Exam 14: Developing Pricing Strategies and Programs

How could a department store attempt to manipulate the reference prices of women's apparel?

Prior research has shown that although consumers may have fairly good knowledge of the range of prices involved, surprisingly few can recall specific prices of products accurately. When examining products, consumers often employ reference prices. List the possible prices consumers' use as their "reference."

Texas Instruments builds a large plant to produce a great quantity of products, hoping that as prices decline, sales volume increases and thus costs decline. What pricing strategy has TI used in order to maximize their market share?

If variable costs are $10 per unit, fixed costs are $300 000, and expected unit sales are 50 000 the unit cost is

When the salesperson at the local "luxury" car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36 000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method?

One factor leading to price increases is overdemand. When a company cannot supply all of its customers, it can raise its prices, ration supplies to customers, or both. What are four different ways the price can be raised?

When a consumer buys a $100 bottle of perfume containing $10.00 worth of materials, the gift giver is communicating their high regard to the receiver and this represents the concept of ________ in pricing.

IKEA and WestJet Airlines are among the best practitioners of value pricing--win loyal customers by charging a fairly low-price for a high-quality offering. Why is value pricing not a matter of simply lowering prices?

Generally, consumers prefer ________ price increases on a regular basis to sudden, sharp increases.

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

If demand hardly changes with a small change in price, we say that the demand is

When the price of a gallon of milk increases by $0.50, consumers notice this increase immediately. This is an example of what concept in the understanding of consumer price sensitivity.

One of the traps of instituting a price decrease is when that low price buys market share in the short term. The same customers will shift to any lower-priced product that may come along. This trap is called

Many consumers use price as an indicator of quality and value.

In ________ the retailer charges higher prices on an everyday basis but then runs frequent promotions in which prices are temporarily lowered below the EDLP level.

________ is the result of a concentrated effort by designers, engineers, and purchasing agents to reduce the product's overall costs.

The popularity of "early-bird" specials at restaurants is an example of what type of price discrimination?

________ consists of the sum of the fixed and variable costs for any given level of production.

An increasing number of companies are basing their pricing on perceived value, which is the value that the consumer decides the product is worth and is the same across all incomes and regions of the company.

When different customer groups are charged different prices for the same product or service, it is called