Exam 20: Setting the Right Price

Costs that are shard in the manufacturing and marketing of several products in a product line are called joint costs.

When the economy is characterized by high inflation,special pricing tactics are often necessary.One popular cost-oriented tactic is culling low-profit margin products from the product line.Why might this tactic backfire? What two other cost-oriented tactics can be used to guard against inflation? Describe these tactics.

All of the following elements must be present for a pricing practice to be considered discriminatory under the Robinson-Patman Act EXCEPT:

What is a promotional allowance? What is the difference between a promotional allowance and a functional discount? Give two specific examples of promotional allowances.

One pharmaceutical manufacturer did not price a new antiulcer drug by adding up the costs of developing and manufacturing the medication and tacking on the amount of profit it wanted to make.Instead,the company justified a higher price than it might otherwise have been able to get from medical insurers by using studies that showed the new drug could help patients avoid expensive surgery and save the insurance companies money.The pharmaceutical company used:

When a firm introduces a new product at a relatively low price because it hopes to reach the mass market,it is following a _____ strategy.The low price is designed to capture a large share of a substantial market and produce lower production costs.

Which of the following is a price tactic that offers all goods and services at the same price (or perhaps two or three prices)?

After establishing pricing goals,managers should estimate total revenue at a variety of prices.Next,they should _____.Only after performing this task are they are ready to estimate how much profit and how much market share can be earned at each possible price.

Dancing Pigs Bar-B-Que Sauce is a product of the Bar-B-Q Shop located in Memphis,Tennessee.It's also sold online for $88 a case,including shipping and handling.The Bar-B-Q shop covers the cost of shipping and uses _____ pricing policy.

What can a marketing manager do to make demand for his or her product more inelastic?

The DCS Stainless Steel Gas Grill for outside cooking costs $3,995.The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers.There is no potential competitor for this grill.The _____ strategy is probably best.

The marketing manager of icruise.com (a travel Web site targeted to consumers who want a luxury vacation)finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during the month of December.However,the vice president of finance is committed to reporting a 25 percent return on investment at all times.This conflict illustrates:

Post makes several varieties of cereals.In promoting this product line,Post offers a 50-cents-off coupon that can be used to purchase any of its cereals.Therefore,Post must consider _____ when pricing its cereals.

_____ tries to get customers into the store with misleading advertising and then uses high-pressure selling to persuade the consumer to buy something else more expensive.

Business-to-business salespeople often use _____ to heighten the demand for certain items in a product line.It is a discounting practice that is often done routinely without much forethought.

A(n)_____ allows for price increases based on the cost-of-living index or some other formula.

Sometimes multinational firms will follow a penetration strategy in developed countries and a skimming strategy in developing countries.

It makes the most sense to use price skimming as a pricing policy when supply is greater than demand.

Rebates involve a cash refund for the purchase of a product during a specific period.

Trade-ins often go hand-in-hand with: