Exam 12: Pricing Concepts and Management

You are head of sales and marketing for your firm, and you are meeting with the CEO to establish pricing objectives for the upcoming product year.??Which of the following factors are you going to consider as you establish your firm's pricing objectives?

A retailer of Dry Day deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate markup as a percentage of selling price?

A manager at Kohl's discovers that Macy's has reduced the price of its children's Levi's from $31.99 to $24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing strategy?

Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using ______, which usually results in a ____.

When Jamie and Cayden are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of

The manager at Target puts a sign up next to a Samsung audio system that reads, "Only $299.99! $60 less than at Best Buy." This is an example of what type of pricing strategy?

Georgina recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell the house, she may have to use

Describe, compare, and contrast the three major bases for setting prices.

Elastic demand is usually a result of the lack of substitute products.

Which of the following is most likely to have an inelastic demand curve?

A marketer is most likely to set prices according to a cash-flow objective when a

The use of price skimming discourages competitors from entering a market.

The objective of profit maximization is rarely operational because its achievement is difficult to measure.

Price skimming is designed to yield maximum unit sales volume.

What are some issues to consider when determining a specific price?

Fixed costs vary with the number of units produced or sold.

Phoebe and Daniel recently purchased a 25-year-old home and are currently immersed in a kitchen remodel, which includes replacing countertops, cabinets, and kitchen appliances. They are shopping for appliances and visited several retailers to compare prices and determine which brands best met their requirements. One retailer is offering the GE brand refrigerator, cook top, built-in oven, dishwasher, and warming drawer for $3,999, while another retailer has a set of LG appliances that includes a larger refrigerator, range/oven combination, dishwasher, and wine cooler for $3,450. Phoebe and Daniel are meeting with their kitchen designer to finalize their plans for the kitchen and think that either one of these packages will fit their requirements. The appliance retailers are utilizing a ______ pricing strategy.

To determine the breakeven point in units, divide the fixed costs by

Scenario 12.3 Use the following to answer the questions. Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. -Refer to Scenario 12.3. Glenwood is considering a markup pricing basis, with the cost for office visit plus vaccines at $45. If Glenwood were to add a markup of 33.3% of the costs, its price would be

Reference pricing is