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43 Cards in this Set
- Front
- Back
What are the 4 steps to setting the right price on a product or service?
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1) Establish pricing goals
2) Estimate demand, costs, and profits 3) Choose a price strategy 4) Fine tune w/ pricing tactics |
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Charging a price identical to or very close to the competition's price:
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Status quo pricing
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An agreement between two or more firms on the price they will charge for a product:
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Price fixing
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What 3 tactics are used for fine-tuning the base price?
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1) Discounts
2) Geographic pricing 3) Special pricing tactics |
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Strategy in which a firm charges a high introductory price, often coupled w/ heavy promotion:
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Price Skimming
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What are the 4 strategies used by suppliers during a recession?
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1) Renegotiating contracts
2) Offering help 3) Keeping the pressure on 4) Paring down suppliers |
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The use of discounts by salespeople to increase demand for one or more products in a line:
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Price Shading
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Laws that prohibit wholesalers and retailers from selling below cost:
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Unfair Trade Practices
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What 2 pricing tactics are using when the economy experiences high inflation?
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1) Cost-oriented tactics
2) Demand-oriented tactics |
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In what 2 instances will businesses impose consumer penalties?
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1) An irrevocable loss of revenue is suffered
2) Additional transaction costs are incurred |
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Setting the price at a level that seems to the customer to be a good price compared to the prices of other options:
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Value-based pricing
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What are the 2 effective pricing tactics to hold or build market share during a recession?
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1) Value-based pricing
2) Bundling or unbundling |
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The practice of charging a very low price for a product w/ the intent of driving competitors out of the market:
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Predatory Pricing
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Strategy in which a firm charges a relatively low price for a product initially as a way to reach the mass market:
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Penetration Pricing
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What are 4 strategies to make demand more inelastic?
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1) Cultivate selected demand
2) Create unique offerings 3) Change the package design 4) Heighten buyer dependence |
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Setting prices for an entire line of products:
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Product line pricing
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What are the 3 Robinson-Patman Act of 1936 defenses that can be used when a seller has been charged w/ price discrimination?
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1) Cost
2) Market conditions 3) Competition |
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A basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle:
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Price Strategy
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Costs that are shared in the manufacturing and marketing of several products in a product line:
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Joint costs
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Hair Works is located across the street from another hair salon. For weeks, the two businesses have been in a price war. When the Hair Works decreases its price for a haircut, its competitor does the same. This is an example of:
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Status quo pricing
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A manufacturer sells its line of cleaning products to several large discount retailers but gives special discounts to its biggest customer. The manufacturer is practicing:
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Price discrimination
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The U.S. Department of Justice charged Samsung, Hynix Semiconductor Inc., Infineon Technologies AG, and Micron Technology Inc. with conspiring to set prices for computer memory between 1999 and 2002. This means the companies engaged in _____.
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Price fixing
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The marketing manager of icruise.com (a Web travel site targeted to consumers who want a luxury vacation) finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during the month of December. The vice-president of finance, however, is committed to reporting a 25 percent return on investment at all times. This conflict illustrates:
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The need for trade-offs in pricing objectives
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The Raver-Smythe Corporation (RSC) has introduced mylar-based artificial fingernails. It earns a low profit margin on the sale of each box of its new fingernails and is still able to meet its revenue objectives due to economies of scale. RSC is using a(n)_____ policy.
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Penetration pricing
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Macy's department stores ran an ad that featured Lenox china. Macy's probably received a ________ from the makers of Lenox china.
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Trade allowance
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When a new airline starts offering low-cost service in Atlanta, a well-established airline drops its prices so low that the new airline is forced to go out of business within a few months. The well-established airline has practiced _____.
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Predatory pricing
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When innovations--such as flat-screen plasma televisions--are first launched into the market, they normally use a ________ strategy since there are no direct competitors.
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Price skimming
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You are thinking about going on a vacation to Las Vegas and found a good package that includes three nights at the Bellagio, tickets to two shows, and dinner every night for a single price. This is an example of _____.
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Price bundling
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Walgreen's receives a 15 percent allowance from a hair coloring brand for running an ad for the brand in the drugstore's weekly circular. This is an example of a:
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Promotional allowance
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"The customer is our enemy; the competitor is our friend." According to an FBI mole, that used to be the unofficial world-view of Archer Daniels Midland (ADM), a $11 billion company that specializes in agricultural and horticultural products. Given this information, what illegal pricing practices would ADM have been most likely to engage in?
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Price fixing
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Standard shipping costs for the Savannah Candy Company are $6.95 for up to $30 worth of merchandise, $9.95 for merchandise between $30.01 and $60, $11.95 for merchandise between $60.01 and $90, and 10 percent of the product value for all merchandise over $90.01. What geographic pricing method is the Savannah Candy Company using?
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Uniform delivered pricing
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The Two-Bit Candy Store is a small retail establishment where all candies are sold for 25 cents per piece, regardless of the candy type or size. This pricing method is known as:
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A single-price tactic
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You are getting ready to buy a new car, and you spend several hours at the dealership, haggling about price. Finally, you and the car salesperson agree on a price that is 10 percent lower than the MSRP. What is the name of the pricing policy used for granting this discount?
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Flexible pricing
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At the Sports Stop, there are tennis rackets priced at $50, $75, $90, $125, and $250. The Sports Stop has chosen this price line structure because it will:
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Reach several different target market segments.
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Ralph's Supermarket is running a Halloween special on pumpkins, which customers can buy for fifteen cents a pound. The supermarket will take a loss on the pumpkins but hopes that customers will purchase other items. This is an example of:
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Leader pricing
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The JetPak Skydiving club charges each member a $50 membership fee in addition to the $35 charged for each jump the member makes. This is an example of what kind of pricing tactic?
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Two-part pricing
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During a recent worldwide recession when wine usage was declining, Nickel and Nickel launched a new brand of wine, which they sold at $125 a bottle. The wine is allowed to age three times as long as lower priced wines, and the grapes used in the wine's production are hand-picked. Wine lovers appreciate how both production techniques improve wine quality. Nickel and Nickel used ________ to build market share.
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Value-based pricing
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Engineered Fabrics is writing up a contract with the U.S. Department of Defense for a system that will prevent gasoline tanks in airplanes from exploding in the event of a crash. What pricing policy should it use?
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Escalator pricing
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The salespeople at Franklin Printers routinely use discounts to increase demand for one or more products in a line, especially during times of inflation when customers are more price sensitive. This practice is called:
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Price shading
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What is the opposite of price skimming?
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Penetration pricing
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It makes the most sense to use _____ as a price policy when demand is relatively inelastic in the upper ranges of the demand curve.
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Price skimming
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A price reduction for buying merchandise out of season:
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Seasonal discount
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Pricing high in order to capitalize on a product's uniqueness:
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Price skimming
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