Exam 19: Pricing Concepts

Today's firms must develop specific,measurable,and attainable pricing objectives if they hope to survive in highly competitive markets.

The most popular method used by wholesalers and retailers in establishing a sales price is _____ pricing.

The dimensions of quality that are important to consumers include:

Define elasticity of demand and compare and contrast the three types of demand: elastic,inelastic,and unitary. What would the demand curve for elastic and inelastic demand look like when graphed?

Discuss how consumers use the price-quality relationship to evaluate goods and explain how marketers can take advantage of this consumer response.

Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each.He has determined that his fixed costs are $8,000,and his average variable costs per firescreen are $45.What is his break-even point in dollars?

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.Based on the information in the narrative above,which of the following factors is most likely to affect the elasticity of demand for the doll?

Profit maximization is the price at which supply and demand are equal,and there is no inclination for prices to rise or fall.

_____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

Break-even analysis determines what sales volume must be reached for a product before the company's total revenue equals total costs.

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.At $200 per Kan Yao demand for the fruit appears to be higher than supply.Suppose at a price of $225,the amount demanded exactly meets the amount farmers are willing and able to supply.In this case the $225 price would be considered the _____ price.

One of the most stressful and pressure-filled tasks of the marketing manager is attempting to set the right price.Specify three aspects of the current pricing environment in consumer markets that have contributed to the difficulty in setting correct prices.

Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii.When a tourist shop began selling Pure Hawaiian Air,it charged $5 per bottle and could not keep up with the demand.It has since raised the price to $7.Now the shop is still selling all the bottles of Pure Hawaiian Air it carries,but the owner is not forced to reorder on a daily basis.The $7 price is probably a(n):

During the hot summer months or the week before a new class starts if there is still space available,the Nick Price golf school in Orlando,Florida offers a 25 percent reduction to get golfers during the off-season or those making a last-minute decision.This is an example of pricing strategy used as a(n):

When Apple Inc.developed and introduced the iPhone it was unique as it essentially combined a cellular phone with an iPod,an Internet browser,and email capabilities.As such,in the short run it seemed that demand for the product would be inelastic,with no real existing competition.The recommend pricing strategy in such a situation would be:

When the price of a product is set at a level where demand and supply are the same,_____ has been achieved.

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The $19.99 is the:

When Nesco brand food hydrators sold for $59.99,Nesco sold 90 dehydrators.When the company dropped the price of its dehydrators to $44.95,it sold 145 dehydrators.Demand for the food dehydrators appears to be:

Explain yield management systems (YMS)and discuss the types of industry were they are most appropriate.

The difference between the retailer's cost and the selling price is the _____.