Exam 17: Setting the Right Price

OfficeMax,a retailer of office supplies,is selling a point-and-shoot digital camera,the printer and software needed to print photographs,and a starter package of photograph paper for $230.If purchased separately,the items would cost a total of $250.What has OfficeMax used?

Sharyl Kabbes manufactures dairy products on her farm outside Walkerton,Ontario.Her products carry the brand name Mrs.K's Premium.The company sells milk,cheese,and sausage products.The products are sold individually or in sets that include a variety of cheeses and sausage products for a special price.Currently the products are sold only in Ontario.Mrs.K's products were introduced with a high price relative to competition.Kabbes says that her products are premium and therefore justify the high initial price.To get retailers to carry Mrs.K's products,the company offers discounts to buyers who will transport the products from the Kabbes Farm to their warehouses.Kabbes also offers retailers money to run ads for Mrs.K's products. Because Mrs.K's products are perishable,transportation is very important,and some of her customers could not take advantage of the discount offered for picking up the product from the farm.As such,Kabbes has decided to divide the province into several segments and base her freight charges on the location of the buyer within these segments. -Refer to Mrs.K's Premium Cheese.The introductory pricing policy chosen by Mrs.K's exemplifies which type of policy?

How do value-based pricing,unbundling,and bundling help marketers hold onto market share during a recession?

Functional discounts,noncumulative quantity discounts,and promotional allowances are examples of rebates given to the trade customer.

Leupold & Stevens,Inc.makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous at a price much lower than it has ever sold a rifle scope before.The new scope offers several different magnifications and is the only scope in the $200 range that is made in the United States.(All similar scopes are priced much higher. )Which pricing strategy is Leupold & Stevens using to appeal to a larger market?

FOB is an acronym for which of the following?

Imagine you have developed a device that can be used to tell whether uncooked meat has been irradiated.Several smaller retail chains have agreed to carry your product,but a large discount retailer has asked you to sell the device to it for a substantially lower price.What is the large discount retailer asking you to practise?

Why are quantity discounts most often used?

One price tactic requires the purchaser to absorb the freight costs from the shipping point.In this case,the farther buyers are from sellers,the more they pay because transportation costs generally increase with the distance merchandise is shipped.What is being described?

Which of the following uses buyers' perceptions of a product's worth,not the sellers' costs,as the basis of pricing?

K&G Restaurant Supplies sells paper products and commodity items such as flour to for-profit businesses.It charges a substantially lower price to companies that operate multiple locations such as a restaurant chain.It charges a higher price to small or independent operations because they are less profitable customers.What is K&G Restaurant Supplies engaging in?

One order of over $500 from The Baker's Catalogue earns a 5 percent discount,and one order of $1,000 and over earns a 10 percent merchandise discount.What are these discounts examples of?

Under what conditions is each of the three basic pricing methods successful?

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

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 Michael's,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 individual 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 Michael's 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 Canada Day sale were reduced by 40 percent. -Refer to Art Supplies.Which pricing tactic was Michael's probably using with its Funky Girls Gel Pens?

When a customer of Vegas Sign Company chooses to pay immediately on delivery rather than wait to be billed in 30 days,the buyer receives a 5 percent discount.What is this 5 percent discount an example of?

Suppose price is not set on the product until the item is either finished or delivered.Which of the following is being used?

Functional discounts are simple to calculate.The total discount is the retail list price times the accumulated margin percentages.

Which of the following BEST describes single-price selling?

One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products.