Exam 18: Setting the Right Price

State laws that put a lower limit on wholesale and retail prices are called _____.In states that have these laws,selling below cost is illegal.

If your favorite mail-order catalog lists freight charges according to the dollar amount of merchandise purchased,you know that it is using _____ pricing.

After mangers understand both the legal and the marketing consequences of price strategies,they should set a(n)_____ price,the general level at which a company expects to sell a good or service.

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

Price penetration is sometimes referred to as a "market-plus" approach to pricing.

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 pay.

Leader pricing is used to:

Hannah's cable system has offered her a deal for basic cable plus 6 premium channels for less than she is currently paying for basic cable.The cable system is using price lining to increase its overall profits.

Often a seller will establish a series of prices for a family of merchandise items.There may be several different models at specific price points but no prices in between.This policy is called:

A price tactic that requires the purchaser to absorb the freight costs from the shipping point is called _____.In this case,the farther buyers are from sellers,the more they pay because transportation costs generally increase with the distance merchandise is shipped.

Ducktown Used Cars aired a radio spot announcing,"Today only,previously owned cars are only $200!" Meghan just wanted some kind of in-town transportation.When she went to Ducktown the salesperson said,"We have only one $200 car left,and it's not the kind of car I'd want my wife to drive.However,we do have some great deals on newer models." Meghan went home with an $8,000 used car.Ducktown is probably practicing:

The basic assumption behind value-based pricing is that:

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

Consumers sometimes prefer two-part pricing because:

A _____ discount is a deduction from list prices that is aimed at encouraging customer loyalty.

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.

If the world's largest manufacturer of door knobs and dead bolt locks set wholesale prices below its cost,with the intention of driving its competitors out of business,the manufacturer would be engaged in predatory pricing.

Kule,Inc.produces three different lines of car racks for transporting large,bulky items. Included in the cost of goods sold is $120,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.What will be the effect on total net profit for the company if the line of bicycle racks is dropped?

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

A retail store implements a single-pricing tactic as a way to remove price comparisons from the buyer's decision-making process.