Exam 11: Developing Pricing Strategies and Programs

________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and record keeping.

Which of the following is True regarding price elasticity?

Price elasticity depends upon the magnitude and direction of the contemplated price change.

For price discrimination to work ________.

JJ's Hair Salon pays overhead each month, including bills for rent, heat, interest, and salaries. These payments are examples of ________ costs.

Which of the following is most likely to be a valid reason for initiating a price increase?

In ________, the seller charges a separate price to each customer depending on the intensity of his or her demand.

Customers usually have a lower price threshold below which prices signal inferior or unacceptable quality, as well as an upper price threshold above which prices are prohibitive and the product appears not worth the money.

Daryl encouraged his prospective client to buy Car A for $38,000 because it was a comfortable, reliable, and fuel-efficient model. But the client was interested in Car B, a used car costing $10,000 less. How could Daryl apply the total cost of ownership to convince this client to buy Car A?

Consumers usually like price increases because these changes signal that an item is "hot" and represents a good value.

A firm that is plagued with overcapacity, intense competition, or changing consumer desires would do better if it pursues ________ as its major objective.

Which of the following is the first step in setting a pricing policy?

Value pricing requires a company to reengineer its operations to become a low-cost producer.

A market-penetration pricing strategy is most suitable when ________.

NV Inc. has launched a touch-sensitive handset in the Indian market and priced it at 9,500 rupees. Although many people are checking it out, marketers see evidence that the price exceeds the upper price threshold for the majority of Indian consumers. What does this mean?

On sites such as eBay and Amazon.com, the seller puts up an item for sale and bidders raise the offer price until the top price is reached. What kind of auctions are these?

Consumers are less price sensitive when ________.

When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product.