Exam 12: Pricing Concepts and Management

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levi's, priced at $39.99. Which of the following strategies is the manager attempting to accomplish?

Markup is measured either as a percentage of or a percentage of .

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is most likely using:

The Palasi Candy Company is a small business located in the United States. The owner of Palasi Candy is calculating the projected costs for the coming year. There is rent for the building, salaries for the retail employees, raw materials of sugar, chocolate, and other ingredients, wrappers for packaging of individual pieces of candy, boxes, and radio advertising. Palasi's are most likely to be the raw materials of sugar, chocolate, and other ingredients, as well as the wrappers.

The Office Place is an office supplies company which has adjusted its price levels so that it can increase its sales volume to match its expenses. The Office Place is most likely employing a objective.

Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing:

What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?

Scenario 12.2 Use the following to answer the questions. Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store. A lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands. -Refer to Scenario 12.2. Given Ray-Ban's plan for positioning the new sunglasses line, they should use a strategy when introducing their new product.

Pricing decisions can be based on determining whether the demand for a product is price elastic or price inelastic.

Identify and describe the major factors that affect pricing decisions.

A price-skimming strategy assumes that:

Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's:

Cost-plus pricing is popular in periods of rapid inflation.

Jared is developing a business plan for a new type of bicycle helmet. He is interested in finding the point at which the costs of producing the helmet will equal the revenue earned from selling the product. Jared is interested in finding the:

Scenario 12.3 Use the following to answer the questions. Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. -Refer to Scenario 12.3. Glenwood's closest competitor, The Hearthstone Pet Hospital, currently charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing:

Identify and describe the three types of product-line pricing.

How might a marketer find information about a competitor's prices? Why is this information important?

With prestige products, a firm will always be able to sell more at a lower price.

Nabisco is considering two pricing objectives. The first is to sell one out of every three crackers consumed in the world, an objective based on ; the second is to meet, but not beat, competitor's prices of cookie products, which is a objective.

Differential pricing means different buyers pay different prices for the same quality and quantity of product.