Exam 37: Pricing Concepts

Fixed cost contribution equals:

A firm has maximized its profits when its marginal revenue exceeds its marginal cost.

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

When the Apple iPhone 3G was introduced,users could buy the "I Am Rich" app for a price of $1,000.The app did nothing but display a red gem on the iPhone's screen.The description of the app stated that this red icon would remind you (and others you show it to)"that you were rich enough to afford this." Six of the applications were sold before Apple,Inc.removed the app from iTunes.At the $1,000 price,the author of the app was using _____ pricing as part of his marketing approach.

Shopping bots:

Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n)_____ strategy.

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.

Mitch owns an accounting agency.The monthly payment on the land he purchased for his business,the mortgage on his small office building,and his business license are all examples of _____ costs.

All of the following factors directly affect the elasticity of demand EXCEPT:

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to those 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 $90.00. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20.00, and a matching one for the doll owner is an additional $38.00. Buy both together and the price is only $50.00. A hand-painted wooden bed and trunk for Kristen are available for $213.00. Shipping costs vary with the price of the merchandise ordered. -Refer to American Girl Doll.You can buy a doll at Walmart for $5.99.The high price of the American Girl doll is used to promote a high-quality image.American Girl uses a _____ pricing strategy.

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

_____ is equal to net profit after taxes divided by total assets.

Cowboy Malone's Electric City pays a wholesaler $700 for a television and sells it to a customer for $1,500.The markup on the television is:

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

_____ use complex mathematical software to profitably fill unused capacity.

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices.This practice is an example of:

The owner of Buffalo Mountain Coffee Shop pays the same amount in rent each month no matter how many customers she serves.The shop owner's rent is an example of a marginal cost.

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.The durian fruit is a unique product.To many people in Thailand,no other fruit tastes or smells anything like the durian.Its uniqueness,in the eyes of the customer,would tend to have which of the following?

When the local Shell station raises or lowers its prices on its gasoline,the Marathon station across the street makes the same changes in its pricing.This is an example of _____ pricing.

Allstate has more than 1,500 price levels determined by complex algorithms that analyze 16 credit report variables,including late payments and card balances.Allstate is using a _____ to set prices.