Exam 39: Setting the Right Price

Apple's "Back to School" program offered students who purchased an iMac computer and an iPod Touch MP3 player a $250 refund.The $250 check was essentially a:

A national manufacturer of car parts has six warehouses and has a pricing policy of charging freight from the closest warehouse to the customer,regardless of where parts are shipped from.For instance,if the customer is in Vancouver,British Columbia,the closest warehouse to the customer is in Seattle,Washington.If the ordered car part actually comes from the Alabama warehouse,the customer still pays freight from Seattle.The manufacturer uses _____ pricing.

There are two limousine services that drive customers from communities in North Georgia to the Atlanta airport.Whenever one reduces its fare,its competitor reduces its fares by the same amount.This is an example of status quo pricing.

Name one advantage and one disadvantage associated with using each of the three basic pricing methods.

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.

Functional discounts are typically calculated as the wholesale price times the accumulated margin percentages.

A firm charging a price identical to or very close to the competition's price is using a _____ strategy.

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.

What can a marketing manager do to make demand for his or her product more inelastic?

Alissa Dunn is the owner and operator of Dunn's Best Jams,which she sells at craft festivals.She only makes and sells three types of jams--pecan pie jam,chocolate pie jam,and lemon tart jam.The costs of leasing her professional kitchen for manufacturing,travel to craft shows,insurance,and so on are allocated on an equal basis to the three types of jam sold.In other words,these costs are:

If a company decides to divide its market area into segments or regions and charge a flat rate for freight to all customers in a given region,the company is using _____ pricing.

If the seller pays all or part of the actual freight charges and does not pass them on to the buyer,the seller is using _____ pricing.

Rag fibers for paper and cotton seeds for cottonseed oil are two by-products of the cotton textile industry.Because these products are produced together,they are complementary products.

Marketing two or more products in a single package for a special price is known as:

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.Samsung recently introduced the Galaxy S III cellular phone,apparently to compete directly with the iPhone 4S.If Samsung checked the price of the iPhone at the Apple Store and leading cellular carrier locations and then set the price of the Galaxy S III to match the iPhone's price,it would be using a _____ pricing approach.

What are consumer penalties? What two reasons do businesses give for requiring consumers to pay them?

In 2008,United Airlines and American Airlines disclosed settlements in a class-action lawsuit over allegations of airfreight price fixing.This means the companies:

Toyota periodically offers customers _____,allowing purchasers to borrow money to pay for new cars without incurring an interest charge.

Sometimes multinational firms will follow a penetration strategy in developed countries and a skimming strategy in developing countries.

In the United States,price fixing is only illegal in some instances.