Exam 21: Developing and Applying a Pricing Strategy

A firm estimates that consumers will pay $50 for its sweaters. If it requires a 30 percent markup, it must manufacture the sweaters for no more than $35 (when selling direct).

Price leadership is most common in which competitive situation?

In a variable markup policy, a seller may use different markups for different categories of goods and services.

A wholesaler has merchandise costs of $70 per unit. If it requires a markup at wholesale of 40 percent, its selling price should be $98.

A firm that is oriented toward high sales volume or high market share should seek ___-based pricing objectives.

A TV sells well at a price of $159. Retailers want a 30 percent markup and the maker wants a minimum 20 per cent markup. Because the TV costs $85 to produce, the maker will be satisfied.

A wholesaler buys a coat for $75 and requires a 25 percent markup at wholesale. The wholesale selling price should be

A firm's total costs are $400,000; its profit goal is $50,000. If it makes 10,000 units, the cost-plus price per unit is $40.

A firm sells key items in its product assortment at less than their usual profit margins. This illustrates the use of

A firm offers several models of a product, with each model representing a distinct level of quality or features. This illustrates

Which of these is NOT an indication that a pricing strategy may be performing poorly?

An advantage of price lining is that it

The lowest price a firm can charge and still attain its profit goal becomes its

Markups are most frequently stated in terms of percentages of costs.

A firm discovers that customer demand is very price elastic and that a large consumer market exists. Which pricing technique should the firm utilize?

For target pricing to operate properly, a firm needs to

In prestige pricing, the demand curve is

A company using a mixed-brand strategy could employ a skimming pricing strategy with its manufacturer brands and a penetration pricing strategy with its dealer brands.

Chain-markup pricing demonstrates that channel members can set prices independently of one another.

A firm has total fixed costs of $500,000. Its variable costs per unit are 30 percent of its selling price. Its break-even point in sales dollars