Exam 10: Pricing: Understanding and Capturing Customer Value

Quills, Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains. Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets. -If Quills decided to introduce its products internationally, what factors may cause a change in price?

Pricing a product mix is often difficult because various products have related demand and costs, and they face different degrees of competition.

________ are the sum of the ________ and ________ for any given level of production.

The simplest pricing method is break-even pricing.

When there is price competition, many companies adopt ________ rather than cutting prices to match competitors.

Explain the factors involved in setting international pricing.

When consumers cannot judge the quality of a product because they lack information or skill, they are likely to perceive a higher-priced product as having higher quality.

Environmental elements that affect pricing decisions are categorized as external factors.

Explain how web retailers can initiate dynamic pricing.

Quills, Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains. Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets. -Would quantity discounts be possible for Quills to offer? Why?

Explain two different ways a consumer might view a price cut.

Fixed costs ________ as the number of units produced increases.

Which of the following statements about a break-even chart is true?

Quills, Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains. Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets. -Explain how a reference price could partially build Quills' image in the market.

Which of the following is not a price adjustment strategy?

The major price-adjustment strategies include discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing.

Give two examples of products for which captive-product pricing may be used.

Which of the following is an external factor that affects pricing decisions?

General Motors prices its automobiles to achieve a 15 to 20 percent profit on its investment. This approach is called ________.

By definition, this type of pricing is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost.