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Exam 12: Pricing Products and Services

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Question 91

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Individuals can choose to purchase Microsoft stand-alone software packages such as Word, Excel, PowerPoint, and One-Note.However, they may choose the purchase the Office Home and Student 2010 suite which has all of these applications in the same package.Microsoft is using a __________ pricing strategy.

A) penetration
B) prestige
C) bundle
D) odd-even
E) standard mark-up

F) A) and B)
G) A) and C)

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Question 92

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List four key factors used to estimate demand.

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Of course (1) price is one factor.Howeve...

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Question 93

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The average price Washburn charges for a guitar is $349.This price must cover its average costs of $25 for direct materials and $120 in direct labor.It must also cover fixed expenses of $38,000.Assuming everything else stays the same, the company's planned move to Nashville, Tennessee, will reduce its fixed costs by $4,800.This would cause the slope of the total cost curve to _________ and the break-even quantity to _________.

Jane Westerlund owns a picture-framing shop, The Caplow Co.The average price she receives for a picture she frames for a customer is $120.This price must cover her average costs for a typical framed picture of $5 for glass, $2 for matting, and $13 for the frame, and $30 for the labor involved.She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary.Assuming everything else stays the same, if Westerlund wants to increase her advertising expenses to $1,000, this would cause the slope of the total cost curve to __________ and the break-even quantity to _________.

A custom kitchen cabinet storeowner wishes to use target return-on-sales pricing to establish a price for a typical section of cabinets.Assume variable cost is $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent of sales on an annual volume of 400 cabinets.What price should be charged for a typical cabinet section?

Most consumers realize the quality of diamonds varies, and most believe the higher the price of the diamond the higher its quality.This is an example of price influencing the perception of overall quality, and __________ to consumers.

Skimming pricing is a strategy that introduces a new or innovative product by

Pricing objectives refer to

Demand-oriented approaches weigh factors that underlie expected __________ more heavily than factors such as cost, profit, and competition when selecting a price level.

A flexible-price policy give sellers __________ in setting the final price in light of demand, cost, and competitive factors.

Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.This practice, is also called __________.

FIGURE 12-5 -Figure 12-5 above shows that when the quantity demanded moves from 3.0 to 4.5 million units, the profit

When Kroger's, a national supermarket chain, prices soda at $2.09 a six-pack, it is attempting to

The manufacturer of a DVD-R is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue against using a skimming pricing strategy for the DVD-R disks?

Demand for a product is likely to be more price elastic if

Marketing executives must translate estimates of customer demand into estimates of

Setting the price is one of the most difficult tasks that a marketing manager faces.Using Figure 12-8 above, identify the three generalized steps that are useful to follow when setting a final price.

__________ approaches.

In the early 1980s, typical round-trip coach fares from the East Coast to London were over $500.Then Freddie Laker introduced a competing service into Newark at $350.Major airlines matched his price-and continued to do so until they drove Laker out of business.Then prices shot back up to over $500.A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor.Laker's experience is an example of __________ on the part of the major airlines.