Exam 14: Pricing Concepts for Capturing Value

When firms set prices similar to those of major competitors, they are following a strategy of

Wilson's Heating and Air Conditioning Company specializes in electric heat pumps. The owner should keep track of the price of natural gas, knowing that

A new yoga studio might use a low introductory offer price to get people to join their new studio or to entice them away from their current studio. These low prices represent a ________ pricing strategy.

Matthew told the manager of his gas station to always adjust prices to match those charged by the other convenience store across the street. Matthew is using a ________ pricing strategy.

In ________ many firms provide similar products that are considered substitutes for each other.

What is the most logical example of complementary products?

If the fixed costs of manufacturing a new programmable watch are $10,000, the sales price is $60, and variable cost per unit is $20, the break-even point is

Sabrina's is an upscale running gear store. Prices are based on customers' beliefs about the value of the gear. The store focuses on a limited target market and provides excellent customer service. Sabrina's is using a ________ pricing strategy.

Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on

Frank was known for driving 30 miles just to save a dollar on the price of his favorite beverage. Frank perceived price as ________ for a good or service, while most consumers recognize price as the ________ made to acquire a good or service.

In a market with ________ there are many firms providing differentiated products.

Maria believes that the best way to drive traffic to the store is by offering "buy one, get one free" for bread and orange juice. Two items that almost every customer will want and when they are in the store, they will purchase additional items. What type of pricing strategy does Maria want to use?

Patrice owns a boutique specializing in formal dresses. Sales are stable and Patrice feels it is time she had a 10 percent increase in her salary. If Patrice takes this increase in compensation, it will decrease the break-even quantity of dresses she needs to sell on a monthly basis.

When Delta increases its average fares, American Airlines and United often follow with similar increases. This is an example of

Tomas manages a Pizza Hut restaurant and is considering changing the hours of the restaurant by keeping it open later on Friday and Saturday nights. He is concerned about the additional costs of labor and ingredients this decision will create. What type of costs is Tomas concerned with?

There is often only one provider of cable television services in each region of the country: Time Warner is in New York, Comcast is in most of New England, and so forth. When Comcast proposed a plan to buy Time Warner, the purchase ultimately could not be completed, mostly due to concerns that it would have caused Comcast to become an overly large ________ with too much power.

The contribution per unit is

Which product is most likely to be characterized by pure competition in the United States?

When a firm colludes with other firms to control prices, it is engaging in

American Airlines just reduced its fares for summer flights by $100. Delta Airlines changes its pricing structure and reduces its flights by $100 as well. Delta is employing status quo pricing.