Exam 13: Pricing Concepts for Establishing Value

Jason rents rooms in his hotel for an average of $100 per night.The variable cost per rented room is $20.His fixed costs are $100,000 and his target profit is $20,000.For Jason,to earn his target profit,he will need to rent out ________ rooms.

To discourage consumers from buying in gray markets,some manufacturers have:

A gray market employs irregular but not necessarily illegal methods of distributing products.

Raymond estimates that the fixed costs associated with opening a new bank branch are $500,000.He expects the branch to attract 1,000 new customer accounts in the first year,each of which will cost $50 per year to service.He also expects to generate $100,000 per year in revenue.For Raymond,the total cost of opening the new branch and remaining open for one year will be:

For which of the following is demand likely to be least sensitive to price increases?

If Brandon buys hats for his store for $5 each and sells them for $15 each,he is using a keystoning pricing strategy.

The more substitutes that exist in a market:

What could go wrong if a firm's pricing strategy were NOT aligned with company objectives?

While prestige products and products for the status conscious command high prices and are targeted toward customers with plenty of disposable income,marketers have noticed that:

Price is often the most challenging of the four Ps to manage,partly because it is often ___________________________ in developing marketing strategies.

Economic conditions cannot be ignored by marketers when setting prices.Among the important domestic economic considerations are:

Brad always buys and uses Nike brand golf balls.If he finds a Titlelist or Callaway ball in the rough,he gives it away.Brand loyal golfers like Brad allow Nike to charge a higher price and not lose many sales.By building a strong brand,Nike has effectively:

What are some of the important factors that influence price elasticity of demand? Briefly describe the influence the factor has.

For which of the following is demand likely to be most sensitive to price increases?

The food and beverage manager at an upscale country club once offered a two-for-one happy hour price for all alcoholic beverages,only to see a very little response to the special.For these consumers,demand for alcoholic beverages is:

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the:

Because consumers are generally more sensitive to price increases than to price decreases,it is easier to lose current customers with a price increase than it is to gain new customers with a price decrease.

Sharon knew that her established customers liked her product much better than the competitors.She was planning to expand into new markets,and she was considering pricing.She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product.Sharon was considering:

If upscale manufacturers of prestige products like BMW autos,Tiffany glass,or Rolex watches offered lower-priced products,what might happen to the demand for their products? Why?

A demand curve is built assuming that: