Exam 39: Setting the Right Price

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

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

A(n)_____ discount is a deduction from list price that applies to the buyer's total purchases made during a specific period.

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:

Hunter's Alley is a chain of stores targeted to people who are proud of their National Rifle Association memberships.It has agreed to set up a special display of Swartklip ammunition near its rifle and shotgun aisles,and also to run an advertisement in newspapers in communities where its stores are located.Swartklip has agreed to supply the display material free and to pay for half the cost of the advertisement.This is an example of a:

Apple iPhone Apple, Inc.'s iPhone first 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 eight 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 its then-exclusive U.S. carrier AT&T. On July 11, 2008, Apple, Inc. released the iPhone 3G, which it advertised as being 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 approach succeeded, and over a million iPhone 3Gs were sold during the introductory weekend. In 2011, the iPhone 4S-the fifth generation iPhone-led cellular phone sales with more than 25 million units sold. Several Android-based phones manufactured by Samsung were not far behind, however. -Refer to Apple iPhone.For one fee,the basic AT&T cellular package includes 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voice mail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.AT&T is using price:

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 Michaels, 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 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 Michaels 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.Michaels was trying to get consumers into the store with the Funky Girls Gel Pens promotion in hope that they will purchase other,higher-margin items.This is an example of:

Apple iPhone Apple, Inc.'s iPhone first 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 eight 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 its then-exclusive U.S. carrier AT&T. On July 11, 2008, Apple, Inc. released the iPhone 3G, which it advertised as being 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 approach succeeded, and over a million iPhone 3Gs were sold during the introductory weekend. In 2011, the iPhone 4S-the fifth generation iPhone-led cellular phone sales with more than 25 million units sold. Several Android-based phones manufactured by Samsung were not far behind, however. -Refer to Apple iPhone.Apple has several options available for competing with Samsung and its Galaxy S III phone.If Apple chooses to compete by pricing its product at a low price to drive Samsung out of the market,this would be considered:

Lea Kirkham is a physician.She charges each patient the same price for a physical examination,whether the procedure takes 10 minutes or a full hour.Which pricing policy is Dr.Kirkham following?

Delayed-quotation pricing:

Ace Hardware's spring snow blower sale is an example of which of the following pricing tactics?

Why is price lining a valuable tactic for marketing managers?

Redline Editorial Services sent a $1,000 invoice to a customer for copyediting a booklet.According to the terms of the invoice,the customer would receive a 3 percent discount on the invoice price if the invoice was paid within 15 days.This is an example of a:

A 16-ounce bottle of Prairie Herb vinegar sells for $4.95,and a 16-ounce bottle of Heinz vinegar costs $1.05.Prairie Herb vinegar is new to the market,perceived to be of higher quality,and provides a unique flavor to foods even though it is used in the same way as Heinz vinegar.Prairie Herb vinegar is most likely using a _____ policy.

A penetration pricing strategy tends to be most effective:

Costs that are shared in the manufacturing and marketing of several products in a product line are called:

With value-based pricing:

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.

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:

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: