Exam 16: Pricing Concepts

Which of the following statements about price is true?

Marketers must take care when using _____ since a lower price often signals to consumers that product quality is also low.

When pricing goals are mainly sales oriented,cost considerations usually dominate.

Specialty Cakes Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping center to a group of investors,and you want to serve a cake shaped like an architectural rendition of the center.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a gala in Macon,Georgia.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is.They know that Cecilia's cakes can make a party a success.Moreover,the cakes are what people remember most about the parties.From this description,you should assume Cecilia Villaveces Cakes have a(n):

There are two limousine services that drive customers from communities in North Georgia to the Atlanta airport.Whenever one reduces its fare,its competitor reduces its fares by the same amount.This is an example of status quo pricing.

Last quarter Abingdon Company sold 1,000 decorative decals for $1 each,Cedar Decaliania sold 200 decorative decals at $4 each,Creative Decals sold 500 decals at $2 each,and Donnelly,Inc.sold 300 decals for $4 apiece.Assuming the four companies are the only firms competing in the decorative decal market,calculate unit and dollar market share for each company for last quarter.For each company,which market share figure might be used in an advertisement for that company?

Define price and discuss the two roles price plays in the evaluation of product alternatives.

Specialty Cakes Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping center to a group of investors,and you want to serve a cake shaped like an architectural rendition of the center.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a gala in Macon,Georgia.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?

Your Memory Lane creates custom art prints that use graphs and icons in a street scene to commemorate special occasions.Suppose Your Memory Lane has priced its product at $350 per print.Further,it has determined that the company's fixed cost is $12,500,with an average variable costs per print of $250.What is his fixed cost contribution per print?

List the two primary determinants of price.What other factors can affect price setting?

Break-even analysis determines what sales volume must be reached for a product before the company's total revenue equals total costs.

Which of the following is a pricing policy whereby a firm charges a high introductory price,often coupled with heavy promotion?

Tesla Motors "Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally-friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons. -Refer to Tesla Motors.The price of the Roadster was set so that total revenue was as large as possible relative to total costs.This represents a _____ approach.

Price is best described as:

The point at which marginal cost and marginal revenue are equal always results in:

The Nest is a retail store owned and operated by an interior designer.The markup on all items in the store is 100 percent over cost (or double the cost).In this case we would say that the designer uses:

The most popular method used by wholesalers and retailers in establishing a sales price is _____ pricing.

A penetration strategy tends to be effective in a price-sensitive market.Thus,one of the purposes of penetration pricing is to:

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered. -Refer to the American Girl Doll.The popularity of the American girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product.The means that the demand for the American Girl doll is:

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered. -Refer to the American Girl Doll.In terms of producing the doll and its accessories,the calico fabric used to make Kristen's dress is an example of a(n):