Exam 14: Pricing Strategies

At a meeting with your fellow executives at KFC, you're discussing introducing a new low-fat grilled chicken nugget option, which is significantly different from the company's usual menu items. The CEO wants to get an accurate sales forecast for the product before giving it the green light. Of the following arguments in favor of using various techniques, which one makes the most sense to you?

Explain psychological pricing and give three examples of this concept.

Which of the following statements is true about the forecasting technique known as the "sales force composite"?

You own an apartment complex, and you want to increase the monthly rent on all units by $50 a month. When you ask the building's on-site manager, Janette, whether she thinks it's okay to raise the rent, she says that demand for rental housing is elastic. What is she saying you should do?

Many people were surprised when famed discount retailer Wal-Mart started acquiring smaller online retailers such as Bonobos and ModCloth, which are known for selling higher-end fashion at moderate and higher prices. Why would Wal-Mart executives make acquisitions like these?

You're the chief sales and marketing officer for Kia Motors. You've decided to price the standard, gas-powered Optima at $22,500. The company is also offering a plug-in hybrid model, which costs an extra $3,500 to manufacture, including the cost of R&D. What price do you assign to the plug-in hybrid, and why?

A skimming pricing strategy is commonly used as a market entry price for distinctive goods and services with high initial competition.

You're the marketing director of a company that manufactures women's shoes. Six months ago your company introduced a new style of walking shoes, and now you'd like to get a better sense of how popular they are so you can forecast sales for the next six months. What kind of data will you include when you use the sales force composite technique to help develop a forecast?

As the chief marketing officer at Chevrolet, you'd like to determine how much the engineering team's redesigned dashboards are going to influence your sales forecasts. You've decided to use the Delphi technique, but you're not sure who to include in your research. Of the following groups who might provide useful insights, which group are you least likely to turn to for feedback?

Discuss the relationship between price and consumer perceptions of quality.

State laws requiring sellers to maintain minimum prices for comparable merchandise are called _____ laws.

You are a buyer for Kroger grocery stores, and you're negotiating a deal with the sales representative for Folger's coffee. Obviously, you'd like to get the best deal possible. Under the Robinson-Patman Act, which of the following discounts would be considered legal?

The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy? ​

Most companies set prices using competitive pricing as their primary pricing strategy.

In order to recover research and development costs rapidly and earn high initial profits, SenseTV is setting a high price for its plasma TVs. The pricing strategy SenseTV is using is called _____ pricing strategy.

Marketers who have adopted a product-line pricing strategy have one major advantage in that they have no difficulty making price changes on individual items.

Retailers such as Home Depot and Lowe's, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing.

A pricing policy that assumes that some prices are more appealing than others is known as _____ pricing.

A manufacturer of tablet computers has designed a unique new product that can network with satellites to access streaming video and television channels. This device does not need a Wi-Fi connection and can be accessed anywhere in the world by logging onto the site. Besides serving as a portable computer, this device bypasses the need for a consumer to purchase cable or personal satellite dish access. Which approach to pricing makes the most sense for the company to use first? ​

As the chief sales and marketing officer for Kia Motors, it's up to you to set pricing tactics in what is an established competitive pricing environment. Right now, you're looking at your firm's line-up of four different gas-powered sedans, each of which is distinctly different from the others, although they all tend to look fairly similar. Which tactic is the best approach for pricing Kia sedans?