Exam 16: Pricing Concepts

What happens when demand is elastic?

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold,a firm should:

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.

_____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.

What is a break-even point? The Catera Company makes and sells cotton candy machines.What is the break-even volume for Catera machines in units?

When the Apple iPhone 3G was introduced the Apple iTunes web site also began selling small program "apps" written by third parties that could be run on the iPhone.One interesting app was the "I Am Rich" application.For a price of $1,000 you could buy this app that did nothing but display a red gem on the iPhone's screen.The description of the app stated that this red icon would remind you (and others you show it to)"that you were rich enough to afford this." Six of the applications were sold before Apple Inc.removed the app from iTunes.At the $1,000 price the author of the app was using _____ pricing as part of his marketing approach.

The manufacturers that remain in the market toward the end of the maturity stage typically offer similar prices.

When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for,the seller is using _____ pricing.

Shopping bots:

Which of the following would imply demand would be elastic?

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.To set the price of her cakes,Cecilia simply doubles her costs,which often include several hours of labor and expensive raw materials.This method of price setting is called:

A marketer using a profit maximization strategy will charge the highest prices the market will bear.

Price fixing is only illegal in some instances.

Penetration pricing is sometimes referred to as a "market-plus" approach to pricing.

Your Memory Lane produce custom-made art prints that include graphics and icons to celebrate life's special moments.For example,on his wedding anniversary David had an art print produced that celebrated highlights of his ten years with his wife,Kathy.Suppose Your Memory Lane sells the custom artwork for $500.It estimates its average variable costs to be $200 per unit produced.It figures its fixed costs to be $900,000 per year.How many prints does it have to sell to break even?

For a nail salon,the costs associated with the purchase of nail polish and other products like nail polish remover,sterilized equipment,laundry service for the towels,and the beverages given to customers,are all examples of _____ costs.

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market is called:

Fixed cost contribution equals:

Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n)_____ strategy.

One of the most stressful and pressure-filled tasks of the marketing manager is attempting to set the right price.Specify three aspects of the current pricing environment in consumer markets that have contributed to the difficulty in setting correct prices.