Unformatted text preview: likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a
new pair of running shoes, he noticed that Nike had a new pair of running shoes that cost $350.
To David, the higher price of the Nike shoe indicated that it would be a better pair of running
shoes. This is an example of:
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 101. When the Apple iPhone 3G was introduced, the Apple iTunes Web site also began selling small
program “apps” written by third parties that could be run on the iPhone. One interesting app was
the “I Am Rich” application. For a price of $1,000, you could buy this app that did nothing but
display a red gem on the iPhone’s screen. The description of the app stated that this red icon
would remind you (and others you show it to) “that you were rich enough to afford this.” Six of
the applications were sold before Apple, Inc. removed the app from iTunes. At the $1,000 price,
the author of the app was using _____ pricing as part of his marketing approach.
Prestige pricing strategy sets high prices to connote high product quality and exclusiveness.
KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Application 102. Marketing managers who attempt to raise the quality image of their product by selling it at high
prices are following a(n) _____ strategy.
maintained markup pricing
ANS: D Prestige pricing strategy sets high prices to connote high product quality.
KEY: CB&E Model Pricing
103. Prestige pricing:
e. OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Knowledge
equalizes supply and demand
uses high prices to promote a high-quality
is the practice of marking up prices by 100
is also called leader pricing
emphasizes the monetary nature of price ANS: B
Actually, prestige pricing emphasizes all the intangible considerations buyers make when
KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Knowledge 104. Laurie knows little about cooking and does not want to spend the time to learn how to make a
quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting
to make a poor choice, she is likely to:
intuitively make the right choice
avoid making a decision by not attending the
buy the most expensive pre-made quiche
(perhaps paying too much), guessing that the
price is related to quality
research the product and buy the least
expensive frozen quiche she can find
buy the least expensive frozen quiche...
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- Fall '13
- Marketing, AACSB Reflective, CB&E Model Strategy, CB&E Model