Exam 20: Setting Prices

One of the biggest challenges of a market share pricing objective is that it oversimplifies the contribution of price to profits.

The federal government often uses ____ pricing when it grants defense contracts.

Scenario 20.1 Use the following to answer the questions. Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands. Refer to Scenario 20.1. Given Ray-Ban's plan for positioning the new sunglass line, they should use a ____ strategy when introducing their new product.

Price skimming is designed to yield maximum unit sales volume.

Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using ______, which usually results in a ______.

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 closest competitor, the Hearthstone Pet Hospital, currently charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing which of the following?

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 is considering a markup pricing basis, with the cost for office visit plus vaccines at $45. If Glenwood were to add a markup of 33.3% of the costs, its price would be ____.

Cost-plus pricing is popular in periods of rapid inflation.

____________ is setting the price lower than competing brands in order to enter a market and quickly gain a significant share of the market.

The newest version of a product like Bose headphones is likely to use _____, while the new version of Red Bull is likely to use _____ .

A product is a price leader when

Which of the following is true about the target market's evaluation of price?

If Samsung uses _____ pricing for its newest version of laptops, it is probably most interested in obtaining market share; and it is assuming

Mindy is selling soda and lemonade at the local university's baseball game. She prices the soda at $4 a bottle and lemonade at $7 each. These are generally much higher prices than people would normally pay. What is likely to happen to demand?

Janet works at ITZ, a new makeup brand. Her company has decided that they want to lead the makeup industry in product quality. They have assessed the market and determined that women will associate higher-priced makeup with being higher in quality. What is the next step that Janet's company must do?

The manager at Target puts a sign up next to a Samsung audio system that reads, "Only $299.99! $60 less than at Best Buy." This is an example of what type of pricing strategy?

Grocery stores use negotiated pricing strategies.

Pricing objectives should be considered overall goals to aid the organization in its long-range plans.

A pricing strategy is a course of action designed to achieve pricing and marketing objectives.

Kohl's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately ____% for this product.