Exam 19: Pricing Concepts

Chad has calculated the sales volume at which his lemonade stand's costs equal revenue.Over dinner he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (lumber and nails for the stand,lemons,sugar,etc.).Which important factor has Chad excluded from his analysis?

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on cost?

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

While the sales of the Apple iPhone have been great from the beginning,when Apple released its iPhone 3G cut the price of the iPhone for $399 to $199 sales exploded with one million iPhones sold the first weekend.Demand for the iPhone appears to be _____.

What is a break-even point? The Catera Company makes and sells cotton candy machines.What is the break-even volume for Catera machines in units?

Target return on investment (ROI)is the most common profit objective used by firms.

Sales-oriented pricing objectives are either based on market share or dollar or unit sales.

_____ costs do not change as output is increased or decreased.

When many substitute products are available,demand is inelastic.

How does price interact with the other three Ps of the marketing mix?

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. -Refer to the American Girl Doll.In terms of producing the doll and its accessories,the calico fabric used to make Kristen's dress is an example of a(n):

Specialty Cakes Imagine you're planning an after-symphony fund-raising party, and you need a life-size grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike. -Refer to Specialty Cakes.Although many factors determine the prices charged by Cecilia Villaveces Cakes,the two primary determinants are:

As a short-term pricing objective,_____ can be effectively used on a temporary basis to sell off excessive inventory.

Keystoning is:

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on the selling price?

Variable costs vary with changes in the level of output,whereas marginal costs do not vary as output changes.

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. -Refer to the American Girl Doll.You can buy a doll at Wal-Mart for $5.99.The high price of the American Girl doll is used to promote a high-quality image.The American Girl uses a _____ pricing strategy.

The two types of costs a marketer needs to consider when setting prices are:

Smelly Fruit At first glance there is little to like about the durian. The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside. When confronted with the durian for the first time, the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure. However, the durian is so popular in Thailand that one variety of the durian fruit, called the Kan Yao, has been selling for as high as $200. Even at that price, supply of the Kan Yao cannot keep up with demand. There are approximately 30 varieties of the durian grown in Thailand, with the most plentiful selling in the $15 range. The yellow flesh of the durian, the part you eat, has very powerful smell, but possesses a sweet, nutty taste that Thais cannot seem to get enough of at any price. -Refer to Smelly Fruit.If it cost a Thai farmer $100 to produce and $25 to market the Kan Yao durian that she sells for $200 at the marketplace,her revenue,for each durian sold,would be _____.

Thompson Pool is known for quality pool installations,excellent customer service,and reasonable prices.If you want to have a Thompson pool you will have to wait about six months due to demand for their product.While Thompson could probably price their product higher,given the demand,they don't. Instead,they set price so that they earn a reasonable level of profits. This company seems to base its pricing policy on: