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Exam 9: Pricing

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Question 31

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Retailers sometimes deliberately sell commonly used products, such as paper towels, soft drinks, and facial tissues, at very low prices to attract consumers who, the retailer hopes, will also buy other, regularly priced merchandise.This is referred to as below-market pricing.

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B) False

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Question 32

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Companies often pursue a market share objective when industry sales are relatively flat or declining.

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B) False

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Question 33

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The owner of a small restaurant that sells take-out fried chicken spends monthly amounts of $2,500 in rent, $500 in utilities, $750 in loan interest, $200 in insurance premium, and $250 for advertising on local buses.A bucket of take-out chicken is priced at $9.50.Unit variable costs for the bucket of chicken are $5.50. How many buckets of chicken does the restaurant need to sell to break even?

Which term describes the factors in the marketplace that limit the range of price a firm may set, such as newness of the product, demand for the product class, and competitors' prices?

When microwave ovens were in the introduction stage of the product life cycle, some consumers were willing to pay exorbitant prices for the innovative ovens.Taking advantage of this strong consumer desire, marketers set the price for microwave ovens at the highest initial price that customers with a very strong desire for the product were willing to pay.Marketers of microwave ovens were using a _____ pricing strategy.

Factors that determine consumers' willingness and ability to pay for goods and services are called _____.

Fickles Co.Ltd.uses a low price to enter the market with its newly launched product, Fickles Fruit Pickles.This strategy is called a _____ strategy.

A target return objective is one in which a company gives up immediate profit in exchange for achieving a higher market share.

Walk Easy Inc., a manufacturer of heel replacement kits for men's shoes, incurs fixed costs of $6 million and unit variable cost of $5. Walk Easy Inc.is considering a switch from manual labour to an automated process.New equipment would cost an additional $4 million per year and it will lower the unit variable cost by $2.How many kits would Walk Easy have to sell at $15 per pair to make $2 million in profits in the next year using the automated process?

Of the 4Ps in the marketing mix, price is often considered the most critical.Explain why?

Inelastic demand exists when:

A firm's profit equation demonstrates that its profit equals _____.

Standard markup:

When a company sells its product in a foreign market for a much lower price (often below its cost) , it is called

Using _____ pricing, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic.

Explain the concept of bundle pricing.Give an example of bundle pricing.

Julia owns a boutique store in which she sells a variety of home décor products.She works backward through markups given to wholesalers and to herself to determine what price she can charge for the products.Which of the following approaches to pricing is she using here?

When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid in cash instead of using his credit card.The convenience store was offering him a _____.

Price discrimination is:

When a cereal manufacturer divides the sales revenue in a single year obtained by all its breakfast cereal brands by the breakfast cereal sales of all its competitors plus its own for that same year, it is calculating its _____.