Unformatted text preview: le price maintenance
Pricing fixing is an agreement between two or more firms on the price they will charge for a
KEY: CB&E Model Pricing OBJ: 20-2 TOP: AACSB Reflective MSC: BLOOMS Application 119. Refer to E-Books. Consumers purchasing Barnes & Noble’s Nook for $299 receive ten e-books
for $19.99. Barnes & Noble is using which pricing tactic?
Price bundling is marketing two or more products in a single package for a special price. The
consumer is paying $318.99 for the reader and ten books, whereas if purchased separately, these
items would cost almost $400.
Thinking REF: 330 OBJ: 20-3 TOP: AACSB Reflective KEY: CB&E Model Pricing MSC: BLOOMS Application 120. Refer to E-Books. It is expected that traditional book clubs, like Doubleday and Book-of-theMonth clubs, will begin offering e-book options to members. Members pay an initial membership
fee of $25.00 and $0.99 per e-book purchased. This is an example of:
Two-part pricing is a price tactic that charges two separate amounts to consume a single good or
KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application Apple iPhone
Apple, Inc.’s iPhone went on sale on June 29, 2007. Apple’s loyal and enthusiastic customer base
is known for rushing to purchase its new products, and the iPhone enjoyed a tremendous amount
of “buzz” before its introduction. As expected, the iPhone entered the market at what many
believed to be a high price ($599). However, within weeks, the price was reduced to $399. By the
end of 2007, over eight million iPhones had sold in the U.S. marketplace. By most, if not all
measures, the original iPhone was a huge success for Apple, and its exclusive U.S. carrier was
On July 11, 2008, Apple, Inc. released the iPhone 3G, which it advertised as being twice as fast as
the original iPhone for half the cost. However, in order to obtain an iPhone at the new price of
$199, buyers had to agree to a two-year service contract with AT&T. This contract would allow
iPhone users to receive phone calls, receive e-mail, and search the Web on the same device. A
single charge of $59.99 from AT&T included 450 minutes of cellular calls, with free nights and
weekend minutes, unlimited data, visual voice mail, 200 text messages, rollover minutes, and
unlimited mobile-to-mobile service within the AT&T network. This approach succeeded, and over
a million iPhone 3Gs were sold during the introductory weekend.
121. Refer to Apple iPhone. When Apple introduced the iPhone at a high price, it was probably using a
_____ strategy to maximize profits.
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