Exam 17: Setting the Right Price

Shipping fresh-cut flowers to international buyers can be risky because of price changes during the time required for shipment,expense incurred over long distances,and quality of product delivered.To minimize costs,what would a seller likely employ?

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.Dividing Ontario into segments and pricing products based on the freight charges to different segments represents the use of which type of pricing?

What does uniform delivered pricing enable a firm to do?

Imagine you are the marketing manager for the Sheet Metallic Company.It manufactures all types of baking sheets and pans.You are responsible for coming up with a rebate plan.What is a rebate? What different types of rebates could you elect to use? Why would you prefer to use a rebate rather than a simple price reduction?

Once he compiles information on pricing objectives,market demand,quantity supplied,and the price elasticity of demand,the marketing manager for a firearms training system will be ready to determine optimal price for a new product extension.

The Raver-Smythe Corporation (RSC)has introduced mylar-based artificial fingernails.It earns a low profit margin on the sale of each box of its new fingernails and is still able to meet its revenue objectives due to economies of scale.RSC is using a penetration pricing policy.

Carrie Dunn is the owner and operator of Dunn's Best Jams,which she sells at craft festivals.She makes and sells only three types of jams-pecan pie jam,chocolate pie jam,and lemon tart jam.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 jams sold.Last year's sales figures and allocated joint costs follow.Should Dunn's Best Jams stop selling its pecan pie jam? Why or why not? Sales Less: Cost of goods sold Gross margin Pecan Pie Jam \ 4,000 (\ 1,000) Chocolate Pie Jam \ 8,000 \ 3,000 Lemon Tart Jam \ 9,000 \ 4,000

Price discrimination can sometimes be justified.

Merchants frequently offer a discount off the base price to customers who pay immediately,or within a specified time period.What is this called?

Sellers must carry adequate levels of merchandise that has been price promoted or offer "rain cheques" if the product sells out.What will failure to comply result in a charge of?

A 16-ounce bottle of Prairie Herb vinegar sells for $4.95,and a 16-ounce bottle of Heinz vinegar costs $1.05.Prairie Herb vinegar is new to the market,perceived to be of higher quality,and provides a unique flavour to foods even though it is used in the same way as Heinz vinegar.Prairie Herb vinegar is most likely using which type of policy?

Hasbro wants to introduce a new brand of flying disc similar to Wham-O's Frisbee.Hasbro would have a great amount of freedom in choosing a price for its new toy.

As production experience increases,the average cost per unit produced decreases.What is this drop called?

Name five of the special pricing tactics.Give one advantage and one disadvantage associated with using each of the tactics you have named.

When a channel intermediary is compensated for the ordinary services and tasks performed within the channel of distribution,the compensation,usually in the form of a discount from base price,is called which of the following?

A company's pricing strategy should do all of the following EXCEPT which one?

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

During the recent worldwide recession when wine usage was declining,Nickel & Nickel launched a new brand of wine,which it sold at $125 a bottle.The wine is allowed to age three times as long as lower-priced wines,and the grapes used in the wine's production are a rare variety.Wine lovers appreciate how both production techniques improve wine quality.What did Nickel & Nickel use to build market share?

The Association of Specialty Surgical Practice has published a minimum fee schedule for services and distributed this schedule throughout the medical profession.What is Specialty Surgical encouraging?

If the seller pays all or part of the actual freight charges and does not pass them on to the buyer,which type of pricing is the seller using?