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Unformatted text preview: following statements is NOT true with regard to trade-ins?
Flexible pricing and trade-ins often go hand in
If a trade-in is involved, the consumer must
negotiate two prices, one for the new product
and one for the existing product.
Research found that trade-in customers tend
to care more about the trade-in value they
receive than the price they pay for the new
About 95 percent of all new car sales involve
a trade-in. e. On average, customers who trade-in an
automobile when purchasing a new one end
up paying more than customers who simply
buy a new car from a dealer. ANS: D
A little over one half (57 percent) of all new car sales involve a trade-in.
KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Analysis 72. Eustis Lee is a lawyer who only handles DUI cases. No matter how quickly he resolves the case,
he charges each customer $5,000. Lee justifies the fee because of his lengthy education and the
years he has spent learning how the judicial system operates. Which pricing policy is the lawyer
Potential (or base)
Flexible (or variable)
Professional services pricing is used by people with lengthy experience, training, and often
certification by a licensing board.
KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application 73. Often a seller will establish a series of prices for a family of merchandise items. There may be
several different models at specific price points but no prices in between. This policy is called:
Price lining is the practice of offering a product line with several items at specific price points.
KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Comprehension 74. At the Greenville Florist, there are four different prices for funeral bouquets. The smallest
bouquet sells for $30; there is also a $40 version and a $75 version. For those who want to
express their grief through the purchase of a dramatic floral arrangement, the florist also offers a
$150 version. The owner of the florist shop has chosen price lining because it will:
enable the shop to carry a larger total
inventory b. maintain all of the product line at the same
stage in the product life cycle
confuse customers and allow salespeople to
sell more of the expensive models
reach several different target market segments
thwart competitors that are trying to sell
similar products c.
e. ANS: D
Price lining allows a retailer to appeal to several different target markets. It is not an uncommon
strategy, and competitors probably use it. It should not affect inventory overall and will not
KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application 75. Why is price...
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This document was uploaded on 09/29/2013.
- Fall '13