Exam 16: Developing Pricing Strategies and Programs

Today, consumers are price takers and accept prices at face value or as given.

Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs.

Bella's Inc. has estimated the demand and costs associated with alternative prices. It has finally chosen to price its new offering in such a way that it will maximize the rate of return on investment. What can be deduced about the company's objective?

When Indu's company printed the ad for their perfume in the newspapers, the caption read, "WAS $100, NOW $75." What kind of a promotional pricing did her company use?

The reservation price, the maximum that most consumers will pay for a given product, is known as the ________ price.

What should a firm consider if it is in a nonhomogeneous market and a competitor lowers its prices?

The key to perceived-value pricing is to ________.

When Sony introduced the world's first high-definition television to the Japanese market in 1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from the various segments of the market. The price dropped steadily through the years - a 28-inch Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $450 in 2014. What pricing strategy did Sony use here?

A company must consider the product's stage in the life cycle and its importance in the company's portfolio before responding to a competitor's price cut.

Fred's company has recently sold its resin-producing plant to a business in India. As part of the sales price, his company agrees to accept as partial payment the production of the resin at an agreed upon price for six years. This is an example of what type of countertrade?

ROC Engineering, a Chinese shipbuilding company, agrees to build a fleet of submarines for the Sri Lankan navy, for which it will be paid in the local Sri Lankan currency. As per the agreement, ROC must also spend a substantial amount of the money it generates through this deal within the country. In accordance with the contract, ROC buys Sri Lankan tea at a reduced rate. This is an example of which of the following forms of countertrade?

When a movie theater charges a lower ticket fee for children and senior citizens, it is engaging in ________ pricing.

In the case of prestige goods, the demand curve sometimes slopes upward.

Which of the following auctions is characterized by one seller and many buyers?

Many consumers use price as an indicator of quality and value.

When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

________ reward dealers for participating in advertising and sales support programs.

If a calculator company produces 100,000 hand calculators at a cost of $10, but the cost drops to $9 when it produces 200,000 and $8 when it produces 400,000 hand calculators, the decline in average cost with accumulated product experience is called the price elasticity of demand.

Competitors are most likely to react to a price change when ________.

When a company maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation, it is known as ________.