Exam 19: Setting the Right Price

Which strategy involves a firm charging a price identical to or very close to the competition's price?

Which pricing method (skimming,penetration,or status quo)would be most appropriate for each of the following products: (1)a new kind of automatic vacuum cleaner, (2)brightly coloured wooden blocks to be used as a child's toy, (3)a new,low-cost,no-calorie fat substitute, (4)a home computer,and (5)a designer perfume.Briefly justify your answers.

Why do consumers sometimes prefer two-part pricing?

Quart jars of Dancing Pig Barbecue Sauce,produced in British Columbia,are sold through the mail.The company uses two different shipping prices.All customers west of the Fraser River pay $3.99 shipping and handling costs per order,while all east of the Fraser River pay $4.99.Which type of pricing is being used?

What is marketing two or more products in a single package for a special price known as?

Functional discounts are typically calculated as the wholesale price times the accumulated margin percentages.

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.Which pricing tactic was Michael's probably using with its Funky Girls Gel Pens?

Post makes several varieties of cereals.In promoting this product line,Post offers a 50-cents-off coupon that can be used to purchase any of its cereals.Therefore,what must Post consider when pricing its cereals?

When a channel intermediary is compensated for the ordinary services and tasks performed within the channel of distribution,the compensation usually comes in the form of a discount from base price.What is this discount called?

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.When a customer buys the matching nightgown set for the doll and her owner,what did American Girl use to price the items?

Functional discounts,noncumulative quantity discounts,and promotional allowances are examples of rebates given to the trade customer.

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.While a doll can be purchased at Walmart for less than $10,American Girl markets its dolls at a price much higher than the prices of its competitors.Which strategy does it most likely use?

The retail nursery is selling potting soil at a below-market price to lure customers into the store in hopes that while they are in the store to buy potting soil,they will also buy other gardening items that have a much higher markup.What is the retail nursery using?

What is the term for a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round?

A 16-ounce bottle of Prairie Herb vinegar sells for $4.95,and a 16-ounce bottle of Heinz vinegar costs $1.05.Prairie Herb vinegar is new to the market,perceived to be of higher quality,and provides a unique flavour to foods even though it is used in the same way as Heinz vinegar.Which type of policy is Prairie Herb vinegar most likely using?

If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains,and at even-numbered amounts to denote quality,what is he or she using?

Geographically dispersed sellers often result in significant freight costs.Define four types of geographic pricing tactics that can be selected by a marketing manager to moderate the impact of freight costs on its more dispersed customers.For each tactic defined,specify the circumstances that would prompt the selection of that geographic pricing tactic.

Why are quantity discounts most often used?

A national manufacturer of car parts has six warehouses and has a pricing policy of charging freight from the closest warehouse to the customer,regardless of where parts are shipped from.For instance,if the customer is in Vancouver,British Columbia,the closest warehouse to the customer is in Seattle,Washington.If the ordered car part actually comes from the Alabama warehouse,the customer still pays freight from Seattle.Which pricing does the manufacturer use?

Manufacturers know the approximate price level they can expect when establishing a product price.This approximate price is called the base price.