Unformatted text preview: oadster high because the company wanted to
promote a high-quality image. What type of pricing does this represent?
Prestige pricing is charging a high price to help promote a high-quality image.
KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Application Specialty Cakes
Imagine that you’re planning an after-symphony fund-raising party, and you need a life-size
grand piano cake. Or, you are a developer proposing a new shopping center to a group of
investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size
grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000
for one of Cecilia’s artistic creations, depending on complexity of design and size. She uses only
the best ingredients, and no two cakes are ever quite alike.
111. Refer to Specialty Cakes. Although many factors determine the prices charged by Cecilia
Villaveces Cakes, the two primary determinants are:
costs of manufacturing and distribution costs
stage of the product life cycle and costs to the
the demand for the good and the cost to the
demand by the consumer and perceived
distribution and promotion strategies used by
the cake maker
If there was reduced demand, then Cecilia would have to lower prices. Also, she must charge for
the time, energy, and resources that go into each cake.
KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 112. Refer to Specialty Cakes. Many party planners in the Southeast will only use Cecilia Villaveces
Cakes at their parties––no matter what the price is. They know that Cecilia’s cakes can make a
party a success. Moreover, the cakes are what people remember most about the parties. From this
description, you should assume Cecilia Villaveces Cakes have a(n):
Price increases do not decrease demand for cakes.
KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 113. Refer to Specialty Cakes. Which of the following is the BEST example of a fixed cost for Cecilia
Eggs, butter, sugar
Food preparation licenses ANS: E
Delivery costs, electricity consumption, and use of part-time employees will vary according to the
KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Application 114. Refer to Specialty Cakes. Which of the following is the BEST example of a variable cost for
Cecilia Villaveces Cakes?
Life insurance on Cecilia
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- Fall '13
- Marketing, AACSB Reflective, CB&E Model Strategy, CB&E Model