Marketing Final Chap 20

If a retailer purchases a can of soup for 60 cents and sells it for 99 cents, what is the markup as the percentage of cost(60/99)? The percentage of selling price(39/99)?

65%; 39.4%

Bert's company is about to release a new electronics product. The electronics product is estimated to have a short life cycle before it is replaced by an upgraded one. The company would like to recover the capital spent to produce the product. It therefore decides to charge the highest possible price for the product upon release. Bert's firm recognizes this might provide an advantage to competitors who may release the product at a lower price, but it believes customers will feel that the higher price signals higher quality. What type of pricing objective has Bert's firm adopted?

Cash Flow

Disney is implementing a new type of pricing. When demand increases and more customers visit the parks, the price will increase. When demand dips during the slow season, prices will decrease. This is a way to help balance out supply and demand. What is another name for the type of pricing that Disney is using?

Dynamic Pricing

T/F In industries where price competition prevails, a firm should always price its products much lower than competitors.

False. Particularly in an industry in which price competition prevails, a marketer needs competitive price information to ensure that a firm's prices are the same as, or slightly lower than, competitors' prices.

___________ is unique to price in the marketing mix.

Flexibility

In the absence of _____________, pricing remains a flexible and convenient way to adjust the marketing mix.

Government Controls

Anthony works at a firm that wants to develop a new pricing strategy for one of its products. The company has decided that its main objective for this product is to increase the product's sales in relation to industry sales. Anthony has obtained a list of prices that tell him how much similar products are being sold for. Anthony is particularly interested in the industry's top competitor because it has so much market share. After determining the price of its major competitor, Anthony decided to undercut their price by several dollars. He believes putting a sign in their stores that features his company's discounted price next to the price of their major competitor for the same product will show consumers that Anthony's company offers them a much better deal. However, he knows that he has to be careful not to misrepresent the competitor's price in the process. Anthony's firm has adopted a ______________ pricing objective.

Market Share

Bert's company is about to release a new electronics product. The electronics product is estimated to have a short life cycle before it is replaced by an upgraded one. The company would like to recover the capital spent to produce the product. It therefore decides to charge the highest possible price for the product upon release. Bert's firm recognizes this might provide an advantage to competitors who may release the product at a lower price, but it believes customers will feel that the higher price signals higher quality. What type of pricing strategy is Bert's company using for this product?

Price Skimming

Malcolm has decided that he wants to open up his own law practice. The time has come to establish prices for his services. Due to his extensive experience and legal background, he believes that his fees should not relate directly to the time or effort spent on specific cases. What type of pricing will Malcolm most likely choose?

Professional Pricing

Daniel always has to purchase popcorn whenever he goes to the movies. Popcorn is marked up 1,275 percent. However, Daniel is willing to pay this price. For Daniel the __________ is impacting his view of price.

Purchase Situation

Value is a combination of price and __________?

Quality

T/F Value does not necessarily have to connote a low price.

True. Consumers may perceive relatively expensive products, such as organic produce, to have great value if the products have desirable features or characteristics. Consumers are generally willing to pay a higher price for products that offer convenience and save time.

Demand-based pricing is best used when the company has __________.

a fixed amount of available resources that are perishable

Mike is pricing a new couch. This couch is higher-quality and expected to last longer than your traditional couch. Mike prices the couch high because he knows that consumers anticipate paying more for longer-lasting products. What stage of the pricing process is Mike currently at?

assessing the target market's evaluation of price

Sam Walton, founder of Walmart, was a retail genius. One thing he would do is advertise a product such as a microwave at a knock-down price. Consumers would come into the store to examine the low-priced microwave. Next to the low-cost microwaves, Walmart would position some better quality, higher-priced microwaves. The idea is that consumers will be attracted to the store due to the low-priced product but that they often upgrade and purchase a higher-priced product once they realize that it offers better quality. Such a method is completely legal as long as there are enough low-priced products available that consumers can choose from if they desire. Sam Walton used what type of pricing strategy?

bait pricing

Anthony works at a firm that wants to develop a new pricing strategy for one of its products. The company has decided that its main objective for this product is to increase the product's sales in relation to industry sales. Anthony has obtained a list of prices that tell him how much similar products are being sold for. Anthony is particularly interested in the industry's top competitor because it has so much market share. After determining the price of its major competitor, Anthony decided to undercut their price by several dollars. He believes putting a sign in their stores that features his company's discounted price next to the price of their major competitor for the same product will show consumers that Anthony's company offers them a much better deal. However, he knows that he has to be careful not to misrepresent the competitor's price in the process. Which of the following pricing strategies is Anthony planning to adopt?

comparison discounting

Valerie is attempting to price a piece of custom-made equipment for a gym. The production costs of the equipment are hard to assess. She decides it would just be easier to add a specified dollar amount to the total cost. What type of pricing is Valerie using?

cost-plus

Sam has a dilemma. He works for a chocolate company and the price of chocolate is going up. The most logical solution would be to raise the price. However, Sam knows from his history in the business that their loyal customers would not look favorably on a price increase. For customers, candy bars are one of those items where the price rarely changes. Sam's firm has sold its candy bars for $0.99 for the past two decades. Sam feels that the next best solution to absorbing the extra costs is to make the candy bars slightly smaller without lowering the price. Sam's company is most likely using which of the following pricing strategies?

customary

Malcolm has decided that he wants to open up his own law practice. The time has come to establish prices for his services. Due to his extensive experience and legal background, he believes that his fees should not relate directly to the time or effort spent on specific cases. Now that Malcolm has chosen the pricing strategy he wants to use, what is his next step?

determining the final price

Anthony works at a firm that wants to develop a new pricing strategy for one of its products. The company has decided that its main objective for this product is to increase the product's sales in relation to industry sales. Anthony has obtained a list of prices that tell him how much similar products are being sold for. Anthony is particularly interested in the industry's top competitor because it has so much market share. After determining the price of its major competitor, Anthony decided to undercut their price by several dollars. He believes putting a sign in their stores that features his company's discounted price next to the price of their major competitor for the same product will show consumers that Anthony's company offers them a much better deal. However, he knows that he has to be careful not to misrepresent the competitor's price in the process. When Anthony is examining the list of prices, he is most likely in which of the following stages?

evaluating competitors' prices

The use of comparative shoppers would generally occur during which step of the pricing process?

evaluating competitors' prices

Shelly is undergoing the six-step process for establishing prices for a newly launched product. She has just finished assessing the target market's evaluation of possible prices. What is Shelly's next step?

evaluation of competitors' prices

Philip goes to a Toyota dealership looking for a new car. He finds a Toyota Corolla he really likes. The time has come to meet with the salesperson. What type of pricing strategy is the salesperson likely to adopt with Philip?

negotiated pricing

If Apple seeks to lead the electronics industry in innovation, what type of pricing objective will it most likely adopt?

product quality

Procter & Gamble's Bounty paper towels has the highest market share in the industry. It operates as a cash cow for P&G. Assume that Procter & Gamble is adjusting the prices of Bounty paper towels sold in the United States. Viewing the United States as a saturated market, the marketing manager of Bounty believes that P&G should adopt a pricing strategy that will serve to maintain their current market share. What type of objective is this manager adopting?

status quo