Exam 16: Pricing Concepts and Strategies

A pharmaceutical company that sets a price below cost on a new cholesterol medication in order to shut out competitors that may want to enter the market could be fined for predatory pricing.

Assume a price per unit equals $100, fixed costs total $50 000, and variable costs are $70 per unit. a. Find the breakeven point (in both units and dollars). b. Assume a firm wants to earn a profit of $50 000. Find the new breakeven point.

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 -is the loss of sales of an existing product due to competition from a new product in the same line.

Assume the demand for a particular service is highly elastic. The firm can actually increase revenue by lowering the price.

Which of the following best describes customary prices?

What are some common pricing objectives used by not-for-profit organizations?

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 -A(n) _____ involves the use of a high price relative to competitive offerings.

If the target return from the sale of a product is expressed as a percentage of sales, it can be included in the breakeven analysis formula as a variable cost.

What type of discount is given off the list price for prompt payment of the invoice?

What type of pricing is used at a men's clothing store that sells suits at four price levels ($295, $455, $525, $650)?

What is one of the most important aspects of government, or in some cases organizational, procurement?

Pure competition is a market structure dominated by only one seller of a product that has no close substitutes.

Discuss the benefits a company receives when following a skimming pricing strategy.

A manufacturer's list price must incorporate the costs incurred by channel members in performing required marketing functions and expected profit margins for each member.

What is a market structure called with large numbers of buyers and sellers of differentiated products?

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 -A(n) _____ is a payment to a channel member or buyer for performing marketing functions.

Indonesian companies manufacture inexpensive yet well-crafted leather belts, handbags, shoes, and apparel. Subsidized by the Indonesian government, the companies begin dumping these products on the Italian and French markets. The Italians respond by taxing the products 70 percent, which would be considered a tariff in this instance.

What type of demand for a product would penetration pricing work best for?

Which pricing method uses a base-cost figure per unit and adds a markup to cover unassigned costs and to provide a profit?

Sellers are increasingly offering different cash discounts to customers based on their experience with how promptly those customers pay their bills.