Former price comparisons example a seller offers a

Info icon This preview shows pages 62–63. Sign up to view the full content.

Former Price Comparisons. Example: A seller offers a "reduced" price when the previous price was offered only for a short period or was deliberately set high to establish a reference point. Page: 397, figure 14-9 Learning Objective: 4 211. Explain predatory pricing. Ans: Predatory pricing is the practice of charging a very low price for a product with the intent of driving competitors out of business. Once competitors have been driven out, the firm raises its prices. This practice is illegal under anti-competition regulations. Proving the presence of this practice has been difficult and expensive because it must be shown that the predator explicitly attempted to destroy a competitor and the predatory price was below the defendant's average cost. Page: 397 Learning Objective: 4 212. Explain the differences in the last three steps in setting price. Ans: Step 4 is select an approximate price level. In this step the decision-maker must choose between demand-oriented approaches, cost-oriented approaches, profit-oriented approaches and competition approaches. In step 5, the list or quoted price is set. In this step the decision-maker must examine whether to use one price or flexible pricing, the effects of company, customer and competition and incremental costs and revenue. Finally the last step is to make special adjustments to list or quoted price such as discounts, allowances and geographical adjustments. Page: 378, figure 14-1 Learning Objective: 1 213. List four of the demand oriented approaches to selecting an approximate price level. Ans: demand-oriented approaches include: skimming, penetration, prestige, price lining, odd- even, target, bundle and yield management. Page: 379, figure 14-2 Learning Objective: 1 214. Give an example of yield management pricing and explain why it is used. Ans: Yield management pricing is charging different prices to maximize revenue for a set amount of capacity at any given time. Airlines, hotels, cruise ships and car rental companies frequently use it to match demand and supply. Page: 381 Learning Objective: 1 215. What is standard markup pricing and when would it be used? - 62 -
Image of page 62

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Chapter 14: Marketing Ans: Standard markup pricing entails adding a fixed percentage to the cost of all items in a specific product class. It is used in supermarkets and other retail stores that have such a large number of products that estimating the demand for each product as a means of setting price is impossible. Page: 382 Learning Objective: 1 216. What are three special adjustments to list or quoted price? Ans: Three special adjustments to list or quoted price include discounts, allowances and geographical adjustments. Each can substantially change the final price. Page: 392, figure 14-6 Learning Objective: 3 - 63 -
Image of page 63
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern