Exam 39: Setting the Right Price

An Alabama-based catalog retailer sells fireplace equipment such as screens and andirons.Its customers in New England are charged one shipping rate,and customers west of the Rocky Mountains are charged a different rate.Customers in the midwestern states are charged yet another rate.What kind of geographic pricing is the catalog retailer using?

Marketers must take care when using _____ since a lower price often signals to consumers that product quality is also low.

Every week,Keller's Grocery runs a weekly ad in the newspaper touting its sale prices on a number of products.For example,this week the store is selling cherries for $1.50/pound and boneless chicken breasts for 99 cents/pound.Keller's sells these products at a below-market price to lure customers into the store in hope that while they are in the store to buy chicken and cherries,they will also buy other grocery items that have a much higher markup.The store is using:

Nestlé Purina sells chicken feed and Wheat Chex,but the sale of one of these products has no known impact on demand for the other.In this case,the two products have a(n)_____ relationship.

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

_____ are extra fees paid by consumers for violating the terms of purchase agreements.

Apple iPhone Apple, Inc.'s iPhone first 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 eight 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 its then-exclusive U.S. carrier AT&T. On July 11, 2008, Apple, Inc. released the iPhone 3G, which it advertised as being 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 approach succeeded, and over a million iPhone 3Gs were sold during the introductory weekend. In 2011, the iPhone 4S-the fifth generation iPhone-led cellular phone sales with more than 25 million units sold. Several Android-based phones manufactured by Samsung were not far behind, however. -Refer to Apple iPhone.HSBC Group is the world's largest banking group.When the iPhone 3G was released,HSBC considered switching from BlackBerry handsets to iPhone 3Gs.This would mean ordering 200,000 iPhones,so HSBC would probably receive special pricing incentives,including a:

Suppose an advertising agency develops logos for its clients.It charges $10,000 per logo--whether the team that's working on the logo takes 30 minutes or days to design the logo.Agency management explain that clients pay for the agency's expertise and creativity,not the amount of time it literally takes to develop a logo.This pricing approach is known as:

In which of the following countries is Procter & Gamble MOST likely to sell razor blades using a penetration pricing strategy?

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market is called:

What is value-based pricing? What is the basic assumption marketers must make about their markets before implementing a value-based pricing strategy?

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

When the salesperson from Affiliated Food,Inc.,a grocery distributor,calls on a grocery store,she is authorized to offer a 15 percent discount from the list price in recognition of activities (such as unpacking items and stocking shelves)that retailers perform for the distributor.This 15 percent discount is a:

A discount off the base price to customers who pay immediately,or within a specified time period,is called a:

What is a promotional allowance? What is the difference between a promotional allowance and a functional discount? Give two specific examples of promotional allowances.

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.

Single-price selling:

All of the following elements must be present for a pricing practice to be considered discriminatory under the Robinson-Patman Act EXCEPT:

Escalator pricing and price shading are two examples of cost-oriented pricing tactics.