Exam 10: Pricing: Understanding and Capturing Customer Value

Why is markup pricing most likely popular?

Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.

The break-even volume is the point at which ________.

What sets the ceiling for product prices?

Explain the concept of the price ceiling.

Refer to the scenario below to answer the following question(s). Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand. Considering that most young households have limited financial resources, Alden attempts to engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics, "we have better control over keeping price right in line with customers." Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The hand mixers are manufactured in two variants-a small handheld mixer with two rotating beaters and another that comes with an optional stand and an attached mixing bowl. Alden's temperature-controlled skillets are manufactured in a single style with three color options. "Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low. -Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low. This indicates that Alden Manufacturing most likely benefits from the ________.

A downward-sloping experience curve is indicative of a company's rapidly increasing production costs.

DivetheBlue, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer DivetheBlue, which has earned a reputation for selling high-quality products. This exemplifies ________.

What is competition-based pricing?

Refer to the scenario below to answer the following question(s). Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand. Considering that most young households have limited financial resources, Alden attempts to engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics, "we have better control over keeping price right in line with customers." Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The hand mixers are manufactured in two variants-a small handheld mixer with two rotating beaters and another that comes with an optional stand and an attached mixing bowl. Alden's temperature-controlled skillets are manufactured in a single style with three color options. "Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low. -Milt Alden uses which of the following strategies for pricing his products?

Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects Bon Vivant's ________ pricing strategy.

Target return pricing uses the concept of a(n) ________, which shows the total cost and total revenue expected at different sales volume levels.

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

List some important characteristics of price.

With accumulated production experience and a higher volume of production, companies not only become more efficient but also ________.

A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.

Explain break-even pricing.

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

Which of the following processes does value-based pricing reverse?

As a manufacturer increases the price, ________.