Exam 17: Pricing Concepts

According to the text,price is best described as:

Trident makes luxury bicycles.Its target market has been people who willingly pay $1,000 or more for their bicycles,and it acknowledges its prices are high.Trident has lowered prices to target customers who want a good bike but who can't or won't spend a thousand dollars for one.Trident is most likely using a(n)_____ pricing objective.

The responsiveness or the sensitivity of consumer demand to changes in price is referred to as _____and occurs when consumers buy more or less of a product when the price changes.

SCENARIOS Continental Lite In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people." -Refer to the American Girl Doll.In terms of the costs of producing the dolls and its accessories,the salary of the graphic designer who does the layout for the American Girl catalog is a:

Which of the following factors does NOT directly affect the elasticity of demand?

Sara Lee Crustless bread designed for making sandwiches is a product that is in the introductory stage of its product life cycle.If management at Sara Lee is typical,its pricing strategy will depend on the elasticity of demand for the crustless bread.

When there is only one product manufacturer left for a product in the decline stage,prices will stabilize.

Paulo is the manager of a souvenir shop in Panama City,Florida.He has decided to graph the demand per week for fresh orange juice because its price varies as the supply of fresh oranges varies.The graph indicates a demand schedule that slopes downward and to the right.This graph indicates that the quantity of juice demanded increases as:

A cost that changes with the level of output is called a(n)_____ cost.

Chulo Ibsen makes and sells hand-forged wrought iron fire screens for $125 each.He has determined that his fixed costs are $8,000,and his variable costs per firescreen are $45.What is his break-even point in dollars?

Concha y Toro,a Chilean wine,has reduced the price of one bottle from $10 to $8.It previously sold 420 bottles in the month prior to the price reduction,and it now sells 525 bottles per month.It is experiencing:

For convenience,pricing objectives can be divided into three categories.They are:

Keystoning is:

Although many factors can influence price,the primary determinants are:

Because the price of condensed soup is small relative to a consumer's purchasing power,and there are several alternate uses for the product,condensed soup probably has elastic demand.

SCENARIOS Continental Lite In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people." -Refer to the American Girl Doll.What is the revenue to American Girl if it sells 20 basic Kristen doll and books?

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

Antique Reproductions pays a manufacturer $800 for a hand-forged iron fireplace screen,and it sells the fireplace screen to a customer for $1600.The markup on the screen is:

Prestige pricing:

The advertisements for Joy brand perfume claim that it is the most expensive perfume in the world.This is an example of _____ pricing.