Exam 12: Pricing Concepts and Management

When Cadillac buys headlights from Delco, both of which are divisions of General Motors, pricing occurs.

Scenario 12.4 Use the following to answer the questions. The BASF Chemical Company in Germany has developed a new rubberized coating. The product is used on cell phones and other hand-held electronic devices that give them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China. -Refer to Scenario 12.4. BASF is considering the problem of actual distance in delivering its product from the plant in Germany to some of its customers in China. Which pricing strategy would help overcome this problem?

Costs are a major issue when establishing price.

What are reference prices and how do customers use them?

Factors affecting pricing decisions can include demand, distribution, and the way in which the product is promoted.

The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of pricing.

Scenario 12.1 Use the following to answer the questions. Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. -Refer to Scenario 12.1. If Concession Supply increased its price by 10 percent and experienced only a 2 percent decrease in the demand for hotdogs, the demand would be:

At the break-even point:

Knowing the target market's evaluation of price allows the marketer to know how much emphasis to place on price and how to price a product relative to competition.

Pricing the basic product in a product line low, while pricing related items at a higher level is called:

Amtrak is considering two pricing strategies for its service. One is to price its train tickets so that it is less expensive to travel on weekends than during the week when there is business travel, which illustrates pricing. The second is to price its train tickets so that the further away the travel date, the greater the discount, which is best described as .

Some stores employ comparative shoppers to learn what prices their competitors are charging.

What assumption does break-even analysis make that limits its overall usefulness?

Producers commonly provide discounts off list prices to intermediaries.

A problem associated with is that consumers can predict when prices will be lowered and delay purchases until that time.

Marginal revenue is the change in total revenue that occurs when a firm sells an additional unit of the product.

If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500. The firm knows that at that price it will achieve its goal. Therefore, the firm would be using a pricing method.

What are the terms of F.O.B. pricing?

Price is a flexible ingredient in the marketing mix.

Grocery stores that position their less expensive, private brands next to more expensive, well-known manufacturer brands on the shelf are using the concept of reference pricing.