Exam 19: Setting the Right Price

In a catalogue targeted to people who like to bake,customers can buy a single yeast bread mix designed specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50.What is this an example of?

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.The introductory pricing policy chosen by Mrs.K's exemplifies which type of policy?

Under what conditions is each of the three basic pricing methods successful?

Ahmad Jing operates a wedding consultant service.He will often provide essentially the same service to different customers at distinctly different prices depending on how much he likes the customer and how much he thinks the customer needs his services.What does Jing use?

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.Look at the prices of items found in the American Girl catalogue.Which fine-tuning pricing tactic did American Girl use?

When does a seller pay the actual freight charges and bill every purchase with an identical,flat freight charge?

When a buyer pays a lower price for buying in multiple units or above a specified dollar amount,what is the buyer receiving?

It's September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter's elementary school.In her Saturday newspaper was a flyer from Michael's,an arts and crafts retailer.As she looked through the newspaper insert,she noticed that if she purchased three or more bottles of Alene's Tacky Glue,the regular price of $1.50 each was reduced to $1.15 each.She also saw that the store priced its plastic storage boxes at $1.99,$3.99,and $5.99.She thought they would be useful for storing each individual child's projects.On the front page of the flyer was an ad for Funky Girls Gel Pens,something she knew her daughter would love to use.The price at Michael's was $6.99 lower than the price she had found at the other stores that carried the pens.She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michael's had a scrapbook starter kit,which includes scissors,book,pages,and stickers for only $15.The items could be purchased separately for $19.99.The flyer also announced that all flag-related items left over from its Canada Day sale were reduced by 40 percent. -Refer to Art Supplies.What pricing practice was used with the scrapbook starter kit?

The dollar store is a chain of retail stores,where all of the merchandise is priced at $1.The Dollar Store uses which of the following?

Often a seller will establish a series of prices for a family of merchandise items.There may be several different models at specific price points but no prices in between.What is this policy called?

A retailer of furniture for babies that is allowed to deduct 3 percent from its total bill if it pays by a specific date is receiving a cash discount.

List in order the four steps used to set the right price for a product.

When a firm is customer driven and seeks to understand the attributes customers want in the goods and services they buy and the value of those attributes to customers,the price of the product is set at a level that seems to the customer to be a good price compared with the prices of other options.What is this strategy called?

How do value-based pricing,unbundling,and bundling help marketers hold onto market share during a recession?

The DCS Stainless Steel Gas Grill for outside cooking costs $3,995.The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers.There is no potential competitor for this grill.Which strategy is probably best?

A June sale on Cadbury Crème Eggs,an Easter staple for many people,is an example of which of the following pricing tactics?

Which of the following tries to get customers into the store with misleading advertising and then uses high-pressure selling to persuade the consumer to buy something else more expensive?

Rag fibres for paper and cotton seeds for cottonseed oil are two byproducts of the cotton textile industry.Because these products are produced together,they are complementary products.

When a firm introduces a new product at a relatively low price it is designed to capture a large share of a substantial market and produce lower production costs because it hopes to reach the mass market.It is following which of these type of strategies?

When the Mosquito Magnet was introduced,it was designed to rid the immediate area of mosquitoes and other annoying insects.The technology for the Mosquito Magnet took years to develop.It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die.What type of pricing policy would you recommend the company use to introduce this product to the market?