Exam 16: Pricing Concepts and Strategies

Match each item to the statement or sentence listed below. a.competitive bidding b.penetration pricing strategy c.list price d.trade discount e.price flexibility f.promotional pricing g.loss leader h.cannibalization i.bundle pricing j.odd pricing k.transfer price l.profit centre m.skimming pricing strategy n.competitive pricing strategy o.pricing policy p.market price q.noncumulative quantity discount r.step out s.bot t.cash discount -The strategy of using a relative low entry price compared with competitive offerings to secure market acceptance is called a(n) _____.

When it comes to big-ticket items, business and government purchasers often legally enter into contracts with favoured suppliers.

What would demand in the short run tend to be if the price of basic food products were to increase significantly?

The revenue a firm receives is determined by the selling prices of its products multiplied by the number of units of each that are sold.

Discuss the three alternative strategies for pricing exports.

What market structure best describes the Canadian airline industry?

Which of the following is an example of a rebate?

In an attempt to simplify pricing structures, sellers sometimes quote FOB destination that, in effect, spread the total shipping costs across all the customers.

What determines whether a quantity discount is cumulative or noncumulative?

Define price. Explain why setting prices can be a difficult process.

The government monitors transfer pricing closely because it is an easy way for companies to avoid taxes on profits.

Some not-for-profits, such as mass transit and highway toll roads, attempt to recover only the actual cost of their operation.

Not-for-profit organizations may try to maximize their returns with a single event, such as a fundraiser ball at $500 per ticket to benefit a local museum.

What is a major problem facing company decision makers when setting transfer prices?

As long as a company can demonstrate that its price discounts and promotional allowances do not restrict competition, the company can avoid any penalties under the Competition Act.

Average total cost is the sum of variable and fixed costs divided by the number of units produced.

The Profit Impact of Marketing Strategies project (PIMS) analysis shows the relationship between market share and profits, as measured by return on investment (ROI); in short, the higher the market share of a company, the higher will be the ROI earned by the company.

Firms using prestige pricing set relatively high prices to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

How would the terms be stated if a business was offering a cash discount of five percent if consumers pay the invoice within 30 days with the full face amount of the invoice due 30 days after that?

The breakeven model is cost based and does not address the question of whether customers will actually purchase the product at the specified price in the quantity required to break even or make a profit.