Exam 17: Setting the Right Price

When Microsoft introduced its Windows NT network operating system,it gave buyers free Web server software.At the same time,Netscape was trying to sell similar Web server software for $4,999.Once Microsoft got a lion's share of the market,and Netscape's market share declined substantially,Microsoft began charging above-market price for its Web server software.Many people thought Microsoft was guilty of which of the following?

What is the easiest pricing goal for a firm to implement?

Describe three tactics used during recessions to make demand for a good or service more inelastic and to create buyer dependency.

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.When does this strategy work best?

What is a promotional allowance? What is the difference between a promotional allowance and a functional discount? Give two specific examples of promotional allowances.

Which of the following allows for price increases based on the cost-of-living index or some other formula?

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.

In Canada,under federal legislation,it is unlawful for a firm to price below its costs with the intent of driving the competition out of business.What is this practice known as?

Super-Sav supermarket employees regularly shop at other local supermarkets in order to make certain that Super-Sav is charging prices comparable to the other supermarkets.What type of pricing strategy is Super-Sav using?

One tactic allows different customers to pay different prices for essentially the same merchandise bought in equal quantities This tactic is often found in the sale of shopping goods,specialty merchandise,and most industrial goods except supply items.What is it?

A firm charging a price identical to or very close to the competition's price is using which type of strategy?

What can leader pricing be used to do?

General Electric Co.was accused of conspiring with De Beers Centenary AG to set a price for industrial diamonds,which are used on industrial cutting tools.As a result,what were the two companies charged with?

What is an agreement between two or more businesses on the price they will charge for a product?

Why is price lining a valuable tactic for marketing managers?

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.What is the type of discount offered by Mrs.K's to buyers who are willing to assume the transportation of products from the farm to their warehouses?

A manufacturer using uniform delivered pricing is legally discriminating against buyers who are located close to the point of shipping because they pay the same amount as buyers located far from the point of shipping.

What is an advantage associated with a flexible pricing policy?

With which of the following does the seller pay the actual freight charges and bill every purchase with an identical,flat freight charge?

The Canadian Girl catalogue began as a concept to introduce girls who lived in the past to today's girls.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Manitoba.Her story begins with her long sea voyage from Iceland.The basic doll dressed in a calico dress and striped apron and the hardcover story of how she got to Manitoba costs $90.Six more hardback books of Kristen's life are available for $80.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $40.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $220.Shipping costs vary with the price of the merchandise ordered and are not connected to weight or distance. -Refer to Canadian Girl Catalogue.Why does Canadian Girl use even-numbered pricing?