Exam 12: Pricing Concepts and Management

You are the general manager of the machining products division of a diversified manufacturing company in Des Moines, Iowa. You primarily produce machining products for sale to wholesalers around the world. However, you periodically get requests from other divisions in your company to purchase your products. You treat these purchase requests the same as a purchase request from a non-affiliated entity. You sell your machining products to other internal divisions at a price that is equivalent to a market-based cost.??This is an example of which of the following types of business pricing?

Mariposa Sanchez is a sales representative for Sherwin Williams and her territory includes an approximately 120-mile radius of her "home" retail store. Her customers are painting contractors and facility managers of office complexes, apartment buildings, hospitals, and other businesses that might have commercial painting needs. Mariposa uses her company vehicle and spends about five hours each day in her car visiting her customers and prospecting for new business. Since her territory is so large, Mariposa puts about 200 miles on her car each day, which consumes a lot of gasoline. She tries to be economical when choosing gas stations, but it doesn't really matter how much the gas costs, she pays the price. In this case, demand for gasoline is

How might a marketer find information about a competitor's prices? Why is this information important?

Captive pricing, premium pricing, and price lining are all strategies aimed at maximizing the profits of an entire product line rather than an individual product.

You are reading the quarterly financial report of one of your competitors. You expected to see their total sales revenue decline because they had a large price increase during the quarter. You were certain that the price increase would lead to an equivalently large decrease in their total sales revenue. To your surprise, their total sales revenue actually increased in the quarter.??Based on this information, which of the following explanations could explain why the competitor's total sales revenue increased?

Food King grocery stores offer candy bars in the checkout lanes for $0.99 rather than $1.00. This use of _____ pricing should help increase sales of the candy bars.

The Palace Confectionary Co is a small business located in the northeastern United States. The owner of Palace Confectionary is calculating the projected costs for the coming year. There is rent for the building; salaries for the retail employees; raw materials of sugar, chocolate, and other ingredients; wrappers for packaging of individual pieces of candy; boxes; and radio advertising. Palace's ______ are most likely to be the raw materials of sugar, chocolate, and other ingredients, as well as the wrappers.

The price of a hotel room is more important to a business traveler than to a tourist.

If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as

Which of the following would be used in setting the price of a new product if considerable competition is expected?

When marginal cost is equal to marginal revenue, the firm should

Pricing objectives should be considered overall goals to aid the organization in its long-range plans.

Setting prices for business customers is very similar to setting prices for consumers.

During July and August, Crystal Cove Golf Course, located in South Carolina, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of

At what point does a firm maximize profit?

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's closest competitor, the Hearthstone Pet Hospital, currently charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing which of the following?

Odd-number pricing is

Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called

A concession in price in business markets to achieve a desired goal is called a(n)

If a company increased its price from $100 to $120 and the quantity demanded fell by 40%, the price elasticity of demand for this product is