Exam 14: Pricing Concepts for Establishing Value

Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on

Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the __________, a decrease in unit cost as product volume increases.

One of the limitations associated with break-even analysis is that

A demand curve shows the relationship between income and demand.

Jason rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20. His fixed costs are $100,000 and his target profit is $20,000. For Jason, to earn his target profit, he will need to rent out ________ rooms.

At the break-even point, profits are maximized.

Managers of Wendy's fast food restaurants keep track of prices at competitors such as McDonald's, Burger King, and Arby's, knowing that a decrease in the prices at these other fast food restaurants will

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard's job to examine the pricing to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard's effort?

Diana owns a boutique specializing in ball gowns. Sales are stable and Diana feels it is time she had a 20 percent increase in her salary. If Diana takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.

Julia wants her firm's gourmet snacks to be the leading brand in the U.S. market. When adopting a pricing strategy designed to gain market share, she should remember that

Firm A has set very low prices for its products in an attempt to drive its competitor, Firm B, out of business. This is known as monopolistic pricing.

If a telecommunications company drastically cuts the price for cellular phone service to eliminate local competitors, the company could be charged with

In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. Each firm weighs the comparative advantages and disadvantages of its offerings to determine whether to price above, equal to, or below the other hotel. In these markets, the hotels are using a _______________ pricing strategy.

__________ pricing tactics lower the price of a product below cost.

For which of the following is demand likely to be least sensitive to price increases?

Explain the concept of the high / low strategy. Why is this an attractive strategy to marketers?

Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price

For marketers to advertise a price as their __________, the Better Business Bureau recommends that at least 50 percent of the sales of a product occur at that price.

In _______________, many firms provide similar products that are considered substitutes for each other.

Gerald has a number of customers for his lawn care service who never question his bill but expect their lawns to be perfect. These customers do not want low prices, they want