Exam 20: Setting Prices

Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called

A pricing strategy is a course of action designed to achieve pricing and marketing objectives.

Scenario 20.2 Use the following to answer the questions.Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. -Refer to Scenario 20.2. Glenwood's new pricing strategy is an example of ____ pricing.

What are some of the objectives a firm might hope to achieve when setting prices?

If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using

If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as

Odd-even pricing is

The objective of profit maximization is rarely operational because its achievement is difficult to measure.

Scenario 20.2 Use the following to answer the questions.Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. -Refer to Scenario 20.2. Glenwood's closest competitor, The Hearthstone Pet Hospital, currently charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing which of the following?

The use of price skimming discourages competitors from entering a market.

The price of a hotel room is more important to a business traveler than to a tourist.

A price-skimming strategy assumes that

Scenario 20.2 Use the following to answer the questions.Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit. -Refer to Scenario 20.2. Glenwood has decided that it is going to offer a special package offer if the prevention plan is purchased within the first 30 days of each year's time for vaccinations. This type of pricing strategy would be an example of

Knowing the target market's evaluation of price allows the marketer to know how much emphasis to place on price and how to price a product relative to competition.

The effectiveness of demand-based pricing often depends on a marketer's ability to determine all the costs associated with the product.

When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using ____ pricing.

Cost-based pricing strategies result in a percentage being added to the cost of the product.

Kendra has been doing research for a smartphone manufacturing company. She has just been reviewing the results of several focus groups and has found that for customers, value is a function of the product's

Grocery stores use negotiated pricing strategies.

Lexmark sells some of its color printers for about $100, but the refill cartridges cost over $30 each. Lexmark's pricing strategy would be best labeled as