Exam 19: Pricing Concepts

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.What is the revenue to American Girl if it sells 20 basic Kristen doll and books?

Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in the Cleveland,Ohio area.Last year,it managed to exceed its target ROI for the current fiscal year.The following results were found on its financial statements: What was the actual return on investment (ROI)for Parrish Farms?

Price is best described as:

What are the problems associated with the use of a cost-based pricing strategy? What contribution does cost make to the setting of prices?

When price decreases and total revenue falls,demand is:

When consumers are sensitive to price changes,_____ occurs.

A cost that changes with the level of output is called a(n)_____ cost.

Costs that do not change as output is increased or decreased are called stable costs.

If a product has high pricing power this would indicate a situation of:

At a price of $654,400 the SSC Ultimate Aero has been ranked as the third most expensive car in the world.The company is only planning to build twenty-five of the current model.If that matches the demand for the Ultimate Aero,then a state of _____has been achieved.

Prices may actually rise for a product in the decline stage of the product life cycle.

The greater the number of different uses for a product,the more _____ demand tends to be.

Most demand curves slope:

Status quo pricing objectives suggest that the firm should try to keep its price consistent regardless of what competition does with its prices.

Research has shown that products that are perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

Tesla Motors "Going green" doesn't have to be boring. The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally-friendly ride. But that level of performance will set you back $128,500. As of 2009, Silicon Valley-based Tesla Motors, Inc. was the only company offering highway-compatible electric cars. Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons. -Refer to Tesla Motors. If total fixed costs are $23,400,000 and the average variable costs is $50,500,how many Roadsters must Tesla sell to break-even?

Although many factors can influence price,the primary determinants are:

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

When pricing goals are mainly sales oriented,cost considerations usually dominate.

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