Marketing Ch. 19 Overview Assignment

Divit is an organic farmer and sells his fresh produce at weekly farmers' markets in his community. During the summer, he sold watermelons for $3 each. One Saturday, he sold all 50 of the watermelons he had picked. How much revenue did Divit earn from selling his watermelons?

$150

Ama has a food truck where she sells coffee drinks such as espresso, lattes, and brewed coffee. She travels to various locations around the city to sell coffee beverages. Her daily fixed costs are $500, and her average price of a coffee drink is $5. Assume Ama's variable costs are $0.25 for every coffee drink she sells. How many coffee beverages does Ama need to sell to break even? Round up to the next unit. To calculate Ama's break-even price, use this formula: Break-even is calculated as: fixed costs divided by contribution margin. The contribution margin is the selling price minus variable costs. In other words, first calculate her contribution margin, then divide Ama's fixed costs by that number.

106 coffee beverages

Deon has a portable silk-screening business and sells t-shirts at sporting events such as the state track meet. His total fixed costs are $1,500 regardless of the number of shirts he produces. His variable costs are $0.75 for every shirt he makes. If he sells his shirts at $8 each, how many shirts does he need to sell at each event to break even? Round up to the next unit. To calculate Deon's break-even price, use this formula: Break-even is calculated as: fixed costs divided by contribution margin. The contribution margin is the selling price minus variable costs. In other words, first calculate his contribution margin, and then divide Deon's fixed costs by that number.

207 shirts

Deon is the owner of a floral shop. He is often frustrated that Kroger and Walmart sell plants and flowers at lower retail prices than he can purchase at wholesale. Deon thinks his wholesale firm may be engaging in price discrimination. Which of the following statements best explains why Deon may pay more for his plants and flowers?

A firm can charge different prices to different customers if the prices represent manufacturing or quantity discount savings.

Appliance World is a locally owned appliance retailer. It offers a price-match guarantee to customers. Customers simply provide proof of a similar item at a lower price at a competitor, and Appliance World will match the price. Which of the following statements is true about price matching?

A price matching strategy may result in higher prices

Microwave ovens are now in the maturity stage of the product life cycle. Which of the following statements is true about pricing for microwave ovens?

Pricing of microwave ovens will be reduced as competition increases and high-cost firms are eliminated.

Miguel's favorite beverage is Pepsi, which normally costs $1.39 for a two-liter bottle. Occasionally, his local grocery store offers three 2-liter bottles of Pepsi for $3. Due to the savings, Miguel stocks up and buys six bottles since he has room to store them in his pantry. This is an example of the _______ concept.

demand

Leon is planning a trip to attend alumni weekend at the university at which he received his degree. He was shocked to learn that hotel rooms for alumni weekend are now priced at least three times the typical cost. He spoke with a customer service agent who told him that the hotel uses a computer algorithm that changes the price of a room based on room availability and the number of inquiries the hotel is receiving about rooms. This is an example of _______ pricing.

dynamic

Caterpillar is a well-known manufacturer of earth-moving equipment. The company is also associated with producing high-quality equipment that is durable and long-lasting. In addition, Caterpillar dealers provide excellent customer service by stocking parts to repair equipment and reduce machine downtime. All these factors lead to high customer satisfaction. Based on this information, demand for Caterpillar equipment will likely be classified as _______.

inelastic

Misaki is an account executive for Canon Business Solutions. She has a company vehicle and travels to meet with customers in her market territory, which covers a 120-mile radius of her home office. She drives approximately 2,000 miles per month and uses premium gasoline. The price of gasoline has no impact on the number of miles Misaki travels for work. Therefore, gasoline for Misaki is classified as having _______ demand.

inelastic

Alicia is interested in purchasing a set of ear buds to use with her laptop and smartphone. She visits Best Buy and notices that the prices vary from $10 to several hundred dollars. Alicia prefers wireless ear buds and compares the Skullcandy model that costs $90 to a similar pair from Beats by Dre that cost $119. She decides to purchase the Beats brand because she believes it's a higher quality set. In this case, Alicia has been influenced by the _______ effect of price

information

Ishara owns a nail salon that sells nail polish, hand lotion, and other beauty aids. She typically doubles the cost of an item to determine her retail price. This practice is called _______.

keystoning

Dr. Dre developed a new model of wireless ear buds and introduced them at a relatively low price in order to capture a large share of the market. This is an example of _______.

penetration pricing

Uber has been accused of using _______ pricing in which it charges fares at a very low price with the intent of driving competitors out of business or out of a market.

predatory pricing

If two executives from rival insurance companies met to discuss the policy premiums they would both agree to charge for automobiles, they would be engaging in _______.

price fixing

Dhruv is shopping at Men's Wearhouse for a new suit. The salesperson shows him that there are basically three levels of quality based on the material and wool content. The top-of-the line suits retail for $1500 each and are ordered according to the customer's measurements. The medium-level suits retail for $750 each, and the base level suits are $450 each. Men's Wearhouse is using a _______ pricing approach.

price lining

The latest model of the Google Pixel smartphone is introduced at a relatively high price compared to competing products. Previous editions of the Google Pixel phone are then priced at a discount. This is an example of a pricing strategy called _______.

price skimming

Zari works at a car dealership. She specializes in used vehicles. She receives an inventory report that lists the cost of each vehicle and the asking price. If Zari sells a car at an amount more than the vehicle cost the dealership to acquire, she has earned a _______.

profit

The Peninsula Hotels group is one of the world's leading hotel chains. It operates prestigious luxury properties in ten major cities across the globe such as Hong Kong, New York, Chicago, Beverly Hills, and Paris. The hotel is known for luxurious amenities and exceptional service. Room rates vary from $1,100 per night for a room with a king bed to over $5,000 per night for a two-bedroom suite. The Peninsula Hotels group is most likely implementing a _______ pricing objective.

profit maximization

Longwei enjoys home improvement projects and often shops at Menards. He recently purchased a Hunter brand ceiling fan. At check-out, he was informed there was an offer by which he could send a copy of his receipt to the manufacturer and receive $10 in return. Longwei picked up the form on his way out of the store. This is an example of a _______, a type of promotional allowance.

rebate

Graciela is a licensed massage therapist who owns a business called Stressbusters. She is offering a special "buy two, get one free" promotion by which customers can purchase a certificate for three 60-minute massages for $120. Graciela is implementing a _______ pricing objective.

sales maximization

Hyundai is introducing a new model of its popular mid-sized sedan, the Sonata. The Sonata competes with Toyota's Camry retailing at $25,050, the Mazda 6 selling for $24,720, and the Honda Accord with a retail price of $24,650. Hyundai plans to price the Sonata at $24,600. This is an example of the _____ pricing strategy.

status quo

Elijah owns a tour company near a lake that provides kayak rentals. One of his competitors rents kayaks for $25 per day or $8 per hour. Elijah decided to lower his prices in order to use _______ as his pricing objective and be in line with his competition.

status quo pricing

Zari lives in Orlando, Florida and often uses Uber. She's always surprised how often the fares change and notices that there can be large differences in Uber's prices. She understands that Uber raises fares when more people are requesting rides. This phenomenon is known as _______ pricing.

surge

Jack is the owner of a car wash. His location offers an automatic car wash option and two self-service car wash bays. He views the car wash business as an investment and strives to control expenses. His goal is to achieve a 20 percent profit on his investment, and he sets his prices in order to achieve this goal. Jack is implementing a _______ pricing objective.

target return on investment