Exam 19: Setting the Right Price

One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products.

Pharmacies are a new addition to Costco.They could exert a greater influence on the marketplace for prescription drugs than their newness indicates.Costco has a stated philosophy of marking up merchandise a maximum of 14 percent.When that philosophy is applied to prescription drugs,especially generics,warehouse club prices can be dramatically lower than those of conventional drugstores,supermarkets,or discount store pharmacies.Which type of strategy is Costco using to convince consumers to use its pharmacies rather than its competitors?

What is a promotional allowance? What is the difference between a promotional allowance and a functional discount? Give two specific examples of promotional allowances.

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 pricing involves dividing the state of Quebec into segments and pricing products based on the freight charges to different segments?

A company's pricing strategy should do all of the following EXCEPT which of these?

Companies frequently offer a reduction from the base price to customers who pay immediately,or within a specified time period.What is this called?

During a recent worldwide recession when wine usage was declining,Nickel & Nickel launched a new brand of wine,which it sold at $125 a bottle.The wine is allowed to age three times as long as lower-priced wines,and the grapes used in the wine's production are handpicked.Wine lovers appreciate how both production techniques improve wine quality.What did Nickel & Nickel use to build market share?

Which of the following are extra charges paid by consumers for violating the terms of purchase agreements?

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

If you want to buy season tickets in the comfortable seating behind the batter at the Fullerton Softball Complex,you can expect to make a qualifying payment that gives you the right to purchase the tickets.This payment is not deemed to be part of the ticket price.It is one of the costs that must be paid in order to buy a season ticket.What is Fullerton using?

One popular cost-oriented pricing tactic is culling low-profit margin products from the product line.Which of the following statements does NOT describe a reason that a marketing manager would want to avoid this tactic?