Exam 12: Pricing Concepts and Management

A psychological price is designed to encourage purchases on the basis of rational response rather than on the basis of emotional reactions.

At what point does a firm maximize profit?

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

Demand depends only on the price of the product.

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?

Markup pricing is not used often by marketers because establishing a percentage markup greatly increases the complexity of the decision-making process.

You are reading the quarterly financial report of one of your competitors. You expected to see their total sales revenue decline because they had a large price increase during the quarter. You were certain that the price increase would lead to an equivalently large decrease in their total sales revenue. To your surprise, their total sales revenue actually increased in the quarter.   Based on this information, which of the following explanations could explain why the competitor's total sales revenue increased?

Costs are a major issue when establishing price.

When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of

A firm can survive in the long run only if its products are sold below cost.

Scenario 12.4 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 12.4. 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 percent of the costs, its price would be ____.

Premium-priced products are usually marketed through

Marketers improve their ability to establish prices appropriately when

Penetration pricing and price skimming of the market are two types of new-product pricing.

When Gabriella visits a Chevrolet showroom to purchase a new car, she sees a Cruze priced around $19,000 and right next to it is a Corvette priced close to $65,000. What type of psychological pricing strategy is the dealership using?

How are pricing objectives similar to a corporation's overall goals? How are they different?

Describe the six steps of the process that marketers can use to establish prices.

A major reason why retailers use markup pricing is that it is convenient.

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

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