Exam 18: Setting the Right Price

Which of the following pricing methods can be used to build market share during a recession?

SCENARIOS Art Supplies 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 Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.What pricing practice was used to price the plastic storage boxes?

Why is price lining is a valuable tactic for marketing managers?

It makes the most sense to use price skimming as a pricing policy when demand is relatively elastic in the upper ranges of the demand curve.

R.W.Hunt & Sons,a distributor of rifles and anything needed for hunting or target practice,has packaged a new rifle scope with a package of paper targets at one low price.R.W.Hunt is actually selling the scope slightly below cost,but the paper targets are very profitable.R.W.Hunt is using a pricing technique called:

One example of price bundling occurs when theaters sell season tickets at a lower price than individual tickets for the same show.

Which of the following factors can a manager IGNORE when deciding on prices for an entire product line?

When Janeka purchased a pair of walkie-talkies so she could stay in contact with her ten-year-old son when he was playing in the neighborhood,she noticed that if she mailed the manufacturer a proof-of-purchase and the cash register receipt showing where and when she had purchased the two-way radio system and how much she had paid,she would receive a check for $25.This $25 is an example of a:

Geographically dispersed sellers often result in significant freight costs.Define four types of geographic pricing tactics that can be selected by a marketing manager to moderate the impact of freight costs on its more dispersed customers.For each tactic defined,specify the circumstances that would prompt the selection of that geographic pricing tactic.

SCENARIOS Art Supplies 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 Fourth of July sale were reduced by 40 percent. -Refer to Mrs.K's Premium Wisconsin cheese.Mrs.K's sells some products in sets that include a variety of cheeses and sausage products for a special price.This is known as:

Hunter's Alley is a chain of stores targeted to people who are proud of their NRA membership.It has agreed to set up a special display of Swartklip ammunition near its rifle and shotgun aisles and also to run an advertisement in newspapers in communities where its stores are located.Swartklip has agreed to supply the display material free and to pay for half the cost of the advertisement.This is an example of a:

Consumers are required to pay consumer fees because businesses allegedly:

Razer-Edge makes machines for sharpening the blades used by butchers to slice meat.When Razer-Edge priced its Primary Sharpener,its salespeople were told that it would be sold for $1,700,but that there would be room for discounts and flexibility.The $1,700 price is the _____ price for the Primary Sharpener

With _____,the seller pays the actual freight charges and bills every purchase with an identical,flat freight charge.

SCENARIOS Art Supplies 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 Fourth of July sale were reduced by 40 percent. -Refer to Art Supplies.What pricing practice was used with the scrapbook starter kit?

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.OfficeMax has used:

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

SCENARIOS Art Supplies 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 Fourth of July sale were reduced by 40 percent. -Refer to American Girl Catalog.While a doll can be purchased at Wal-Mart for less than $10,American Girl markets its dolls at a price much higher than the prices of its competitors.It most likely uses a _____ strategy.

K&G Restaurant Supplies sells paper products and commodity items like 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.K&G Restaurant Supplies is engaging in:

Carrie Dunn is the owner and operator of Dunn's Best Jams,which she sells at craft festivals.She only makes and sells 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?