Exam 21: Developing and Applying a Pricing Strategy

Through ___, a firm alters prices frequently in response to changes in cost or demand.

Which of these price adjustment tactics by a manufacturer enables the manufacturer to develop and maintain a customer data base?

A firm using price-floor pricing is able to sell an extra 1,000 units of its excess capacity. Its price-floor price exceeds its marginal cost per unit by $4. The firm's additional profit

An indication that a pricing strategy may be performing poorly is that sales personnel spend a large part of their selling time negotiating prices with potential consumers.

Cost-plus pricing allows firms to receive consumer orders, produce items, and derive prices after total costs are known.

Explain how traditional break-even analysis differs from modified break-even analysis. Which technique has more realistic assumptions? Which is easier to use? Explain your answers.

Unless cost-, demand-, and competition-based pricing techniques are combined, critical decisions are likely to be overlooked.

Additional markups are often keyed to the costs of essential product ingredients, such as the minimum wage rate.

No bargaining with customers over price is permitted with

Cost-based pricing is more effective than demand-based pricing when a firm has highly differentiated products.

With which pricing technique are the maximum acceptable costs for each channel member computed?

Average total costs at any quantity are equal to average fixed costs plus average variable costs.

Markup percentages are usually expressed in terms of an item's selling price, not its cost, because

A broad price policy attempts to match a firm's pricing approach with target market needs.

With price discrimination, a firm seeks to appeal to market segments that have different price elasticities and/or different price ceilings.

Which of these is a major limitation of cost-based pricing?

What is the role of market segmentation in yield management pricing? Describe its ideal uses and potential limitations.

In a demand-based strategy, prices are set below the market, at the market, or above the market.

A one-price policy is required with self-service merchandising.

In setting prices, a computer manufacturer considers questions such as these: "What profit margin does a price level allow for each channel member, including our firm? Can we charge 10 percent above the market due to our excellent service department and reputation? Is our market price sensitive?" This firm is using