CH 11

________ is the amount of price increase that can be taken without affecting customer demand.

Just noticeable difference (JND)

________ is a critical component that plays into a customer's assessment of the value afforded by a firm and its offerings.

Price

Laksha purchases a beautiful aromatherapy diffuser for her home, which comes with one essential oil. Soon, she will need to purchase refills to keep using the product. In this scenario, the pricing strategy used for the diffuser is ________ pricing.

captive

A commercial snow removal service will give customers a 10 percent discount if they pay their bills in full in 20 days; however, after 20 days they do not receive a discount. This is an example of a

cash discount

When a firm's objective is to gain as much market share as possible, a likely pricing strategy is ________, sometimes also referred to as pricing for maximum marketing share.

penetration pricing

Yusuf works at a jeweler. A recent shipment of "True Love" brand diamond engagement rings arrives, and he sees it is priced higher than any other rings in the store. Since Yusuf took a marketing class in college, he knows that the company is most likely using

prestige pricing.

A strategy of ________ addresses the objective of entering a market at a relatively high price point.

price skimming

Brooklyn runs a nutritional supplements store. She learned that customers process the price of $9.99 as significantly lower than the price of $10.00 because of the reduced digit count in the price point. Accordingly, she follows this rule to set up the prices for all products. Brooklyn uses a ________ strategy.

psychological pricing

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________ remit monies to purchasers after the fact.

allowances

Beautiful Home is a discount furniture store. Most of the items in the store are overstock, so they tend to be more inexpensive than other furniture. Recently Beautiful Home started to display the manufacturers' suggested retail price next to the price it charges to show the savings. Beautiful Home is using a ________ strategy.

reference pricing

Besides the standard auction approach where buyers bid for a seller's offering, it is now very common for sellers to utilize ________ to bid prices to capture a buyer's business.

reverse auctions

In markets where customers typically witness rapidly changing prices, ________ can provide a source of competitive advantage.

stability pricing

As with average-cost pricing, the effectiveness of ________ pricing is highly dependent on the accuracy of the forecast

target return

Pricing objectives very frequently are designed to maximize profit, which necessitates a ________ pricing strategy.

target return on investment (ROI)

Print Now, a printing company targeting small business owners, has fixed expenses for rent and fixtures, and variable expenses for payroll, utilities, and supplies. Together, these comprise the firm's _______ costs.

total

Gavin runs an internet site where people can buy his pet costumes and accessories and he will charge the same delivery fee to any location within the 48 contiguous states. Gavin utilizes ________ pricing.

uniform delivered

For most products, as long as the customer perceives the ratio of price and benefit to be at least equal, perceptions of ________ will likely be favorable.

value

Firms that have an objective of utilizing pricing to communicate positioning use a ________ strategy.

value pricing

Because price is a cue for developing customer perceptions of product quality, the ________ may be reduced if a low price belies the product's actual quality attributes.

value proposition

________ could lead the marketing manager to decide to price at some market average price, or perhaps above or below it in the context of penetration or skimming objectives.

Competitor-based pricing

________ is used by firms that rely on periodic heavy promotional pricing, primarily communicated through advertising and sales promotion, to build traffic and sales volume.

High or low pricing

________ affords the marketing manager an opportunity to develop a rational pricing strategy across a complete line of related items.

Product line pricing

The internet created a rise in ________ as more and more people decided to meet online to sell products to the highest bidder.

auction pricing

The internal processes at Southwest Airlines are highly efficient, giving it a competitive advantage over other airlines. Southwest has a very efficient maintenance process and also has a very simple process of booking passengers. Because of these efficiencies, the company offers an appealing pricing structure while also increasing the airline's profit margin. According to Michael Porter, Southwest's competitive advantage is based on

cost leadership

Joachim purchased an alarm system for his car during a promotion. He considered the price during the promotion to be very attractive. However, he later learned that the firm set an artificially high reference price for the alarm system just before the promotion to make the advertised sale price more attractive. Joachim just experienced

deceptive pricing.

The rise of Walmart as one of the world's largest corporations has brought the concept of ________ to the forefront of global consumer consciousness.

everyday low pricing

In the past, ________ allowed manufacturers to establish artificially high prices by limiting the ability of wholesalers and retailers to offer reduced or discounted prices.

fair trade laws

To use target return pricing, one must first calculate total ________ costs.

fixed

When a restaurant owner introduced three new vegan entrees, they were initially priced below $15 to generate customer interest. Over the next few months, the owner raised prices slowly until these entrees were comparably priced to other main dishes. In this scenario, the restaurant owner utilized a ________ strategy.

penetration pricing

One rationale for establishing a price skimming objective is that ________ lends status to a product or brand by virtue of a price relatively higher than the competition.

prestige pricing.

When Naomi purchased her new cell phone, she was offered an opportunity to purchase a car charger and a decorative case together at a reduced price. The cell phone provider was using a ________ strategy.

price bundling

Companies that collude to set prices at a mutually beneficial high level are engaged in

price-fixing

Lainey manages season ticket sales for a professional hockey team. She explains to her staff that the lowest-priced tickets are for the least desirable seats and the highest-priced tickets are for the most desirable seats, with the rest of the ticket prices falling somewhere in between. Lainey is describing ________ pricing.

product line

Healthy Living will send retailers a check if the retailer successfully includes its vegetable-based smoothies in its promotional efforts. Healthy Living uses ________ to incentivize retailers.

promotional allowances

When shipping prices are based on the distance from the shipping location, it is considered ________ pricing.

zone