Marketing Final ch. 20

A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate markup as a percentage of selling price?

30%

Kohl's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately ____% for this product.

57

If PepsiCo sets its twelve-pack price to match the price charged by Coca-Cola, Pepsi is using which of the following pricing methods?

Competition-based

For custom-made equipment or commercial construction projects, which pricing method is most likely used?

Cost-plus

All for Fun is a retail store that offers a variety of board games, magic cards, and other collectible items and caters to teens and adults who enjoy strategy-based games. The store has over 20,000 magic cards and utilizes a sophisticated computer system to identify the value of each card. All for Fun determines the rarity of a given card and adjusts prices according to how much money customers are likely to pay for a particular card. Cards that are in limited production or considered "rare" are more expensive than cards that are widely available. Thus, the price for a single magic card might vary between $25 and $50 or more per card depending on the market. What type of pricing is All for Fun utilizing?

Demand-based pricing

Which of the following bases for pricing is most commonly used by retailers?

Markup pricing

In 2003 Frito-Lay introduced its Stax brand of potato chips. These chips were meant to compete directly against Pringles. The intent was to gain market share quickly. During the first few months they were on the market, Stax retailed for 69 cents. What type of pricing strategy is Frito-Lay likely using?

Penetration pricing

Which of the following would be used in setting the price of a new product if considerable competition is expected?

Penetration pricing

____________ is setting the price lower than competing brands in order to enter a market and quickly gain a significant share of the market.

Penetration pricing

_____________ is pricing a product at a moderate level and positioning it next to a more expensive model or brand.

Reference pricing

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?

Reference pricing strategy

Which of the following statements about markup pricing is correct?

The use of similar markups reduces price competition.

Which of the following statements is true about the determination of a specific price for a product?

When no government controls exist, pricing is a flexible way to adjust the marketing mix.

Theatergoers in the Midwest were pleasantly surprised when they arrived at the cinema to see the latest release and learned that a price reduction had just gone into effect. The Wehrenberg Theater chain, which is the oldest theater company and operates in 15 Midwest locations, decided to drop matinee prices from $7.75 to $4.50 per person and reduce evening prices from $9.75 to $7.50 per person. The price decrease is a result of decreased traffic at the theater and a trend for consumers to use Netflix or Hulu to watch movies. The Starplex Cinemas operating in the same communities as Wehrenberg followed suit and reduced their prices to attract consumers as well. The two movie theater chains are utilizing the ______ pricing basis.

competition-based

When products in an industry are relatively homogeneous and price is a key purchase consideration,

competition-based pricing becomes more important.

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is using

competition-based pricing, which considers costs to be less important than competitor's prices.

When determining markup as a percentage of cost, divide the markup amount by

cost

The federal government often uses ____ pricing when it grants defense contracts.

cost-plus

When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using ____ pricing.

cost-plus

If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it knows that at that price it will reach that goal, the firm would be using a ____ pricing method.

demand-based

If a product is priced based on how many or how few people want it at a particular time and place, ____ pricing is being used.

demand-based

During July and August, Lakewood Links Golf Course, located in South Carolina, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of

demand-based pricing.

Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not

discourage competitors from entering the market.

Wet Seal, a retailer of swimwear, employs a commonly used cost-based pricing method called

markup pricing.

All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except

penetration pricing.

If Nabisco wants to quickly gain a large market share with its new line of reduced-fat snack crackers, it should use

penetration pricing.

If Samsung uses _____ pricing for its newest version of laptops, it is probably most interested in obtaining market share; and it is assuming

penetration pricing; that other competitors could enter the market easily.

If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as

price skimming.

When Sharp first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Sharp is called

price skimming.

The newest version of a product like Bose headphones is likely to use _____, while the new version of Red Bull is likely to use _____ .

price skimming; penetration pricing

Reference pricing is

pricing a product at a moderate level and positioning it next to a more expensive model or brand.

Markup is measured either as a percentage of ____ or a percentage of ____.

selling price; cost

A price-skimming strategy assumes that

the initial demand is highly inelastic.

Competition-based pricing is

used when costs and revenues are secondary to competitors' prices.