Exam 20: Setting the Right Price

The term FOB is an acronym for:

If items are _____,an increase in the sale of one good causes an increase in the sale of the other (and vice versa).

Apple iPhone Apple,Inc.'s iPhone went on sale on June 29,2007.Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products,and the iPhone enjoyed a tremendous amount of "buzz" before its introduction.As expected,the iPhone entered the market at what many believed to be a high price ($599).However,within weeks,the price was reduced to $399.By the end of 2007,over eight million iPhones had sold in the U.S.marketplace.By most,if not all measures,the original iPhone was a huge success for Apple,and its exclusive U.S.carrier was AT&T. On July 11,2008,Apple,Inc.released the iPhone 3G,which it advertised as being twice as fast as the original iPhone for half the cost.However,in order to obtain an iPhone at the new price of $199,buyers had to agree to a two-year service contract with AT&T.This contract would allow iPhone users to receive phone calls,receive e-mail,and search the Web on the same device.A single charge of $59.99 from AT&T included 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voice mail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.This approach succeeded,and over a million iPhone 3Gs were sold during the introductory weekend. -Refer to Apple iPhone.Consumers who agree to the two-year AT&T service contract will be required to pay a cancellation fee if they leave AT&T prior to the end of the two-year period.This fee is a consumer:

All of the following are strategies to make the demand for a good or service more inelastic EXCEPT:

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

Art Supplies It's September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter's elementary school.In her Sunday newspaper was a flyer from Michaels,an arts and crafts retailer.As she looked through the newspaper insert,she noticed that if she purchased three or more bottles of Alene's Tacky Glue,the regular price of $1.50 each was reduced to $1.15 each.She also saw that the store priced its plastic storage boxes at $1.99,$3.99,and $5.99.She thought they would be useful for storing each child's projects.On the front page of the flyer was an ad for Funky Girls Gel Pens,something she knew her daughter would love to use.The price at Michael's was $6.99 lower than the price she had found at the other stores that carried the pens.She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michaels had a scrapbook starter kit,which includes scissors,book,pages,and stickers for only $15.The items could be purchased separately for $19.99.The flyer also announced that all flag-related items leftover from its Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.What pricing practice was used with the scrapbook starter kit?

The DCS Stainless Steel Gas Grill for outside cooking costs $3,995.The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers.There is no potential competitor for this grill.The _____ strategy is probably best.

Louisiana State University (LSU)football season ticket holders have to pay a fee (also known as a "donation")to the LSU Foundation every January,which is not deemed to be part of the ticket price.They pay for their tickets later in the year for the next football season.The Foundation fee must be paid in order to retain the rights to purchase a season ticket.LSU is using:

A national manufacturer of car parts has six warehouses and has a pricing policy of charging freight from the closest warehouse to the customer,regardless of where parts are shipped from.For instance,if the customer is in Vancouver,British Columbia,the closest warehouse to the customer is in Seattle,Washington.If the ordered car part actually comes from the Alabama warehouse,the customer still pays freight from Seattle.The manufacturer uses _____ pricing.

The market for turkey products is large.If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savory dressing,most of the large market for this new product would be aware of its existence.The market is price sensitive,and there is some potential competition.The appropriate strategy would be:

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

Marketing two or more products in a single package for a special price is known as:

A base price may be lowered through the use of a discount.Discounts take a variety of forms and have several different objectives.Name and define three types of discounts (do not include allowances or rebates).State the main objective of each type of discount you identify.

More and more businesses are adopting consumer penalties-extra fees paid by consumers for violating the terms of a purchase agreement.

Which of the following prohibits any firm from selling to two or more different buyers,within a reasonably short time,commodities (not services)of like grade and quality at different prices where the result would be to substantially lessen competition?

Tickets to a combined amusement park and water slide were $49 for the day.Then the company gave customers the option to purchase tickets for either the amusement park or the water slide for $18.To help keep costs in line,the park management also began charging its customers a small parking fee.Initially,the cost of parking was figured into the $49 price.The amusement park is using:

An Internet picture frame manufacturer offers retailers reduced prices on any combination of size or style frames purchased.The discount is shown as they shop and adjusted as the quantity of frames purchased increases.What common form of purchase discount is the frame manufacturer using?

A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin,which can be used effectively as a blood replacement.The manufacturer of the product has put a high price on the product in order to recoup its research and development costs.The manufacturer of Oxyglobin is using a _____ policy.

All of the following are tactics for fine-tuning the base price EXCEPT:

Uniform delivered pricing is illegal because it discriminates against buyers who are located close to the point of shipping because they pay the same amount as buyers located far from the point of shipping pay.