Exam 17: Setting the Right Price

When does a penetration pricing strategy tend to be most effective?

A catalogue retailer offer three styles of khaki pants at three price levels.Customers can buy khaki pants for $26.00,$32.00,or $38.00 and at no other prices but these.The special pricing tactic used by the catalogue retailer is best described as variable psychological pricing.

Manufacturers know the approximate price level they can expect when establishing a product price.This approximate price is called the base price.

If a manufacturer designates a shipping point from which to calculate all freight charges and charges customers freight from that point (even if the goods were shipped from another location),which type of pricing is the manufacturer using?

If a company decides to divide its market area into segments or regions and charge a flat rate for freight to all customers in a given region,what type of pricing is the company using?

The office supply store was selling two-drawer file cabinets for $20,which is a below-market price,to lure customers into the store in hopes that while they are in the store to buy a file cabinet they will also buy other items that have a much higher markup.What is the office supply store using?

What is the illegal practice of manufacturers controlling prices at the retail level?

Winnipeg Metallic Company,a manufacturer of baking pans,requires its buyers to pay for the cost of transportation from the manufacturing site to their place of businesses.Winnipeg Metallic uses FOB origin pricing.

In a catalogue targeted to people who like to bake,customers can buy a single yeast bread mix designed specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50.What is this an example of?

In Canada,federal legislation prohibits firms from selling to two or more competing buyers on an ongoing basis,within a short period of time,goods of like grade and quality at different prices where the result would be to lessen competition in the marketplace.What is this infraction known as?

Price fixing is clearly illegal in all instances.

Kasha has decided to keep her new power boat in a "drystack" storage facility rather than in the water at a marina.The storage facility charges her a fee of $500 per year,plus $25 each time she calls ahead and asks the facility to put her boat in the water for the day or weekend.Which pricing tactic is the facility using?

What is value-based pricing? What is the basic assumption marketers must make about their markets before implementing a value-based pricing strategy?

The Terra Vista Airport is a small airport frequently used by people who love skydiving.To help keep costs in line,the airport now charges its customers a small parking fee.At one time,the cost of parking at the airport was included in the price of the jump.What is Terra Vista Airport using?

What are two effective pricing tactics,which can be used during a recession,to hold or build market share?

What can a marketing manager do to make demand for his or her product more inelastic?

Two reasons are given to explain why some companies price their products too,low thereby reducing company profits.What are they?

Which pricing method (skimming,penetration,or status quo)would be most appropriate for each of the following products: (1)a new kind of automatic vacuum cleaner; (2)brightly coloured wooden blocks to be used as a child's toy; (3)a new,low-cost,no-calorie fat substitute; (4)a home computer;and (5)a designer perfume? Briefly justify your answers.

The two operators of carriage tours in Victoria are in a price war with each other.Whenever one reduces its fare,its competitor reduces its fares by the same amount.This is an example of status quo pricing.

What is product line pricing? What three relationships among products in the line must managers be aware of before setting prices? For each relationship,give an example of a product that fits the situation.