Exam 18: Pricing Concepts

When only one firm is left in the market selling a product in the decline stage,prices will stabilize.

According to your textbook,which of the following describes a disadvantage associated with markup pricing?

Today's firms must develop specific,measurable,and attainable pricing objectives if they hope to survive in highly competitive markets.

What is 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.To compete against the private labels,the significant brands can upgrade products to distinguish them from private labels and advertise their brands more aggressively than ever.Most of the ads will feature cents-off coupons.What does this pricing strategy clearly involve manipulation of?

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs: What is the annual break-even point in units for the company?

Markup pricing,adding an amount to cost to cover expenses and profit,is one of the most common pricing methods used by intermediaries to establish a selling price.

Last quarter Abingdon Company sold 1,000 decorative decals for $1 each,Cedar Decaliania sold 200 decorative decals at $4 each,Creative Decals sold 500 decals at $2 each,and Donnelly,Inc.sold 300 decals for $4 apiece.Assuming the four companies are the only firms competing in the decorative decal market,calculate unit and dollar market share for each company for last quarter.For each company,which market share figure might be used in an advertisement for that company?

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold,what should a firm do?

At Walmart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99. -Refer to Walmart.The retailer sold one at the $28.50 price and five at the $19.99.What was Walmart's revenue?

What is the most popular method used by wholesalers and retailers in establishing a sales price?

A bakery supply catalogue sells five-pound bags of moist apricots and cranberries,sweet dates,bits of pineapple,and candied cherries to be used in fruitcakes.Each bag costs $24.95. -Refer to Dried Fruits.If the price of cranberries were to increase by 5 percent,it would have no effect on the price of the fruit mix because cranberries are only one of several fruits in the package.What is the demand for cranberries for this particular use?

Imagine you're planning an after-symphony fundraising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping centre to a group of investors,and you want to serve a cake shaped like an architectural rendition of the centre.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a major gala.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.Many party planners will use only Cecilia Villaveces Cakes at their parties-no matter what the price is.They know that Cecilia's cakes can make a party a success.Moreover,the cakes are what people remember most about the parties.From this description,what should you assume that Cecilia Villaveces Cakes have?

Imagine you're planning an after-symphony fundraising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping centre to a group of investors,and you want to serve a cake shaped like an architectural rendition of the centre.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a major gala.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike. -Refer to Specialty Cakes.There are many occasions for which people may need to buy a cake,but most people do not have the time or interest to learn about cakes and their bakers.Why might these people who do not know about the quality of the Cecilia Villaveces Cakes choose them?

What is the term for a cost that changes with the level of output?

Calculate answers for the following scenarios: a. A set of measuring cups is sold for $2.50.The retailer added $.50 to the original cost.What is the markup percentage? Calculate your answer in terms of the price that retailers usually use in computing markups. b. The cost of a food blender is $40 and the retailer applies a markup of $60.What is the retail markup percentage? Calculate your answer in terms of the price that retailers usually use in computing markups. c. A retailer marks up all products by 20 percent.If a set of glasses costs the retailer $10,what will the final selling price be? d. A retailer marks up all products by 75 percent.If the selling price of a set of plastic bowls is $4,what was the cost to the retailer?

Why are marketing managers finding it more difficult to set prices in today's environment?

A marketer using a profit maximization strategy will charge the highest prices the market will bear.

What do many consumers,especially when faced with an uncertain purchase decision,think of a high price?

What is the term for the change in total costs associated with a one-unit change in output?