Exam 14: Pricing Strategies

Personal training is your life, but you haven't increased your hourly rate since you started six years ago. You're still charging $50 an hour, when you really should be charging $80, given the excellent results you get. Based on what you know about the various factors that influence elasticity of demand, you:

As the marketing director for a company that produces home office equipment, you've been asked to weigh in on a suggested price for the company's new all-in-one printer. Similar products retail for $200 to $600, with most of them falling in the $350 to $400 range. You'd like to position your company's product where there is less competition, so you suggest pricing yours:

_____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices.

The company you work for as a marketing director makes smartphones. About a year ago, the company's design team rolled out a new model that was comparable in every way to other brands retailing for $300 to $400, except that the phone could be manufactured for far less money. You decided to use a penetration strategy and set a retail price of $199, but sales have fallen well below your forecast. What is the most likely explanation for the shortfall?

When a chain store sells certain products below cost to attract customers, it is practicing a loss-leader price tactic.

The _____ of demand is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price.

"Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, is an example of _____ pricing.

The amounts of a product that will be offered for sale at different prices during a specified period is referred to as:

Firms using a competitive pricing strategy try to reduce the emphasis on price competition by matching other firms' prices and concentrating their own marketing efforts on the product, distribution, and promotion elements of the marketing mix.

Demand for the hiking sandals marketed by the SoftShoe Company is highly elastic. As a pricing strategy consultant, you have been hired to help the firm reduce this elasticity. Choose the recommendation you would be least likely to make.

Long before the invention of iPhones, iPads, and iWatches, Apple was charging a premium for its personal desktop computers, which performed the same functions as other PC brands. Of the following, which is the least likely motivation for this pricing strategy?

At Streamline Technology, you're responsible for marketing the company's ergonomically designed office equipment, such as chairs and desks. Since Streamline has relatively few customers, you've asked one of the marketers on your team to write up a plan for a survey of buyer intentions regarding your company's ergonomic keyboard. When you review his plan, you agree with everything he's proposed except:

Your company manufactures umbrellas, among other accessories. Six months ago, you projected sales of 5,000 units of your $16 umbrellas over the course of a year, so you produced 5,000 umbrellas. But so far you've sold less than half. What does this mean, and what is the best way to address the situation?

Since many firms begin penetration pricing with the intention of increasing prices in the future, success depends on generating numerous trial purchases.

Pricing decisions are influenced by a variety of legal constraints imposed by federal, state, and local governments.

An example of odd pricing would be:

That guy! Your brother-in-law is finally fulfilling his dream - opening Giordini's Italiano Ristorante - and he's put you in charge of marketing. He says he wants to use something called penetration pricing to launch his business. Of all the penetration pricing ideas you come up with, which one are you least likely to use?

A skimming pricing strategy is more commonly used by firms to:

What is market-plus pricing? Why do companies practice a skimming strategy?

Dish Network has recently advertised a bundled package of 50 channels plus Internet for $59.99 per month but in the fine print, the advertisement notes that this offer is applicable for new subscribers only. What type of pricing policy is Dish Network using with this promotion?