Exam 19: Setting the Right Price

A catalogue retailer offer three styles of khaki pants at three price levels.Customers can buy khaki pants for $26,$32,or $38 and at no other prices but these.The special pricing tactic used by the catalogue retailer is best described as variable psychological pricing.

Teresa and Debbie have decided to keep their new power boat in a "drystack" storage facility rather than in the water at a marina.The storage facility charges them a fee of $500 per year,plus $25 each time they call ahead and ask the facility to put their boat in the water for the day or weekend.Which pricing tactic is the facility using?

One example of price bundling occurs when the ballet sells season tickets at a lower price than the total price of tickets for each show bought individually.

Alissa Dunn is the owner and operator of Dunn's Best Jams,which she sells at craft festivals.She makes and sells only three types of jams: pecan pie jam,chocolate pie jam,and lemon tart jam.The costs of leasing her professional kitchen for manufacturing,travel to craft shows,insurance,and so on are allocated on an equal basis to the three types of jam sold.What are these costs?

Leupold & Stevens,Inc. ,makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous at a price much lower than it has ever sold a rifle scope before.The new scope offers several different magnifications and is the only scope in the $200 range that is made in the United States.(All similar scopes are priced much higher. )Which pricing strategy is Leupold & Stevens using to appeal to a larger market?

Uniform delivered pricing is which of the following?

Sharyl Kabbes manufactures dairy products on her farm outside Sherbrooke,Quebec.Her products carry the brand name Mrs.K's Premium Quebec.The company sells milk,cheese,and sausage products.The products are sold individually or in sets that include a variety of cheeses and sausage products for a special price.Currently,the products are sold only in the province of Quebec.Mrs.K's products were introduced with a high price relative to competition.Kabbes says that her products are premium and,therefore,justify the high initial price.To get retailers to carry Mrs.K's products,the company offers discounts to buyers who will transport the products from the Kabbes Farm to their warehouses.Kabbes also offers retailers money to run ads for Mrs.K's products. Because Mrs.K's products are perishable,transportation is very important,and some of her customers could not take advantage of the discount offered for picking up the product from the farm.As a result,Kabbes has decided to divide the province of Quebec into several segments and base her freight charges on the location of the buyer within these segments. -Refer to Mrs.K's Premium Quebec Cheese.Mrs.K's sells some products in sets that include a variety of cheeses and sausage products for a special price.What is this known as?

At the Greenville Florist,there are four different prices for funeral bouquets.The smallest bouquet sells for $30;there is also a $40 version and a $75 version.For those who want to express their grief through the purchase of a dramatic floral arrangement,the florist also offers a $150 value.Why has the owner of the florist shop chosen price lining?

Cashtown Used Cars aired a radio spot announcing,"Today only,previously owned cars are only $200!" Meghan just wanted some kind of in-town transportation.When she went to Cashtown,the salesperson said,"We have only one $200 car left,but it's not the kind of car I'd want my wife to drive.However,we do have some great deals on newer models." Meghan went home with an $8,000 used car.What is Cashtown probably practising?

List the three basic pricing methods.Name one advantage and one disadvan tage associated with each.

What are consumer penalties? What two reasons do businesses give for requiring consumers to pay them?

Razer-Edge makes machines for sharpening the blades used by butchers to slice meat.When Razer-Edge priced its Primary Sharpener,its salespeople were told that it would be sold for $1,700,but that there would be room for discounts and flexibility.What type of price is the $1,700 price for the Primary Sharpener?

What are the three basic strategies for setting a price on a new good or service? Briefly describe each strategy.

Big Sky Brands have introduced Jones Carbonated Candy,a candy that delivers a blast of the most popular Jones soft drink flavours along with an oddly enjoyable tongue-tingling sensation.Which strategy would most likely be used with this product to convince consumers to try it and not buy some other brand?

Kule,Inc.produces three different lines of car racks for transporting large,bulky items. Total company net annual profit = $40,000 Included in the cost of goods sold is $12,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that it drop the luggage rack line?

The American Girl catalogue began as a concept to introduce girls who lived in the past to today's girls.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 and the hardcover story of how she got to Minnesota cost $90.Six more hardback books of Kristen's life are available for $80.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $40.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $220.Shipping costs vary with the price of the merchandise ordered and are not connected to weight or distance. -Refer to American Girl Catalogue.In order to determine how to price the doll,American Girl most likely used a four-step process.What is the first step in this process?

The advent of the Internet and electronic commerce has greatly affected the way businesses price their goods and services and has allowed for the use of more of which of the following?

K&G Restaurant Supplies sells paper products and commodity items like flour to for-profit businesses.It charges a substantially lower price to companies that operate multiple locations such as a restaurant chain.It charges a higher price to small or independent operations because they are less profitable customers.What is K&G Restaurant Supplies engaging in?

Leading Brands,Inc. ,manufactures Trek Natural sports drink.The company would like to introduce a Trek Natural brand energy drink.Leading Brands would have a great amount of freedom in choosing a price for its new energy drink.

A manufacturer using uniform delivered pricing is legally discriminating against buyers who are located close to the point of shipping because they pay the same amount as buyers located far from the point of shipping.