Chapter 11 small business

When introducing new​ products, an entrepreneur will find that​ _________ products have the narrowest acceptable price range.

me-too

A​ _______ pricing policy is ideal for introducing relatively​ low-priced goods into a market that has no elite segment and little opportunity for differentiation.

penetration

Image plays an important role in pricing. One analysis shows that a designer handbag that sells for​ $970 in upscale retail outlets costs about​ ______ to make and ship.

81

If a customer makes a​ $100 credit card purchase at a small retail​ store, on average how much does the store receive from the​ sale?

97.67

A retailer pays​ $112 for a handbag and prices it at​ $275; the percentage​ (of cost) markup​ is:

145.56%

Priya owns a small manufacturing operation and is reviewing her​ company's pricing strategy. She sees that her​ company's total variable expenses are​ $987,493 and its fixed expenses are​ $378,674. Her​ company's total revenue is​ $1,590,655. Suppose that​ Priya's company manufactures​ 84,000 units of the product. What is her​ company's breakeven selling​ price?

16.26

A retailer pays​ $112 for a handbag and prices it at​ $275; the dollar markup​ is:

163

Priya owns a small manufacturing operation and is reviewing her​ company's pricing strategy. She sees that her​ company's total variable expenses are​ $987,493 and its fixed expenses are​ $378,674. Her​ company's total revenue is​ $1,590,655. Suppose that​ Priya's company manufactures​ 84,000 units of the product. Suppose that Priya sets a profit objective of​ $$275,000. What price should she​ charge?

19.54

Companies that use freemium pricing find that typically about​ ______ percent of customers who use the free version of a product actually purchase its upgraded versions.

2-4

If a retail​ entrepreneur's desired initial markup percentage​ (of retail​ price) is 60​ percent, what retail price would she establish for an item that cost the retailer​ $90?

225

Natalie owns her a company that provides massages and is reviewing her​ company's prices. She and her employees recently spent​ 7,340 hours providing massages to clients. Her​ company's variable expenses during that time were​ $118,450, and its fixed expenses were​ $41,900. Natalie's target net profit margin is 25 percent. What price should Natalie charge per​ hour?

29.13

In the United​ States, about how much is the average debit card​ transaction?

37

Priya owns a small manufacturing operation and is reviewing her​ company's pricing strategy. She sees that her​ company's total variable expenses are​ $987,493 and its fixed expenses are​ $378,674. Her​ company's total revenue is​ $1,590,655. Priya's contribution margin percentage​ is:

37;9

A retailer pays​ $112 for a handbag and prices it at​ $275; the percentage​ (of retail​ price) markup​ is:

59.27

To kick off the holiday sales season around​ Thanksgiving, one retailer marks down the customary price of one of its most popular​ items, a pair of yoga pants that normally sell for​ $45 to just​ $14. Although the retailer does not make a profit on the pants at that​ price, its pricing strategy is designed to attract shoppers who will purchase other items that carry normal markups and generate a profit. This retailer is using which pricing​ model?

Leader pricing

Matias is developing a pricing strategy for his​ start-up company. Market research tells him that there is no elite segment and the product that he sells offers little opportunity for differentiation. His marketing plan includes investments in advertising and promotion. Which pricing strategy is best suited for​ Matias's company?

Penetration

Fall is​ approaching, and Angelina wants to sell the remaining summer items that remain in stock so that she can reinvest the cash generated from those sales in fresh fall merchandise. She plans to offer a discount that declines over time​ (for example, 30 percent off on day​ 1, 20 percent off on day​ 2, and 10 percent off on day​ 3). What type of discount is she planning to​ use?

Steadily decreasing

Companies such as Birchbox​ (makeup and beauty​ products), Netflix​ (online streaming of​ movies, television​ shows, and video​ games), and Dollar Shave Club​ (shaving razors and​ accessories) rely on which pricing​ model?

Subscription pricing

Customers' perceived value of a product or service is an important factor in setting prices. Which of the following statements is false​?

The product or service that produces the best value for customers is the one that offers the lowest price.

Isabella owns a small coffee shop. She understands the importance of retaining her customers and launches a loyalty program in which she offers a free latte to customers who make 12 purchases. Isabella is using​ a(n):

earned discount

The study by Cornell University of the same​ all-you-can-eat buffet priced at​ $4 for one group of customers and at​ $8 for another group of customers shows​ that:

entrepreneurs should establish prices that reinforce the image they want to create for their companies and are compatible with what their target customers expect to pay.

In a study on​ pricing, shoppers estimated the average grocery​ store's net profit margin to be 27​ percent, when in reality it​ is:

less than 2%