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Exam 13: Pricing Products and Services

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Question 21

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When a manager sets prices for all items in a multiple products line to cover the total cost and to produce a profit for the complete line - not necessarily for each item, it is called:

A) price lining.
B) customary pricing.
C) line item pricing.
D) product-line pricing.

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Question 22

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Companies have found that using social media can reduce customer service and support costs. Assuming all else is equal, implementing a social media program may help companies increase their:

A) profit margins
B) marketing costs
C) support costs
D) price of goods sold

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Question 23

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The pricing model in the text has six distinct steps in the pricing process. In which step would you be reviewing the following approaches: demand-oriented, cost-oriented, profit-oriented, and competition-oriented?

Setting the highest initial price that customers really desiring the product are willing to pay is:

Patty O'Rourke hired an attorney to represent her in a court case involving an auto accident. The attorney charged O'Rourke a fee for his services. Terry Thomas needed a haircut-the local stylist charged him $12 for her services. Aaron Mathison mowed his neighbour's lawn; in exchange, the neighbour rototilled Mathison's garden. The attorney fees paid by O'Rourke, the $12 charged by the hair stylist, and exchange of lawn mowing for garden tilling are examples of:

The Precision Writing Instruments Company makes two pen designs - the Cordova design and the Savannah design. These data apply, regardless of which of two pen designs is being implemented. Materials cost per pen is $6. Labour cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. Marketing research has estimated the following demand functions for the next year of sales for the two pen designs where Q represents demand in thousands and P represents price. For the Cordova design, Q = 150 - 2.5P. For the Savannah design, Q = 175 - 2.1P. A penetration strategy is proposed for the Savannah design and a price of $25 is selected. What will be the profit or loss for the first year?

Which of the following statements about a flexible-price policy is NOT true?

Buyers for grain set prices ahead of time by the marketplace. Sellers in this market are simply informed of the price and the amount that is needed. This market is likely one of a(n) :

Trade (functional) discounts are calculated on two criteria. What are the two criteria?

A primary reason for Carmex's success is

When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid cash rather than used his credit card. The convenience store was offering him a:

The demand curve for which type of pricing method slopes downward and to the right, then turns back to the left?

Woodsgift Farm sells floral jellies - jellies made from pansies, honeysuckle, wisteria, and other flowers. To price its jellies, the owners of the farm, add 30 percent to the cost of everything that goes into making the jellies including their salaries, jars, sugar, and pectin. What is this pricing method called?

Many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic. This strategy is referred to as:

Shell Oil recently exchanged one million pest-control devices for sugar from a Caribbean country. This practice is referred to as:

When Panera Bread opened Panera Cares Cafe, they implemented a pricing model that allowed consumers to pay what they wished for their items. This pricing model is referred to as:

The manufacturer of a Blu-Ray-R, a recordable Blu-Ray disk that can be erased and reused, is thinking of using a skimming pricing strategy for its new product. Which of the following conditions would argue AGAINST using a skimming pricing strategy for the Blu-Ray disks?

Penetration pricing is intended to appeal to which market?

In one of its least favourite actions, Amazon.com was caught fiddling with its price tags. Avid Blu-Ray shoppers found that the online store was offering different customers different prices for the same Blu-Ray, and complained vociferously. Amazon was caught red-handed. It was, company officials admitted, trying to see how much it could charge for an item before shoppers balked. No matter what the reasoning behind it, Amazon.com was using:

In the process of setting price, a marketer must first identify pricing constraints and objectives. Next, three specific estimates are necessary. What are they?