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Exam 10: Pricing Strategies

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Question 41

Multiple Choice

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A key ingredient to setting prices properly is to understand a company's:

A) cost structure.
B) most aggressive price competitor.
C) target market.
D) profit expectations.

E) C) and D)
F) None of the above

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Question 42

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Life cycle pricing is a short-term pricing strategy that assumes that competition will eventually emerge and the price will be lowered.

A) True
B) False

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Question 43

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Once a company has invested time and money developing a unique new product,in order to recoup some of the high R&D costs,they will likely use a:

Most stores find it most practical to use a flexible markup,which assigns various markup percentages to different types of products.

Your local grocery store uses a pricing technique known as ________ on a weekly basis,in which they mark down the price of several popular items,sometimes well below their normal price,in an effort to increase customer traffic and to boost sales of other items.

Leader pricing is a technique in which a small company marks down the price of a popular item below its normal price in an attempt to increase customer traffic and to boost sales of other items.

What is Miller Manufacturing's break-even price?

CD Connection sells popular CDs at three price levels: $11,$14,and $17.This illustrates which of the following pricing techniques?

A manufacturer can force a small business to charge the "manufacturer's suggested retail price."

Management consulting firm McKinsey and Company claims that ________ of the pricing problems on new products are the result of companies setting prices that are too low.

Price is a measure of what the customer must exchange to obtain goods and services,and is an indicator of value to the customer.

The acceptable price range of a product or service is the area between the ________ defined by customers in the market and the ________ established by the company's cost structure.

To avoid major pricing mistakes,business owners should "shop" their competitors and asses their prices,especially on identical products.

Pandecker,Inc.,estimates the variable costs of producing one unit to be $11.26.The company plans to produce 26,500 units.The fixed costs the company expects to incur are $82,770.If Pandecker's profit target is $75,000,what price should it charge?

Macy's buys white,pinpoint oxford blouses at $14 each and sells them at $30 each.Macy's percentage (of cost) markup is:

Because installment credit absorbs a company's cash,many small businesses rely on financial institutions to provide it for their customers.

Setting prices for products and services requires entrepreneurs to balance a multitude of complex forces as entrepreneurs determine prices for their goods and services that will draw customers and:

A skimming price strategy is used to introduce relatively low-priced goods into a market where no "elite" segment exists.

Direct (variable)costing includes in the unit cost of a product only those costs that vary with the quantity of units produced.

Captive-product pricing is a technique that involves selling a product for a low price and charging a higher price for the accessories that accompany it.