Exam 16: Pricing Concepts and Strategies

In order to recover research and development costs rapidly and earn initial high profits, Sony set a high price for its plasma TVs.What is the pricing strategy Sony used?

A Swedish telephone maker transfers phones costing $10 to produce to its Canadian subsidiary for a transfer price of $20.The Canadian subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expenses.What is the outcome for the Canadian subsidiary?

The only real difference among the many cost-plus pricing techniques is the sophistication of the pricing procedures.

External factors that affect a marketer's global pricing strategy include general conditions in international markets, the global status of the industry, and competitors' actions.

According to economists, profit will be maximized by a product price that exactly balances the revenue received from the last unit sold with the increase in total cost involved in making and selling it.

A pharmaceutical company that sets a price below cost on a new cholesterol medication in order to shut out competitors that may want to enter the market could be fined for predatory pricing.

What should customers submit to the creditor if they want to take the discount on an invoice for $300 dated April 1 with terms of 3/10 net 30?

What is a major factor influencing the elasticity of demand for a product?

Zone pricing is a modified version of uniform-delivered pricing.

What pricing objective might seek sales maximization or achievement of a stated market share?

Average total cost is the sum of variable and fixed costs divided by the number of units produced.

Everyday low-pricing is used exclusively by retailers in an effort to attract consumers.

In the absence of other cues, price is an important indicator of product quality to the consumer.

MBNA offers an opportunity for credit card customers to transfer balances from competitive cards and pay low financing for a six-month period.After the introductory period is over, the rate will increase to the normal percentage.MBNA's strategy is to penetrate the market and obtain increased market share.

The full-cost approach to pricing allows the marketer to recover all costs, plus an amount added as profit margin.

A five-pound bag of roasted peanuts sells for $8, and the average variable costs are $4 per bag.What is the breakeven point in bags if the total fixed costs for the roasted peanuts are $80 000?

Extensive research related to psychological pricing consistently indicates that certain prices or price ranges make products more appealing to buyers.

Cost-plus pricing is the practice of adding a markup to the base cost of a product to cover unassigned costs and provide a profit.

Everyday low-pricing is closely related to skimming pricing strategies.

A firm with an overall goal of becoming the market leader may elect to pursue a low-price policy as a means of achieving maximum sales penetration.