Exam 12: Pricing Concepts and Management

Which of the following statements is true about marginal analysis?

Firestone notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's

You are a brand manager for a large chain of grocery stores. You have been working overtime for the last two weeks to prepare for your pricing objectives meeting with the head of sales and marketing. You walk into the meeting with a high degree of confidence in the strategy that you have for setting the pricing objectives for your brand category for the upcoming year. You are speechless when the marketing head tells you that no changes in the pricing objectives will be made for your brand category. He says he believes it is most prudent to leave the existing pricing objectives as they are for the upcoming year.??Which of the following statements is the best explanation for the marketing head's decision to leave the existing pricing objectives in place with no change?

Bundle pricing may be perceived to be of value by customers because

Electricity is an example of a product that is price elastic.

The idea behind price skimming is to quickly recover the costs of research and development.

Marginal revenue is the change in total revenue that occurs when a firm sells an additional unit of product.

Scenario 12.2 Use the following to answer the questions. Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands. -Refer to Scenario 12.2. Ray-Ban's plan of gathering information about the other brands sold in department stores, including their prices, would most likely be used in a ____ basis for pricing.

LaTonya Horton works for the Stars organization and is responsible for managing ticket sales. She knows that ticket price and season ticket packages are related to consumers' interest in purchasing tickets and she tries to price individual tickets and packages at the level where ticket sales and profitability are maximized for the Spurs home games. LaTonya typically tests the _______ of demand by creating special events or special sales where she adjusts the price of tickets so she can determine the best price that maximizes profitability for the organization.

One of the biggest challenges of a market share pricing objective is that it oversimplifies the contribution of price to profits.

For most products, the quantity demanded goes up as the price goes down.

Demand is best determined by a top management committee.

For custom-made equipment or commercial construction projects, which pricing method is most likely used?

The newest version of a product like Bose headphones is likely to use _____, while the new version of Red Bull is likely to use _____ .

An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-market pricing strategy.

If an organization sets prices to recover research and development expenses and establish a premium quality image for its product, it would be using a ____ pricing objective.

The Cubicles is an office supplies company that has just adjusted its price levels so that it can increase its sales volume to match its expenses. The Cubicles is most likely employing a ____ objective.

Len is planning three sales during the third quarter of the year at Toys "R" Us. The first is at the beginning of the school year, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to be

Price leaders, comparison discounting, and special-event pricing are applications of

Markup can be stated as a percentage of the cost or as a percentage of the selling price.