Exam 20: Setting the Right Price

Suppose an advertising agency develops logos for its clients.It charges $10,000 per logo--whether the team that's working on the logo takes 30 minutes or days to design the logo.Agency management explain that clients pay for the agency's expertise and creativity,not the amount of time it literally takes to develop a logo.This pricing approach is known as:

A(n)_____ discount is a deduction from list prices that applies to the buyer's total purchases made during a specific period and is intended to encourage customer loyalty.

How do value-based pricing,unbundling,and bundling help marketers hold on to market share during a recession?

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

What is a promotional allowance? What is the difference between a promotional allowance and a functional discount? Give two specific examples of promotional allowances.

A catalog retailer offers three styles of khaki pants at three price levels.The special pricing tactic used by the catalog retailer is best described as variable psychological pricing.

During a recent worldwide recession when wine usage was declining,Nickel & Nickel launched a new brand of wine,which it sold at $125 a bottle.The wine is allowed to age three times as long as lower-priced wines,and the grapes used in the wine's production are hand-picked.Wine lovers appreciate how both production techniques improve wine quality.Nickel & Nickel used _____ to build market share.

Which of the following statements is NOT true with regard to trade-ins?

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

Sears and John Deere run major sales on their lines of riding lawn mowers every fall.This is an example of a seasonal discount.

Kiddieland Amusement Park charges customers an admission fee of $10.Customers must pay 50 cents for each ride they want to ride while inside the park.This is an example of two-part pricing.

_____ tries to get customers into the store with misleading advertising and then uses high-pressure selling to persuade the consumer to buy something else more expensive.

A penetration pricing strategy tends to be most effective:

Trade-ins often go hand-in-hand with:

Manufacturers know the approximate price level they can expect when establishing a product price.This approximate price is called the base price.

Flexible pricing enables a seller to close a sale with price-conscious consumers.

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

Which of the following pricing methods can be used to build market share during a recession?

All of the following are potential disadvantages of a flexible pricing policy EXCEPT:

When the economy is characterized by high inflation,special pricing tactics are often necessary.One popular cost-oriented tactic is culling low-profit margin products from the product line.Why might this tactic backfire? What two other cost-oriented tactics can be used to guard against inflation? Describe these tactics.