Exam 18: Setting the Right Price

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.Which pricing tactic was Michael's probably using with its Funky Girls Gel Pens?

Eustis Lee is a lawyer that only handles DUI cases.No matter how quickly,he resolves the case,he charges each customer $5,000.Lee justifies the fee because of his lengthy education and the years he has spent learning how the judicial system operates Which pricing policy is the lawyer using?

Leupold & Stevens,Inc.,makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous at a price much lower than it has ever sold a rifle scope before.The new scope offers several different magnifications and is the only scope in the $200 range that is made in the United States.(All similar scopes are priced much higher.)Which pricing strategy is Leupold & Stevens using to appeal to a larger market?

If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains,and at even-numbered amounts to denote quality,he or she is using:

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

Current is a catalog retailer that sells greeting cards,wrapping paper,and decorative bows.Since its inception,the catalog retailer has offered three separate prices on each item purchased.The highest price is for purchases of a single item.The middle price is for purchases between two and five of the same item.The lowest price is for purchases over five of the same item.What common form of purchase discount is Current using?

The market for turkey products is large.If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savory dressing,most of the large market for this new product would be aware of its existence.The market is price sensitive,and there is some potential competition.The appropriate strategy would be:

Escalator pricing and price shading are two examples of cost-oriented pricing tactics.

The term FOB is an acronym for:

A _____ is a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round.

Marketing managers can use a wide variety of special pricing tactics to fine-tune prices.Name and define five of the special pricing tactics that are legal.For each tactic,give an example of a specific company,industry,or product that would use the tactic.

Functional discounts are simple to calculate.The total discount is the retail list price times the accumulated margin percentages.

Imagine you have developed a device that can be used to tell whether uncooked meat has been irradiated.Several smaller retail chains have agreed to carry your product,but a large discount retailer has asked you to sell the device to them for a substantially lower price.The large discount retailer is asking you to practice:

The first step in setting the right price for a new product is to estimate demand,costs,and profits.

All pricing objectives have trade-offs that managers must weigh.

What are consumer penalties? What two reasons to businesses give for requiring consumers to pay them?

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,the company is using _____ pricing.

Kule,Inc.produces three different lines of car racks for transporting large,bulky items. Included in the cost of goods sold is $12,000 of annual rent (a fixed cost)that is distributed equally among the three product lines.As a consultant to Kule,will you recommend that they drop the luggage rack line?

Merck & Co.,the manufacturer of the AIDS drug Crixidan,distributes exclusively to one distributor,Stadtlanders Pharmacy.The pharmacy has been criticized for charging too high a price for the drug and taking advantage of inelastic demand.Stadtlanders claims the charges are ethical because of high staffing costs and associated discounts with various health plans.This situation describes issues associated with:

Which of the following phrases accurately describes psychological pricing?