Exam 14: Developing Pricing Strategies and Programs

When a company initiates a price cut in an attempt to dominate the market through lower costs (such as the $1.00 special lunch menus at key fast food restaurants) the company must ensure that it does not fall into certain low cost traps. List these four "traps."

In market-penetration pricing, the company's objective in pricing is to ________, believing that higher sales volume will lead to lower unit costs and higher long-run profits.

What are the different possible consumer reference prices?

If demand hardly changes with a small decline in price, we say that the demand is inelastic.

The example of "2/10" net 30 is a type of cash discount and means that

Traditionally, price has operated as the major determinant of a buyer's choice.

Price is one of the two elements of the marketing mix that produces revenue.

How would you explain the concept of "price elasticity" to a co-worker?

As a small firm in a commodity industry, you are often faced with a pricing policy that can best be described as "going-rate pricing." Explain how this pricing policy works.

The Internet is partially reversing the fixed pricing trend. Sellers can customize offers and prices, and buyers can compare prices through

________ communicates to the market the company's intended value positioning of its product or brand.

Which of the following is a factor that leads to less price sensitivity?

The final price charged by the company does not necessarily have to take into account the brand's quality and advertising relative to competition.

Caterpillar wants to lower production costs in order to decrease its required break even volume. Which formula should they use for the break-even calculation?

Auction-type pricing is becoming very popular today due to the Internet. The three types of auction-types of pricing include sealed-bid auctions, descending bids auctions, and

Companies sometimes initiate price cuts in a drive to dominate the market through lower costs.

Explain why "value pricing" is not just a matter of simply setting lower prices?

Pricing decisions are clearly complex and difficult, and many marketers neglect their pricing strategies.

In deciding on the price for your product's introduction, you must consider what is best described as the "three Cs." Define and explain what is meant by this statement?

Total costs consist of the sum of the fixed and variable costs associated with the product.