Exam 19: Setting the Right Price

This tactic allows different customers to pay different prices for essentially the same merchandise bought in equal quantities.It is often found in the sale of shopping goods,specialty merchandise,and most industrial goods except supply items.What is this tactic called?

When a customer of the Majestic Sign Company chooses to pay immediately on delivery rather than wait to be billed in 30 days,the buyer receives a 5 percent discount.What is this discount an example of?

The Raver-Smythe Corporation (RSC)has introduced mylar-based artificial fingernails.It earns a low profit margin on the sale of each box of its new fingernails and is still able to meet its revenue objectives due to economies of scale.RSC is using a penetration pricing policy.

A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin,which can be used effectively as a blood replacement.The manufacturer of the product has put a high price on the product in order to recoup its research and development costs.Which type of policy is the manufacturer of Oxyglobin using?

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.When does this strategy work best?

According to your text what is an advantage associated with a flexible pricing policy?

What type of geographic pricing policy would a marketing manager most appropriately choose for the following products: (1)nationally advertised bubble gum, (2)rebuilt engines for jet airplanes,and (3) bulk amounts of a rare spice harvested from a single mountain in Canada and used in high-priced restaurants? Justify your answers,and specify any assumptions you used to arrive at your answer.

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing does which of the following?

What is product line pricing? What three relationships among products in the line must managers be aware of before setting prices? For each relationship,give an example of a product that fits the situation.

A base price may be lowered through the use of a discount.Discounts take a variety of forms and have several different objectives.Name and define three types of discounts (do not include allowances or rebates).State the main objective of the each type of discount you identify.

After establishing pricing goals,managers should estimate total revenue at a variety of prices.Next,they should do which of the following?

A winery that makes a huge profit on merlot wines may lower its price on pinot noir wines to cause damage to wineries that produce only pinot noir.This is an example of predatory pricing.

If a manufacturer designates a shipping point from which to calculate all freight charges and charges customers the freight costs from that point (even if the goods were shipped from another location),which type of pricing is the manufacturer using?

When Microsoft introduced its Windows NT network operating system,it gave buyers free Web server software.At the same time,Netscape was trying to sell similar Web server software for $4,999.Once Microsoft got a large share of the market,and Netscape's market share declined substantially,Microsoft began charging an above-market price for its Web server software.What did many people think Microsoft was guilty of?

The market for turkey products is large.If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savoury dressing,most of the large market for this new product would be aware of its existence.The market is price sensitive,and there is some potential competition.What would be the appropriate strategy?

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.What is the term for the money offered by Mrs.K's to retailers to advertise the company's products?

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.Which type of discount is offered by Mrs.K's to buyers who are willing to assume the transportation of products from the farm to their warehouses?

Why do retailers use leader pricing?

Bowler's Alley is a chain of Canadian stores targeted to people who are proud of their NBA (National Bowling Association)membership.It has agreed to set up a special display of Rawling bowling balls near its bike aisles and also to run an advertisement in newspapers in communities where its stores are located.Rawling has agreed to supply the display material free and to pay for half the cost of the advertisement.What is this example of?

Evergreen Lighting,a manufacturer of decorative,energy-efficient lighting products,requires its buyers to pay for the cost of transportation from the manufacturing site to their place of businesses.Evergreen Lighting uses FOB origin pricing.