Questions and Answers
Market skimming prices are preferred in all of the following conditions except __________.
an initial low price is set by the companies
Market penetration prices are preferred in all of the following conditions except __________.
enough buyers must want the product at a higher price
One major objective associated with a market-penetration pricing strategy is to ________.
win a large market share
Which new product pricing strategy should a company use to maximize its market share and attract many buyers quickly?
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When Apple introduced its iPhone, it was pursuing a(n) ________ new product pricing strategy.
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Which statement is true concerning new product pricing strategies?
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Companies that make products that must be used along with a main product are using __________.
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The pricing method in which sellers combine several products and offer a reduced price is known as __________.
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What pricing strategy is Gillette using when it charges a fairly low price for its razors and a high price for razor blades?
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Bath & Body Works offers 'three-fer' deals on its soaps and lotions. This is an example of _______ pricing.
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What type of pricing is exemplified by a car buyer choosing a base model at one price or a premium version at a higher price?
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The Ford Mustang is offered in several different models. Ford will use ________ pricing to determine the price steps between the different models.
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In __________ pricing, the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs.
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Some sellers use 00-cent endings on regularly priced items and 99-cent endings on discount merchandise. This is referred to as __________.
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Many state colleges charge one price for in-state students and a higher price for out-of-state students. Which form of segmented pricing are these schools using?
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Companies that use ________ continually adjust prices to meet the characteristics and needs of individual customers and situations.
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What do consumers often use as an indicator of quality when choosing a bottle of wine?
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What geographic pricing method does UPS use when charging different prices for shipping based on the delivery region?
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Techniques that can be used by sellers for avoiding customers' perception of price gouging include all of the following except __________.
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Techniques that can be used by sellers for avoiding customers' perception of price gouging include all of the following except __________.
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Which statement is true regarding initiating price cuts?
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Assume a competitor has cut prices. What potential actions should the company determine to take?
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Which statement is true regarding initiating price increases?
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What is a potentially effective action a company could take in response to a competitor's price cut?
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Federal legislation on __________ states that sellers must set prices without talking to competitors.
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What is predatory pricing?
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What was Archer Daniels Midland Co guilty of in the 1990s?
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What is the practice of pricing products below cost to harm competitors?
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What occurs when retailers set an artificially high 'regular price' and then advertise a 'sale price' that is close to their everyday price?
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What is the purpose of the Robinson-Putnam Act?
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Study Notes
Pricing Strategies
- Market Skimming Pricing: Setting a high initial price for a product, generally preferred when low competition exists; aims to recover costs quickly.
- Market Penetration Pricing: Initial low pricing used to quickly attract a large number of buyers and gain market share; requires sufficient customer demand for higher-priced alternatives.
- Objective of Market Penetration: Primarily focused on capturing a significant market share swiftly.
Product Pricing Strategies
- Captive-Product Pricing: A strategy where the main product is sold at a low price, while complementary products are sold at higher prices (e.g., razors and razor blades).
- Product Bundle Pricing: Offering several products in a package at a reduced rate (e.g., "three-fer" deals).
- Optional-Product Pricing: Pricing based on base models plus optional features or upgrades (e.g., car sound systems).
- Product Line Pricing: Setting different prices for different models within a product line to reflect differences in features and performance.
Segmented Pricing Strategies
- Segmented Pricing: Selling the same product at different prices without cost differences; common in educational institutions charging in-state versus out-of-state tuition.
- Psychological Pricing: Using pricing techniques like 99-cent endings to enhance consumer perception of value.
- Dynamic Pricing: Continuously adjusting prices based on customer demand and characteristics.
Geographic and Perception Pricing
- Zone Pricing: Geographic pricing method where shipping costs vary based on distance (e.g., UPS).
- Avoiding Price Gouging: Techniques include remaining transparent in pricing and avoiding bad practices like product rationing.
Price Adjustments
- Price Cut Initiatives: Initiating price cuts may lead to price wars, especially in industries with excess capacity; companies can respond by adjusting prices or enhancing perceived product value.
- Price Increase Strategies: Companies should explore alternatives to raising prices, like improving value propositions to manage higher costs.
Legal and Ethical Pricing
- Price-Fixing Legislation: Laws prohibit colluding with competitors to set prices; observed in cases like Archer Daniels Midland Co.
- Predatory Pricing: An unethical strategy involving selling below cost to eliminate competitors; illegal in many jurisdictions.
- Deceptive Pricing: Occurs when retailers artificially inflate "regular prices" before advertising "discounts."
Statutory Contributions
- Robinson-Patman Act: A federal regulation aimed at preventing unfair price discrimination, ensuring competition remains fair.
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Description
Test your knowledge on market pricing strategies with this flashcard quiz for BUS 312 Chapter 11. Explore concepts like market skimming and penetration pricing, and how they apply in different scenarios. Perfect for students looking to reinforce their understanding of pricing tactics.