Exam 20: Setting the Right Price

The tactic that allows different customers to pay different prices for essentially the same merchandise bought in equal quantities is called _____.This tactic is often found in the sale of shopping goods,specialty merchandise,and most industrial goods except supply items.

What is value-based pricing? What is the basic assumption marketers must make about their markets before implementing a value-based pricing strategy?

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

Loss-leader pricing is a tactic that prices products below cost in an attempt to run competitors out of business.

When a buyer pays a lower price for buying multiple units or above a specified dollar amount for a single order,the buyer is receiving a _____ discount.

Marketing two or more products in a single package for a special price is known as:

When using _____,price is not set on the product until the item is either finished or delivered.

Name one advantage and one disadvantage associated with using each of the three basic pricing methods.

The owner of a neighborhood hardware store has decided to sell a set of three padlocks for $5.He hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items.The owner is encouraging store patronage through:

Many businesses find recessions to be an excellent time to build market share through the use of price shading.

Nellie Tompkins is the owner and operator of Hot Mamma Salsa,which she sells at craft festivals.She only makes and sells three types of salsa--peach,pear,and pineapple salsa.The joint costs of leasing her professional kitchen for manufacturing,travel to craft shows,insurance,and so on are allocated on an equal basis to the three types of salsas sold.Last year's sales figures and allocated joint costs follow.Should Hot Mamma Salsa stop selling its pear salsa? Why or why not? Sales \4 ,000 \8 ,000 \9 ,000 Less: Cost of goods sold Gross margin (\ 1,000) \ 3,000 \ 4,000

Art Supplies It's September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter's elementary school.In her Sunday newspaper was a flyer from Michael's,an arts and crafts retailer.As she looked through the newspaper insert,she noticed that if she purchased three or more bottles of Alene's Tacky Glue,the regular price of $1.50 each was reduced to $1.15 each.She also saw that the store priced its plastic storage boxes at $1.99,$3.99,and $5.99.She thought they would be useful for storing each individual child's projects.On the front page of the flyer was an ad for Funky Girls Gel Pens,something she knew her daughter would love to use.The price at Michael's was $6.99 lower than the price she had found at the other stores that carried the pens.She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michael's had a scrapbook starter kit,which includes scissors,book,pages,and stickers for only $15.The items could be purchased separately for $19.99.The flyer also announced that all flag-related items leftover from its Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.Which type of discount is being using to price the tacky glue?

A price tactic that requires the purchaser to absorb the freight costs from the shipping point is called _____.In this case,the farther buyers are from sellers,the more they pay because transportation costs generally increase with the distance merchandise is shipped.

What is product line pricing? What three relationships among products in the line must managers be aware of before setting prices? For each relationship,give an example of a product that fits the situation.

All of the following are strategies to make the demand for a good or service more inelastic EXCEPT:

Art Supplies It's September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter's elementary school.In her Sunday newspaper was a flyer from Michael's,an arts and crafts retailer.As she looked through the newspaper insert,she noticed that if she purchased three or more bottles of Alene's Tacky Glue,the regular price of $1.50 each was reduced to $1.15 each.She also saw that the store priced its plastic storage boxes at $1.99,$3.99,and $5.99.She thought they would be useful for storing each individual child's projects.On the front page of the flyer was an ad for Funky Girls Gel Pens,something she knew her daughter would love to use.The price at Michael's was $6.99 lower than the price she had found at the other stores that carried the pens.She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michael's had a scrapbook starter kit,which includes scissors,book,pages,and stickers for only $15.The items could be purchased separately for $19.99.The flyer also announced that all flag-related items leftover from its Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.Michael's was trying to get consumers into the store with the Funky Girls Gel Pen promotion in hopes that they will purchase other,higher margin items.This is an example of:

Leader pricing is used to:

Apple iPhone Apple Inc.iPhone went on sale on June 29,2007.Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products and the iPhone enjoyed a tremendous amount of "buzz" before its introduction.As expected,the iPhone entered the market at what many believed to be a high price ($599).However,within weeks the price was reduced to $399.By the end of 2007 over 8 million iPhones had sold in the U.S.marketplace.By most,if not all measures,the original iPhone was a huge success for Apple and it exclusive U.S.carrier AT&T. On July 11,2008,Apple Inc.released the iPhone 3G,which it advertised as twice as fast as the original iPhone for half the cost.However,in order to obtain an iPhone at the new price of $199,buyers had to agree to a two-year service contract with AT&T.This allows iPhone users to receive phone calls and email,and search the web on the same device.A single charge of $59.99 from AT&T included 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voicemail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.This approach succeeded and over a million iPhone 3Gs were sold during the introductory weekend. -Refer to Apple iPhone.For one fee,the basic AT&T cellular package includes 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voicemail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.AT&T is using price _____.

Which of the following pricing methods can be used to build market share during a recession?

Consumers sometimes prefer two-part pricing because: