Exam 12: Pricing Concepts and Management

Transfer pricing involves the sale of a product to another unit within the same organization.

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 has decided to promote the new sunglass line as an "affordable luxury" and plans significant promotional expenditures. With these objectives, which of the following should Ray-Ban use to price its product line?

In its advertisement, Timberland gives a close-up of one of its boots to show its fine craftsmanship. At the bottom of the advertisement is "Est. 1973," followed by the phrase "Best Then. Better Now." What type of pricing strategy is Timberland most likely to use with this ad?

Penetration pricing and price skimming of the market are two types of new-product pricing.

Grocery stores that position their less expensive, private brands next to more expensive, well-known manufacturer brands on the shelf are using the concept of reference pricing.

Identify and describe six types of psychological pricing.

When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as

The "White Sale" that many department stores have every year a few weeks after Christmas is an example of

For most firms in the United States, demand curves are

If a product has an inelastic demand and the manufacturer raises its price,

When Cadillac buys headlights from Delco (both of which are divisions of General Motors), ____ pricing occurs.

Priya Singh recently opened a clothing boutique catering to women aged 20 to 60 who are seeking on-trend fashions at an economical price point. Priya focuses on customer service and offers her customers personal styling advice, closet audits, and a generous return policy. She's developing quite a following and has found that social media is a great way to market her business and showcase new arrivals. Since she orders limited numbers of items in a size range, customers know they must call or stop by the shop if they see something posted on Instagram or Facebook that they'd like to own. Priya sells most of her clothing at full price and only offers a "sale" twice each year. Priya was recently asked to speak with a marketing class about pricing and how to run a profitable business. She was reviewing some information to prepare for the class and wanted to emphasize to the students the importance of identifying fixed costs, variable costs, marginal costs, and marginal revenue as well as their relationship to profitability. Priya planned to demonstrate that profits will be at their highest when

Demand-based pricing strategies are easy to use.

If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where

When determining markup as a percentage of cost, divide the markup amount by

If a firm currently produces 2,500 products per month and decides to produce 2,501, it will incur

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 has decided that it is going to offer a special package offer if the prevention plan is purchased within the first 30 days of each year's time for vaccinations. This type of pricing strategy would be an example of

How can a marketer use product quality as a pricing objective to influence purchasing decisions?

Reductions for transportation and other costs related to the physical distance between buyer and seller are known as

Suppose managers at Mahindra have determined the costs associated with producing hay balers are equal to the price that they charge for the hay balers. This indicates that Mahindra is producing at the ____ point.