Exam 10: Pricing: Understanding and Capturing Customer Value

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.

As production moves up, the average cost per unit decreases because ________.

If Milt Alden focuses on overall costs of manufacturing plus profit in setting product prices, which strategy would he employ?

Customer perceptions of the product's value set the floor for prices.

Explain the concept of the price ceiling.

Using value-based pricing, a marketer would not design a product and marketing program before setting the price.

Briefly describe the process of value-based pricing.

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $13 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.

________ pricing refers to offering just the right combination of quality and gratifying service at a fair price.

Target return pricing is a variation of which of the following cost-oriented pricing approaches?

________ refers to the amount of money charged for a product or service.

Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.

Average cost tends to increase with accumulated production experience.

The more elastic the demand, the more it pays for the seller to raise the price.

The simplest pricing method is cost-plus pricing, which involves adding a standard markup to the cost of the product.

The total production costs at Kellner Machine Works are $87,000 out of which $45,000 represent fixed costs. Which of the following is representative of the variable costs incurred by the company?

PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining their systems than the initial price of the product. PoolPak specializes in and differentiates itself through both cutting-edge technologies used to build its high-value climate control systems as well as seamless quality service. PoolPak's prices are very high, but demand for its climate-control systems seems to be forever on the rise. This exemplifies ________.

Factors a company considers in setting its price include all of the following EXCEPT ________.

Samsung Mobile plans to launch a new phone with a unit cost of $270 and wants to earn a 10 percent markup on its sales. Samsung's markup price is ________.