Exam 20: Setting the Right Price

A catalog retailer offers three styles of khaki pants at three price levels.The special pricing tactic used by the catalog retailer is best described as variable psychological pricing.

When a firm introduces a new product at a relatively low price because it hopes to reach the mass market,it is following a _____ strategy.The low price is designed to capture a large share of a substantial market and produce lower production costs.

Tickets to the combined amusement park and water slide were $49 for the day.Then the company gave customers the option to purchase tickets for either the amusement park or the water slide for $18.To help keep costs in line,the park management also began charging its customers a small parking fee.Initially,the cost of parking was figured into the $49 price.The amusement park is using:

Apple iPhone Apple Inc. iPhone went on sale on June 29, 2007. Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products and the iPhone enjoyed a tremendous amount of "buzz" before its introduction. As expected, the iPhone entered the market at what many believed to be a high price ($599). However, within weeks the price was reduced to $399. By the end of 2007 over 8 million iPhones had sold in the U.S. marketplace. By most, if not all measures, the original iPhone was a huge success for Apple and it exclusive U.S. carrier AT&T. On July 11??, 2008, Apple Inc. released the iPhone 3G, which it advertised as twice as fast as the original iPhone for half the cost. However, in order to obtain an iPhone at the new price of $199, buyers had to agree to a two-year service contract with AT&T. This allows iPhone users to receive phone calls and email, and search the web on the same device. A single charge of $59.99 from AT&T included 450 minutes of cellular calls, with free nights and weekend minutes, unlimited data, visual voicemail, 200 text messages, rollover minutes, and unlimited mobile-to-mobile service within the AT&T network. This approach succeeded and over a million iPhone 3Gs were sold during the introductory weekend. -Refer to Apple iPhone.Apple and AT&T have several options available for competing with Samsung and its Instinct phone.If Apple and AT&T choose to compete by pricing their product at a low price to drive Samsung out of the market,this would be considered _____.

At the Greenville Florist,there are four different prices for funeral bouquets.The smallest bouquet sells for $30; there is also a $40 version and a $75 version.For those who want to express their grief through the purchase of a dramatic floral arrangement,the florist also offers a $150 value.The owner of the florist shop has chosen price lining because it will:

L.L.Bean charges all customers the same flat freight rate.It uses _____.

When the economy is characterized by high inflation,special pricing tactics are often necessary.One popular cost-oriented tactic is culling low-profit margin products from the product line.Why might this tactic backfire? What two other cost-oriented tactics can be used to guard against inflation? Describe these tactics.

Acme Lawnmowers sells its mowers to retailers at different prices,depending on whether they are independent stores or members of a national chain.It uses _____.

The Atlanta Braves Family Value Pack includes 4 tickets to an Atlanta Braves game,4 hot dogs,4 Cokes,a parking pass,and a game program for $157.This price is significantly lower than the cost of purchasing these items individually.The Braves are using:

Which type of discount is a price reduction offered to a customer in return for prompt payment of a bill?

Rag fibers for paper and cotton seeds for cottonseed oil are two by-products of the cotton textile industry.Because these products are produced together,they are complementary products.

Costs that are shared in the manufacturing and marketing of several products in a product line are called:

The $149 Atlanta Braves MVP package includes tickets to a Braves game,the Georgia Aquarium,Stone Mountain Park,the World of Coca-Cola museum,and Six Flags amusement park.Its pricing technique is known as _____.

Which of the following is a price tactic that offers all goods and services at the same price (or perhaps two or three prices)?

The basic assumption behind value-based pricing is that:

When using _____,price is not set on the product until the item is either finished or delivered.

Which pricing method (skimming,penetration,or status quo)would be most appropriate for each of the following products: (1)a new kind of automatic vacuum cleaner; (2)brightly colored wooden blocks to be used as a child's toy; (3)a new,low-cost,no-calorie fat substitute; (4)a home computer; and (5)a designer perfume.Briefly justify your answers.

If the seller pays all or part of the actual freight charges and does not pass them on to the buyer,the seller is using _____ pricing.

A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin,which can be used effectively as a blood replacement.The manufacturer of the product has put a high price on the product in order to recoup its research and development costs.The manufacturer of Oxyglobin is using a _____ policy.

Proctor & Gamble entered the electric toothbrush market with the Crest SpinBrush at a price considerably lower than lesser-known competitors.It used penetration to gain market share.