Exam 20: Setting the Right Price

One example of price bundling occurs when Nintendo sells the Wii Fit balance board with the Wii game system at a lower price than the total price of each if bought separately.

After managers understand both the legal and the marketing consequences of price strategies,they should set a _____ price,the general level at which a company expects to sell a good or service.

Louisiana State University football season ticket holders have to pay a fee (also known as a "donation")to the LSU Foundation every January,which is not deemed to be part of the ticket price.They pay for their tickets later in the year for the next football season. The Foundation fee must be paid in order to retain the rights to purchase a season ticket. LSU is using:

Apple iPhone Apple Inc. iPhone went on sale on June 29, 2007. Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products and the iPhone enjoyed a tremendous amount of "buzz" before its introduction. As expected, the iPhone entered the market at what many believed to be a high price ($599). However, within weeks the price was reduced to $399. By the end of 2007 over 8 million iPhones had sold in the U.S. marketplace. By most, if not all measures, the original iPhone was a huge success for Apple and it exclusive U.S. carrier AT&T. On July 11??, 2008, Apple Inc. released the iPhone 3G, which it advertised as twice as fast as the original iPhone for half the cost. However, in order to obtain an iPhone at the new price of $199, buyers had to agree to a two-year service contract with AT&T. This allows iPhone users to receive phone calls and email, and search the web on the same device. A single charge of $59.99 from AT&T included 450 minutes of cellular calls, with free nights and weekend minutes, unlimited data, visual voicemail, 200 text messages, rollover minutes, and unlimited mobile-to-mobile service within the AT&T network. This approach succeeded and over a million iPhone 3Gs were sold during the introductory weekend. -Refer to Apple iPhone.HSBC Group is the world's largest banking group.It is considering switching from BlackBerry handsets to iPhone 3Gs.This would mean ordering 200,000 iPhones,so HSBC would probably receive special pricing incentives,including a _____.

For sports marketers,an inelastic demand curve means they have greater flexibility in making pricing decisions.What can a sports marketer do to make demand for his or her product more inelastic?

Single-price selling:

A situation in which a manufacturer,and its distributors agree that the retailers will sell the manufacturer's products at a certain price,at or above the price floor,is called _____.

South Africa's Competition Commission accused South African Airways of conspiring with its partner,Germany's Lufthansa,to set prices on flights between Cape Town,Johannesburg,and Frankfurt.As a result,the two airlines were charged with:

Claxton Bakery recently began selling its fruitcakes online.If Claxton wants a simple pricing system that allows for different shipping charges depending on geographic segment or region,the company should use _____ pricing.

When the Mosquito Magnet was introduced,it was designed to rid the immediate area of mosquitoes and other annoying insects.The technology for the Mosquito Magnet had taken years to develop.It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die.What type of pricing policy would you recommend the company use to introduce this product to the market?

Which of the following prohibits any firm from selling to two or more different buyers,within a reasonably short time,commodities (not services)of like grade and quality at different prices where the result would be to substantially lessen competition?

When a buyer pays a lower price for buying multiple units or above a specified dollar amount for a single order,the buyer is receiving a _____ discount.

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.This strategy works best when:

The basic assumption with price skimming is that the firm is customer driven,seeking to understand the attributes customers want in goods and services they buy and the value of that bundle of attributes to customers.

Art Supplies It's September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter's elementary school. In her Sunday newspaper was a flyer from Michael's, an arts and crafts retailer. As she looked through the newspaper insert, she noticed that if she purchased three or more bottles of Alene's Tacky Glue, the regular price of $1.50 each was reduced to $1.15 each. She also saw that the store priced its plastic storage boxes at $1.99, $3.99, and $5.99. She thought they would be useful for storing each individual child's projects. On the front page of the flyer was an ad for Funky Girls Gel Pens, something she knew her daughter would love to use. The price at Michael's was $6.99 lower than the price she had found at the other stores that carried the pens. She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michael's had a scrapbook starter kit, which includes scissors, book, pages, and stickers for only $15. The items could be purchased separately for $19.99. The flyer also announced that all flag-related items leftover from its Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.Michael's was trying to get consumers into the store with the Funky Girls Gel Pen promotion in hopes that they will purchase other,higher margin items. This is an example of:

Business-to-business salespeople often use _____ to heighten the demand for certain items in a product line.It is a discounting practice that is often done routinely without much forethought.

Evergreen Lighting,a manufacturer of decorative,energy-efficient lighting products,requires its buyers to pay for the cost of transportation from the manufacturing site to their place of businesses.Evergreen Lighting uses FOB origin pricing.

During a recent recession,many manufacturers determined that their suppliers were an excellent source of cost savings.Specific cost-reduction strategies manufacturers have used with their suppliers include:

The tactic that allows different customers to pay different prices for essentially the same merchandise bought in equal quantities is called _____.This tactic is often found in the sale of shopping goods,specialty merchandise,and most industrial goods except supply items.

For which of the following situations would a price-skimming strategy be most appropriate?