Exam 39: Setting the Right Price

The first step in setting the right price for a new product is to estimate demand,costs,and profits.

If items are _____,an increase in the sale of one good causes an increase in the sale of the other (and vice versa).

Post makes several varieties of cereals.In promoting this product line,Post offers a 50-cents-off coupon that can be used to purchase any of its cereals.Therefore,Post must consider _____ when pricing its cereals.

All of the following are potential disadvantages of a flexible pricing policy EXCEPT:

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.

AMC Theaters offers customers a package that includes two movie tickets,two small drinks,and one small popcorn all priced together at $29.99.this pricing technique is called:

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.

Consumers sometimes prefer two-part pricing because:

When the economy is characterized by high inflation,special pricing tactics are often necessary.One popular cost-oriented tactic is culling low-profit margin products from the product line.Why might this tactic backfire? What two other cost-oriented tactics can be used to guard against inflation? Describe these tactics.

A base price may be lowered by a discount.Discounts take a variety of forms and have several different objectives.Name and define three types of discounts (do not include allowances or rebates).State the main objective of each type of discount you identify.

Discuss the two reasons why managers sometimes price their products too low,thereby reducing company profits.

At the Greenville Florist,there are four different prices for funeral bouquets.The smallest bouquet sells for $30; there is also a $40 version and a $75 version.For those who want to express their grief through the purchase of a dramatic floral arrangement,the florist also offers a $150 version.The owner of the florist shop has chosen price lining because it will:

Procter & Gamble entered the electric toothbrush market with the Crest Spinbrush at a price considerably lower than those of lesser-known competitors.It used penetration to gain market share.

Sears and John Deere run major sales on their lines of riding lawn mowers every fall.This is an example of a seasonal discount.

Marketing managers can use a wide variety of special pricing tactics beyond discounts and allowances to fine-tune prices.Name and define five of the other pricing tactics that are wholly legal.For each tactic,give an example of a specific company,industry,or product that would use the tactic.

Nellie Tompkins is the owner and operator of Hot Mamma Salsa,which she sells at craft festivals.She only makes and sells three types of salsa--peach,pear,and pineapple.The joint 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 salsas sold.Last year's sales figures and allocated joint costs follow.Should Hot Mamma Salsa stop selling its pear salsa? Why or why not?

Consumers are required to pay consumer fees because businesses allegedly:

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.

Trade-ins often go hand-in-hand with:

When using _____,price is not set on the product until the item is either finished or delivered.