Exam 21: Developing and Applying a Pricing Strategy

When cost-plus pricing is involved, price adjustments such as escalator clauses and surcharges are rarely used.

A firm with a high status image and high customer brand loyalty should utilize a penetration pricing strategy.

A firm wants to increase sales to $2,000,000 while obtaining a 15 percent return on investment. This firm is combining sales- and profit-based pricing objectives.

The proper role of a price leader is to

A firm sets its standard volume at 10,000 units. Investment costs are $4 million; and the target return on investment equals 15 percent. If the firm's average total costs at its standard volume equal $20, what is its target price?

Customary pricing and a one-price policy both seek to standardize prices, while variable pricing and flexible pricing do not.

Discounts, timing of payments, and credit arrangements are all examples of

Unbundled pricing enables full-service firms to better compete with discounters by separating out the costs (prices) of the specific services the full-service firms offer.

Price lining involves two basic decisions: defining the range of a firm's prices (floor and ceiling), and setting specific points within that range.

A retailer purchases a camera for $200 and requires a 20 percent markup at retail. The retail selling price should be

The responsibility for transportation charges is outlined in geographic pricing agreements.

Price leadership is illegal if competing firms discuss their pricing plans with each other.

A firm needs to be careful to avoid oversegmenting its markets when it uses

The seller is responsible for paying all shipping costs in which form of geographic pricing?

The Following Questions are linked to this scenario: A firm wishes to calculate its maximum acceptable costs under two scenarios: direct or indirect distribution. -Under the indirect distribution alternative, the shoe manufacturer sells its products via independent wholesalers and retailers. Each of the three parties requires a 30 percent markup. If consumers are willing to pay $159 for the product, the manufacturer's maximum acceptable cost

A firm must change its pricing strategy often due to competitive developments. This is a symptom of a poor pricing strategy.

The concept of prestige pricing is drawn from

In a one-price policy, all buyers pay the same uniform delivered price regardless of their location.

Chain-markup pricing traces demand-minus pricing calculations from the final consumer to middlemen to suppliers.

Price-floor pricing assumes that two market segments exist and that there would be no loss in sales with the inelastic segment if lower prices are offered to the elastic segment.