Exam 18: Pricing Concepts

Kables Optic builds quality binoculars,which have innovative components (such as water resistance)and superior durability.Kables Optic has managed to keep its price lower than its competitors.However,Kables's sales have been disappointing.For a fast and simple remedy,what should Kables do?

If the formula for elasticity results in a measure of elasticity (E)equal to 1,the increase in sales exactly offsets the decrease in price so that total revenue remains the same.

One of the most stressful and pressure-filled tasks of the marketing manager is attempting to set the right price.Specify three aspects of the current pricing environment in consumer markets that have contributed to the difficulty in setting correct prices.

Which of the following is defined as the quantity of product offered to the market by suppliers at various prices for a specified period?

Which of the following factors does NOT directly affect the elasticity of demand?

When Laser Technology developed and introduced a high-tech crash investigation system to be used by law enforcement officers,the company determined that demand for the product was inelastic,and there was no existing competition.What should the pricing strategy for the system be?

Which of the following statements best describes price?

When Nesco brand food hydrators sold for $59.99,Nesco sold 90 dehydrators.When the company dropped the price of its dehydrators to $44.95,it sold 145 dehydrators.What does demand for the food dehydrators appear to be?

What is the term for the responsiveness or the sensitivity of consumer demand to changes in price when consumers buy more or less of a product when the price changes?

Khimaira Farms sells handcrafted cookie cutters.When graphed,the demand schedule for Khimaira Farms brand cookie cutters forms a straight line.If at $3 per cutter,500 cookie cutters are demanded,and at $4 per cutter,450 cookie cutters are ordered,how many will be ordered at a price of $6 per cutter?

Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each.He has determined that his fixed costs are $8,000,and his average variable costs per firescreen are $45.What is his break-even point in dollars?

What is an organization using when it sets its prices so that total revenue is as large as possible relative to total costs?

The American Girl catalogue began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered. -Refer to American Girl Doll.Which of the following factors is most likely to affect the elasticity of demand for the doll?

What is the term for money that is left over after paying for company activities?

The American Girl catalogue began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered. -Refer to American Girl Doll.You can buy a doll at Walmart for $5.99.The high price of the American Girl doll is used to promote a high-quality image.Which type of pricing strategy does The American Girl use?

What is the term for the practice of marking up prices by 100 percent (or doubling the cost to set the selling price)?

In the mature and highly competitive furniture industry,what would you expect furniture manufacturers to engage in?

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on the selling price?

In a sluggish economy,consumers will buy even the most modest of products with the same discretion once shown only to big-ticket items,like computers,airfares,and designer clothes.The results are a growing popularity of cheaper private-label products and the likelihood that price wars among consumer goods could lead to the same kind of consolidation that occurred in the airline and electronics industries.Moreover,analysts say changing buying habits will force premium brand marketers to lower their prices to protect their positions.These companies may also upgrade products to distinguish them from private labels and promote their brands more aggressively than ever. One analyst says that consumers are forcing product innovation.Products have to be sold on merit.As a result,there will be fewer brands of significance,but the significant brands will be stronger.Brand loyalty is believed to exist only when,or if,value is provided.How do the significant brands compete? One analyst says that a combination of sensible pricing and innovation with a strong brand name can stabilize market share.Reformulated or repackaged products are typical examples of innovative attempts to solidify market share. -Refer to Consumer Buying Habits.Assume a product has a strong brand name,a reasonable price,and good quality.Which of the following strategies should NOT be implemented?

As products enter the growth stage of the product life cycle,prices generally begin to fluctuate wildly.