Exam 16: Pricing Objectives and Policies

Target return pricing objectives:

The problem with sales-oriented pricing objectives is that:

The marketing manager for Aerial Photography, Inc. says his sales reps have gotten in the habit of setting prices which do not produce a profit. Aerial Photography apparently is using:

At Travelocity's website, visitors are likely to find several airlines that have the identical same-day price for a flight from Atlanta to San Francisco. What pricing objective are these airlines pursuing?

Mercedes, the European luxury car-maker, does not mention price in its magazine advertising. Instead, the ad copy focuses on the quality and performance of the Mercedes product line. What pricing objective is Mercedes pursuing?

Jackson Motors, Inc. normally sells its electric motors to all buyers for $100. However, a competitor offered to sell similar motors to one of Jackson Motors' biggest customers for only $80 and Jackson Motors offered that customer-but not its other customers-a $80 selling price. According to the Robinson-Patman Act:

Offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities is a ______________ policy.

Regarding price-level policies:

Using temporary price cuts to speed a producer's new product into a market is known as:

Faced with many "me-too" competitors, Sonic Burgers, Inc. has set its price level to "meet competition"-while emphasizing nonprice competition. Sonic Burgers' pricing objective seems to be a ______________ objective.

A leading hard-disk manufacturer introduces a new line of high-capacity disk drivers. After selling to elite customers at a high price point, the company slowly reduces its prices over a period of time. The company is engaging in

Which of the following observations concerning price fixing is true?

A target return pricing objective seeks to obtain a specific level of profit-often stated as a percentage of sales or return on investment.

A manufacturer might try to defend itself against charges of illegal price discrimination by claiming that:

Many intermediaries seek advertising allowances from manufacturers to help them pay the cost of advertising the products they sell.

Use this information for question that refer to the Pricing 1 case. (WPI) case. As a project for her marketing class, Emily Washington is researching how five local businesses price their products. The following are brief sketches of what she has learned about each company. At Bella Computers, Emily has discovered that the company earned a 6 percent return on investment this year and wants to increase it to 9 percent next year. To its retailer customers, Bella Computers gives cash discount terms of 2/10, net 30. It also gives retailers a 3% reduction on the invoice amount for advertising Bella products locally. Bella gives retailers' salespeople 2% of the sale price for each Bella Computer they sell. At Ross Pharmaceuticals, she learned that the company has invested heavily in developing a new product that recently received a patent. Because cash is tight, the company wants to achieve a rapid return on its investment. The new patented product is badly needed in the market, so a very inelastic demand curve is expected. Digital Imaging makes photographic prints for wedding photographers. It is very concerned about competitor reactions to its pricing, so it has selected prices that will not draw the attention of the competition and not start a price war. Digital Imaging offers customers an 8% discount if their purchases exceed $20,000 a year. Jack's One Hour Cleaners recently opened for business. The company invested a lot of money in new equipment, and feels that it has to quickly get "at least 10% market share to stay in the game." This need obviously influences the company's pricing decisions. Jack's also plans to offer customers 20% discounts on any order over $20. National Printing Equipment (NPE) produces equipment that helps to print newspapers and magazines. The company sells directly to printers and through wholesalers. Its salespeople negotiate prices with individual customers and often have to match competitors' prices. NPE has a new product, the Gutenberg NP201, with some competitive advantages now, but competitors are expected to follow quickly with similar products. The new product is being introduced into a market with elastic demand. Regarding freight charges for its equipment, NPE's invoice reads, "Seller pays the cost of loading equipment onto a common carrier. At the point of loading, title to such products passes to the buyer, who assumes responsibility for damage in transit, except as covered by the transportation agency." Which business offers a NONCUMULATIVE quantity discount?

Flexible-price policies are most common in the channels, in direct sales to business customers, and for expensive shopping products because sales reps may need to make adjustments for market conditions.

When rice producers from China sold rice for a lower price in Japan as compared to the price charged in China, it appeared the Chinese rice producers were engaging in _____.

A skimming price policy usually involves a slow reduction in price over time.

A flexible-price policy means offering