Exam 14: Developing Pricing Strategies and Programs

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 ________.

Many consumers use price as an indicator of quality and value.

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.

A small change in price of a product within the price indifference band causes a substantial change in the demand of that product.

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

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 ________.

The airline and hospitality industries use ________, by which they offer discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.

The key to effectively using perceived-value pricing is to deliver value that is on par with your competitors.

When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference.

When Abe goes shopping, he comes across a T-shirt that is priced at $35. Although he wants to buy it, judging from the material used, he feels that the T-shirt should only cost $20. What reference price is Abe using here?

What should a company do if its competitor's product contains some features that are not available in its product?

The U.S. government often uses Dutch auctions to procure supplies.

When the airline industries offer discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

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

What is third-degree price discrimination?

Shrinking the amount of product instead of raising the price is a good way to counteract consumer resistances to price increases.

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

Which of the following is the first step in setting a pricing policy?

Daryl convinced his prospective client that Car A was the best for him. But, the client insisted that the car cost him a good $10,000 more than Car B, the one which he was thinking of buying. Daryl told him that the amount he would have to spend on the fuel, insurance, repairs, and maintenance for Car B would be 5 times more than what he would have to spend on Car A. Finally convinced, the client consented to buy Car A. What technique did Daryl use to convince his customer?

In first-degree price discrimination, the seller charges less to buyers of larger volumes.