Exam 14: Pricing Concepts for Establishing Value

Diana owns a boutique specializing in ball gowns. Sales are stable and Diana feels it is time she had a 20 percent increase in her salary. If Diana takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.

Raymond estimates the fixed costs associated with opening a new bank branch are $500,000. He estimates the branch will attract 1,000 new customers who will cost $50/year to service each of their accounts. He also expects to generate $100,000 in fees annually from these accounts. What will be the total cost of opening the new branch and remaining open for one year?

What five components should be taken into consideration when a company is developing its pricing objectives?

The key to successful pricing is to match the product with the consumer's perception of value.

Unlike product, promotion, or place, price is the only part of the marketing mix

Because consumers are generally more sensitive to price increases than to price decreases, it is easier to lose current customers with a price increase than it is to gain new customers with a price decrease.

Why do manufacturers set manufacturer's suggested retail prices (MSRP)? How do they enforce this practice? Is it legal?

Break-even analysis is useful because it allows managers to

Bill is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of

Rodi owns Hallman's auto repair service. He has observed over the years that customers keep their high-mileage cars longer when the economy is doing poorly, creating demand for his maintenance and repair service. Rodi has observed the impact of ________ on demand for his service.

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

A high/low pricing strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

Gary is the marketing manager for an automobile dealership. His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent. His firm is using a ________ orientation.

When a firm has a particular profit goal as its overriding concern, it will use target return pricing to meet the profit objective.

A firm uses customer orientation when it sets its pricing strategy based on how it can add value to its products or services. A "no haggle" pricing policy is a type of ________ pricing strategy.

Historically, prices were

One of the limitations associated with break-even analysis is that

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

The contribution per unit is

Which of the following is the most logical example of complementary products?