Exam 20: Setting the Right Price

The owner of a neighborhood hardware store has decided to sell a set of three padlocks for $5.He hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items.The owner is encouraging store patronage through:

Markdown allowances are illegal.

Suppose an advertising agency develops logos for its clients.It charges $10,000 per logo --whether the team that's working on the logo takes 30 minutes or days to design the logo.Agency management explain that clients pay for the agency's expertise and creativity,not the amount of time it literally takes to develop a logo.This pricing approach is known as _____.

Many businesses find recessions to be an excellent time to build market share through the use of price shading.

A penetration pricing strategy tends to be most effective:

E-Books With the explosive growth of electronic book, or e-book, readers like Amazon's Kindle and Barnes & Noble's Nook and even smart phones like the iPhone and BlackBerry devices, book pricing is becoming a significant concern for book publishers. Digital book sales have grown exponentially from almost non-existent in 2002 to more than $120 million in 2009. While these sales are still small compared to industry sales, they are expected to grow even more in the coming years due to the plethora of e-book readers coming on the market. This creates a dilemma for publishers, though, because the average price of a hardcover book, which is the bread-and-butter of publishers' profits, is $27.00, whereas the price of an e-book is $9.99. To protect profits, some publishers, like Simon & Schuster, are delaying the electronic editions by four months. Other publishers are following suit, claiming consumers will not buy the hardcover at $27.00 if they can purchase it at a much lower price electronically. -Refer to E-Books. If publishers decide to release e-books at the same time as the higher-priced hardcovers,book resellers will probably end up with a lot of unsold books in their stores. This will likely result in an increase in _____ demanded by the resellers because they will have to slash prices to sell the books.

An Alabama-based catalog retailer sells fireplace equipment such as screens and andirons.Its customers in New England are charged one shipping rate,and customers west of the Rocky Mountains are charged a different rate.Customers in the midwestern states are charged yet another rate.What kind of geographic pricing is the catalog retailer using?

Often a seller will establish a series of prices for a family of merchandise items.There may be several different models at specific price points but no prices in between.This policy is called:

Dancing Pigs Bar-B-Que Sauce is a product of the Bar-B-Q Shop located in Memphis,Tennessee.It's also sold online for $88 a case,including shipping and handling.The Bar-B-Q shop covers the cost of shipping and uses _____ pricing policy.

Geographically dispersed sellers often result in significant freight costs.Name and describe the five types of geographic pricing tactics that can be selected by a marketing manager to moderate the impact of freight costs on its more dispersed customers.For each tactic defined,specify the circumstances that would prompt the selection of that geographic pricing tactic.

A price tactic that requires the purchaser to absorb the freight costs from the shipping point is called _____.In this case,the farther buyers are from sellers,the more they pay because transportation costs generally increase with the distance merchandise is shipped.

Costs that are shard in the manufacturing and marketing of several products in a product line are called joint costs.

The DCS Stainless Steel Gas Grill for outside cooking costs $3,995.The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers.There is no potential competitor for this grill.The _____ strategy is probably best.

The Comcast Triple Play package includes cable television,Internet,and telephone service for a price significantly lower than the cost of the three services priced separately.This is an example of _____.

Home Depot's fall lawnmower sale is an example of which of the following pricing tactics?

If an item purchased under FOB origin terms is damaged in transit,against whom should the purchaser file its damage claim?

Delayed-quotation pricing:

The term FOB is an acronym for:

Why is price lining a valuable tactic for marketing managers?

A _____ is a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round.