Price setting c18

What is a function of a markup chain?

It sets the price structure in an entire distribution channel.

Royal Caribbean offers a New Years cruises for 1,800 per person. In its advertising, the company focuses on four payments of $450 because customers are _______ price sensitive the greater the total expenditure.

More

According to the case study, Samsung hopes to bring greater value to its customers by:

Offering "smart TVs" with built-in internet connections and apps Developing QLED 8k TVs which offer better picture quality

A basic problem with the average-cost approach is that it doesn't consider cost variations at different levels of ________.

Output

William is an organizational buyer for Goodlife Tires. He purchases rubber for Goodlife. There are several suppliers that all offer basically the same grade of rubber. This situation will have what likely effect on William's price sensitivity?

William will be price sensitive.

Setting some very low prices to attract customers, but trying to sell more expensive models or brands to the customer in the store is called _____.

bait pricing

When Xbox sets a relatively low price on its game units to stimulate more demand for its games, it is implementing ______.

complementary product pricing

One of the drawbacks of using average-cost pricing is that ________.

it fails to take into account the effect of "economies of scale" on pricing

A dollar amount added to the cost of products to get the selling price is called a

markup

What type of pricing is being used when customers pay on a periodic basis for access to a product?

subscription

Multiplying the selling price times the BEP in units equals ______.

the BEP expressed in dollars

Michael is a sales rep for a steel manufacturer. He is talking to a customer about the new pricing strategy his firm is using which will save his customer money when he substitutes the steel from michaels company for the steel they currently use. What type of pricing does this represent?

value in use pricing

Setting prices that will capture some of what customers will save by substituting the firms product for the one currently being used is called ________.

value in use pricing

Conducting an auction tells a company __________.

what customers are willing to pay

What is the advantage of price lining?

It is an uncomplicated pricing method for both buyers and sellers

Which of the following statements are accurate descriptions of average cost pricing?

-it may yield very good profits, but only in lucky cases -it seems simple, but it often doesn't work very well

What does product bundle pricing encourage consumers to do?

-spend more money -purchase items that they may not have planned to

Special Ts buys T-shirts for $8. After adding a $4 markup, they sell the T-shirts for $12. If the company determines the markup based on the selling price, then the markup on these T-shirts is _____.

33.3%

The federal trade act considers bait pricing _______.

A deceptive act

Why do some companies use the same markup percent as each other?

Because their operating expenses are alike

The quantity where the firms total cost just equals it's total revenue is called the _______.

Break-even point

How does a manager determine the average cost per unit for a product?

By analyzing company documents from the previous year

Which two of the following statements about switching costs are true?

Customers tend to avoid switching costs They can be relatively costly and dissuade business customers from switching

Which two of the following statements about switching costs are true?

Customers tend to avoid switching costs They can be relatively costly and dissuade business customers from switching

A software manufacturing company set a suggested retail list price of $240 for its new data management software. From the suggested retail list price, the software company subtracted its usual chain of markups for wholesalers and retailers to obtain its own selling price of $102. This is an example of _________.

Demand-backward pricing

True or false: Large markups always mean large profits.

False: a large markup may raise the price level that decreases demand for the product, which will cause the reduction of profits.

Which of the following are characteristics of break-even analysis?

It is easy to use and is useful for analyzing costs; it makes it appear as if any item can be sold at the assumed price, which may not be the case; and it makes it appear as if profits will increase continuously.

While shopping for toothpaste at her local convenience store, Cassie was able to compare prices on all of the available products. The shows how access to substitutes _________ price sensitivity.

Increases

Which of these consumers is paying a company based on subscription pricing?

Jen pays a monthly fee for the daily newspaper to be delivered to her front door.

Producer A sells widget to wholesaler B. Producer A charges the cost plus a markup to arrive at the sales price. Wholesaler B sells a widget to Retailer C. Wholesaler B charges the cost plus a markup to arrive at the sales price. This is an example of a _______ chain.

Markup

A person who really enjoys reading might have a higher_______ for a popular paperback book than another person who is only an occasional reader.

Reference price

Eliysh, a student, is used to paying $1.50 is used to paying 1.50 for a 12-ounce bottle of water around campus. She expects the new machine to charge her the same amount for water. For eilysh, the 1.50 price is a ________

Reference price

Two examples of total fixed cost expenses include __________ costs.

Rent, salary

The break-even point is found by dividing total fixed costs by ________.

The fixed cost contribution per unit

What are two reasons companies companies would add a markup to the cost of products that they have purchase from wholesalers?

To pay for the cost of operating the business To make a profit

Why do some companies use standard markup percent?

To simplify the pricing process

True or false: in general, consumers are less sensitive to price when they share the cost of an item with another person or a group of people.

True

True or false: markups are related to selling price mostly for convenience

True:

According to this case study, which of the following are true about the television industry?

Vizio could charge low prices for its tvs because it had low overhead costs and took slim margins. When flat panel tv's were first introduced around 2001, they were priced at about $10,000

Which two conditions would make a customer more price sensitive?

When there are available substitutes When there is an opportunity to make price comparisons

________ are a way to determine what a group of potential customer would pay

auctions

The _______ is obtained by dividing total cost by the related quantity.

average cost per unit

adding a reasonable markup to the average cost of a product is called ______.

average cost pricing

Extremely aggressive or dishonest ________-pricing advertising can be considered a deceptive act.

bait

A retail store advertises a laptop with an AMD Dual-Core C-50 processor for $325. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced laptop and try to convince them to trade up to a better, and more expensive, unit with an Intel Core i5-480M processor. This is an example of ______.

bait pricing

_________ evaluates whether the firm will be able to cover all of its costs with a particular price

break-even analysis

Setting prices on several products as a group is called ______ product pricing.

complementary

Setting prices on several products as a group is called ________ product pricing.

complementary

Of the two basic approaches to setting prices, _______ is the most common.

cost-oriented

What are the two basic approaches to price setting?

cost-oriented and demand-oriented

If a markup is too high, it can ______ demand for the product and have a negative impact on profit.

decrease

Setting an acceptable final consumer price and working backward to what a producer can charge is called ______ pricing.

demand-backward

How is the average cost per unit calculated?

dividing total cost by the related quantity

One reason break-even analysis should be used cautiously is because most managers face ____ demand situations.

down sloping

The __________ contribution per unit is the assumed selling price per unit minus the variable cost per unit.

fixed cost

The sum of those costs that are fixed in total, regardless of how much is produced, is called the total ________.

fixed cost

Setting prices for a whole line of products is called _______.

full-line pricing

In order to use the average cost pricing, a marketing manager must make an estimate of ______.

future sales

In order to attract customers to visit a retail store, sellers may offer ______, or real bargain prices. Sellers hope that once customers are at the store they will purchase other items that are not priced so low.

leader pricing

Customers are ______ price sensitive when contemplating making a small expenditure of money.

less

If the end benefit of a purchase has great significance to the consumer, the consumer will probably be ______ price sensitive.

less

Judy and Amy are having lunch together and decide to split the bill equally. Amy ordered more expensive items than she normally would because she is ______ price sensitive when sharing the cost.

less

For shopping products, it is common for all prices and value to be ______.

logically related

Amber feels that there is no substitute for the True Secular brand jeans she is about to buy. What level of price sensitivity might Amber be expected to have in this moment?

low price sensitivity: because amber only wants these jeans and therefore is not as sensitive to how much they cost.

A ________ is the percentage of the cost that is added to the cost to get the selling price.

markup

A __________ is the percentage of the cost that is added to the cost to get the selling price.

markup

Deborah is considering finding a new cellphone service provider because her current provider is raising its prices. However, for Deborah the prospect of shopping around for a new provider that is cheaper and offers similar coverage sounds time-intensive and aggravating. Deborah ultimately decides to stay with her current provider because ______.

of the cost of switching providers

In the marketplace, markups are generally expressed as a ________.

percentage

At the store where Garrett works, all soft drinks cost $1.50 and candy bars cost $1.00. This is an example of _______.

price lining

Setting one price for a set of products is called ______ pricing.

product bundle

Setting prices that have special appeal to target customers is called _______ pricing. These prices just seem right to customers.

psychological

Cal believes that customers in his culinary supply shop find certain prices very appealing. He believes that customers do not really notice the difference in prices of products priced between $15.00 and $19.99. Therefore, Cal prices products at the top of this range. Cal's pricing approach is called ______.

psychological pricing

The price customers expect to pay for a product is called the _______.

reference price

If you multiply the _______ by the BEP in units, you get the BEP in dollars.

selling price

Retail stores that use leader pricing attempt to attract customers by ______.

setting prices very low for some products

Retail stores that use leader pricing attempt to attract customers by _________.

setting prices very low for some products