Exam 11: Manage Pricing Decisions

Firms should be careful with a ________ strategy, as price is a cue for developing customer perceptions of product quality. The value proposition may be reduced if a low price belies the product's actual quality attributes.

The just noticeable difference in a price is the amount of price increase that can be taken without affecting customer demand.

Bella is a discount furniture store. Most of the items in the store are overstock and hence tend to be more inexpensive than other furniture. Recently Bella started to display the manufacturers' suggested retail price next to the price it charges to show the savings. Bella is using a ________ strategy.

To better take into account the differential impact of fixed and variable costs, marketing managers can use ________ pricing.

Explain step-by-step how average-cost pricing would be used to set the exact price of a product. What is the primary risk associated with average-cost pricing? Step 1: Calculate the total costs expected to produce the product. Step 2: Forecast the number of units expected to be sold. Step 3: Divide the total cost by the number of units to determine the average cost per unit. Step 4: Add the desired profit margin to the average cost per unit to determine the average price per unit.

Define the four types of channel discounts and provide an example of each.

Zone, uniform delivered, and free on board are examples of geographically-driven pricing options that can be implemented within a distribution channel.

Krista goes to a store to buy a new liquid soap dispenser. When she purchases a new dispenser from the store she gets two liquid soap refill packets for free, as part of a promotional offer, but she will need to purchase refills later. In this scenario, the pricing strategy used for the soap dispenser is ________ pricing.

Jameson purchased an alarm system for his car during a promotion. He considered the price after the promotion to be very attractive. However, he later learned that the firm set an artificially high reference price for the alarm system just before the promotion to make the advertised sale price more attractive. Jameson just experienced ________.

Giovanni's Gems is a high-quality Italian leather goods store in Manhattan. Giovanni also runs an Internet site where people can buy his products and he will charge the same delivery fee to any location within the 48 contiguous states. Giovanni utilizes ________ pricing.

________ costs are incurred over time, regardless of volume, whereas ________ costs fluctuate with volume.

Firms and brands that continually attempt to operate in the ________ quadrant do not survive over the long run as customer trust is damaged. Some firms use price skimming strategies, especially on product introductions, even when all the bugs have yet to be worked out of the product.

One rationale for establishing a price skimming objective is that ________ lends status to a product or brand by virtue of a price relatively higher than the competition.

Explain the tactic of product line pricing and provide three examples of this strategy in the marketplace today.

The rise of Walmart as one of the world's largest corporations has brought the concept of ________ to the forefront of global consumer consciousness.

A strategy to intentionally sell below cost to push a competitor out of a market, then raise prices to new highs, is called ________.

Define and discuss the pros and cons of three of the following pricing strategies: penetration pricing, price skimming, target return on investment (ROI) pricing, competitor-based pricing, and value pricing.

Mark owns a driving range in New York City. He has taken notice of the three competitors who are located very close to his business. Mark decides to look at his competitors' pricing and then determine his best pricing strategy based on all of the information. In this scenario, Mark is utilizing ________.

As with average-cost pricing, the effectiveness of ________ pricing is highly dependent on the accuracy of the forecast.

With ________ pricing, customers are allowed-even encouraged-to haggle about prices.