cost from Chicago to Dallas even if the goods are shipped from Dallas. Wilkinson most likely uses ________ pricing.

The National Tree Company offers resellers half-price reductions on artificial Christmas trees if they purchase them in July. This is an example of a ________.

The demand curve shows the number of units the market will buy in a given time period at similar prices.

When using product bundle pricing, sellers combine several products and offer the bundle at an increased price for increased profit.

The Vitamin Shoppe sells natural vitamins and supplements. Product prices are adjusted frequently to meet the needs of individual customers. For example, long-time customers receive discounts. This strategy is most likely an example of ________ pricing.

Costs that change directly with the level of production are referred to as ________ costs.