Exam 20: Setting Prices

Another name for bundle pricing is multiple-unit pricing.

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.

Explain differential pricing and then describe the four major types.

Services that are performed by lawyers, dentists, or doctors are typically priced using ____; sometimes these prices are not based on the amount of time that is spent in each situation, but are based on a flat fee regardless of the difficulty involved.

An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-market pricing strategy.

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 heavy 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 _____.

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

In 2003 Frito-Lay introduced its Stax brand of potato chips. These chips were meant to compete directly against Pringles. The intent was to gain market share quickly. During the first few months they were on the market, Stax retailed for 69 cents. What type of pricing strategy is Frito-Lay likely using?

Scenario 20.2 Use the following to answer the questions. Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. Refer to Scenario 20.2. Glenwood's new pricing strategy is an example of ____ pricing.

Max and Tiffany are celebrating their 10th wedding anniversary and are dining at an exclusive French restaurant in a major city a few hours away from their home. They're reviewing the wine list and want to celebrate their anniversary with a bottle of champagne. Max and Tiffany are not very knowledgeable about the different brands of champagne but know that in order to be classified as champagne, the grapes must be grown in a particular region of France known as the champagne viticulture region. Other producers might have similar products, but they must use the phrase "sparkling wine" as they are prohibited from using the champagne name. As Max and Tiffany are reviewing the wine list, they see that a bottle of Cristal, which is a famous label, sells for $250 per bottle but a sparkling wine from the Anjou region of France is $50 per bottle. Since Max and Tiffany are not that knowledgeable about wine, they decide to order the $50 bottle of sparkling wine. What type of pricing strategy does Cristal most likely utilize?

The objective of profit maximization is rarely operational because its achievement is difficult to measure.

Uber uses a pricing strategy based on real-time market conditions. It charges less in periods of low demand and more during periods of high demand. Sometimes these prices double or triple during periods of high demand. Uber argues that these higher prices motivate more drivers to pick up passengers, thus increasing the supply of drivers needed to handle the additional demand. This demand-based pricing strategy is an example of

Chris is planning three sales during the third quarter of the year at Toys "R" Us. The first is at the beginning of the school year, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to be

Cost-based pricing results in a high price when demand is high and a low price when demand is low.

A marketer uses only one pricing objective to avoid organizational confusion.

Hotels try to price rooms to maximize resources by quickly adapting to changes in demand. Part of this involves anticipating consumer behavior and calculating a number of different factors, including demand for rooms at a particular time period, likely length of stay, types of rooms likely to be requested, etc. It wants to be able to sell rooms at the right price to the right people. This pricing strategy is an example of

Identify and describe the four types of product-line pricing.

The "White Sale" that many department stores have every year a few weeks after Christmas is an example of

Aldi and Dollar General stores have been expanding their footprint across the United States, opening new locations and competing against traditional discount and grocery store chains, such as Walmart, Target, Kmart, Kroger, Jewel Osco, and Schnucks. Both Aldi and Dollar General hope to capture a large proportion of the dollars consumers spend on grocery and general merchandise items and have responded to consumer desires for value and convenience of a smaller store. What type of pricing objective are these stores utilizing?

Gavin is trying to come up with a pricing strategy for his store. He greatly admires Walmart and is considering adopting an everyday low price strategy. However, he is concerned because he believes that consumers might then view his products as being of low quality. At what stage of the process is Gavin currently at as he is trying to establish prices?