Exam 11: Pricing Decisions

How can price be used as a strategic variable to achieve specific financial goals? Under what conditions should skimming or penetration pricing be adapted as strategies?

A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to:

When subsidiary country managers are given broad discretion to set prices in their markets, a polycentric pricing strategy is in evidence.

The United States and Germany recently completed an open-skies agreement that will allow Lufthansa to fly more routes within the United States.

Penetration prices often mean that the product may be sold at a loss for a certain period of time.

The skimming pricing strategy is appropriate in the mature phase of the product life cycle.

Transfer pricing is a term that applies to transactions between different divisions or units of the same company.

Sony used penetration pricing when it launched the Walkman personal stereo in 1979.

Which of the following would not be taken into account by a company using an ethnocentric approach to pricing decisions?

If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as "innovators" and "early adopters" with relatively inelastic demand curves, the company should use the ________ pricing strategy:

The market skimming pricing strategy is a part of a deliberate attempt to reach a market segment that is willing to pay premium price for a particular brand or for a specialized or unique product.

________ occurs when a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained.

According to current GATT standards, governments cannot penalize foreign companies for dumping if the export price of a given product differs from the domestic price by less than 2%.

When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:

Price floor and price ceiling are two basic factors which determine the boundaries within which prices should be set.

All of the listed advantages are for "Extension or Ethnocentric" pricing strategy except:

Nintendo was fined nearly $150 million after it was determined that the video game company had colluded with European distributors.The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices.This is a classic example of:

If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, that company may be accused of:

With a free on board (FOB)named port, the responsibility and liability of the seller ends at the docking point at the port.

In the United States, Levi Strauss & Company is under price pressure due to stiff competition from Wrangler and Lee brands marketed by VF Corporation.