Exam 13: Pricing Concepts

Mayra works at a jewelry store on the weekends. Roman, the store manager, asked her to help him with putting price tags on some new jewelry for display. Mayra was surprised that there was not much thought to the pricing process - all they did was look on the invoice for the price they paid, double that amount, and put that figure on the price tag. Therefore, an item that they paid $125 was priced at $250. The jewelry store's markup percentage is:

Prices are related to the other elements of the marketing mix and to virtually all marketing outcomes. If a firm has a strong desire to increase its market share, it is likely it will:

You are asked by a non-marketing executive of your hip-hop music company to clarify some financial language she heard at a recent annual presentation to investors. She asks you to give her a simple one-sentence definition of "breakeven analysis." ​ Required: Which of the following definitions meets her request for a simple one-sentence definition of "breakeven analysis?"

Nakamichi introduced a set of true high-fidelity headphones at a price of $2,000. However, the product simply did not find a market. Most likely, this was due to:

Parker Industries is a small company with a big name! Parker Industries is actually a one-person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. If Parker found a vendor that would provide the same product for $.89 each including shipping, what would happen?

Javier is the business manager at his college. In his role, Javier makes a lot of business decisions. Javier has installed a vending machine in a dorm for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier buys soft drinks for $.25 each and charges $.75 each from the vending machine. Currently, the machine has a sales volume of 400 cans a month. Javier thinks lowering the price to $.60 each will increase sales by 100 cans a month. What affect will this have on profit or loss?

A pricing strategy that emphasizes benefits of a product in comparison to the price and quality levels of competing offerings is called _____ pricing.

A product is priced to sell for $12 with average variable costs of $8. The company's total fixed costs are $120,000. The minimum number of units that must be sold in order to the breakeven point with zero profits are:

You are head of sales and marketing for your cowboy boots manufacturing firm. It has been a chaotic product year, with a great deal of input from many stakeholders: consumer advocacy groups, employees, competitors, and shareholders. You are meeting with the CEO to establish pricing objectives for the upcoming product year. ​ Required: Which of the following factors will you consider as you establish your firm's pricing objectives?

Deena operates a coffee shop located near the university campus. Her major competitor is Kaprice's Coffee on the corner across the street from Deena's Café. Recently, Deena decided to raise the price of all the products she sells. Since they are close competitors with Deena's Café, Kaprice's can most likely experience:

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit is currently operating at breakeven volume. If sales decrease 50 units and costs remain the same, the firm will:

Almost all fast-food restaurants offering a short menu with low prices to compete with the other restaurants. These are intended to attract very price conscious consumers and are usually a "dollar menu" or offered at prices such as $.99 and $1.49. This approach is referred to as:

Often there are cost efficiencies with longer production runs that will result in lower variable cost per unit.

Items such as lease payments, administrative staffing, and insurance costs, that remain stable at any production level within a certain range are known as:

Temporary price cuts are the only tactic available for increasing a product's market share.

Taylor recently went shopping for the first time at Farm to Home, a whole foods grocery store that emphasizes natural, hormone-free products. Taylor usually shops at Walmart and pays $.88 for a gallon of milk. At Farm to Home, a gallon of milk was $9.00. It seems that Farm to Home is using a:

Krizia is excited about her bakery that she just started. As a marketing major, Krizia knows that setting the correct price will be critical to the success of her bakery. In particular, Krizia wants to get a very good grip on costs, as she knows costs establish the ___________ for her prices.

When firms have identical or very similar products and price information readily available - for example, cigarettes or soft drinks - a common pricing approach to avoid price wars is utilizing a competitive parity pricing strategy.

Javier is the business manager of his college. In his role, Javier makes a lot of business decisions. Javier is currently considering installing a vending machine in one of the dorm for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier can buy soft drinks for $.25 each and plans on charging $.75 each from the vending machine. How many drinks would have to be sold a month to cover the cost of the machine?

Which of the following pricing objectives reflects marketers' recognition of the role of price in creating an overall image of the firm and its product offerings as being high quality or exclusive?