Exam 10: Pricing: Understanding and Capturing Customer Value

________ pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Price setting is usually determined by ________ in small companies.

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

Compare and contrast pure competition and oligopolistic competition.

To take advantage of a downward-sloping experience curve, a company must do all of the following EXCEPT ________.

Overhead costs are costs that do not vary with production or sales level.

Companies with lower costs ________.

Under oligopolistic competition ________.

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 ________.

Companies can legitimately charge a higher price if ________.

The simplest pricing method is ________ pricing.

A downward-sloping experience curve is indicative of ________.

Price setting is usually determined by ________ in large companies.

While lower prices may attract additional customers, it is possible for pricing strategies to result in the product becoming a commodity in the customers' eyes.

Companies with higher costs ________.

The experience curve reveals that ________.

Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged?

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 ________.

Define price. Discuss its importance.

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?