MGT 103 EXAMS 2 ANSWERS AND QUESTIONS SET
A+
✔✔Goals of promotion change - ✔✔BOTTOM TO TOP:
Confirmation, adoption, trial, evaluation, interest, awareness
✔✔Profit - ✔✔TR - TC
(P x Q) - TC
✔✔How to increase demand without changing price? - ✔✔Decrease quantity
Change promotions
Change target market
Change distribution strategy
✔✔Breakeven Point (quantity) - ✔✔FC / (Price - VC)
✔✔Profit Point (quantity) - ✔✔(FC + Desired Profit) / (Price - VC)
✔✔fixed-price policy - ✔✔setting one price for all buyers
✔✔dynamic pricing policy - ✔✔setting different prices for products and services in real
time in response to supply and demand conditions
ex) airplane tickets
✔✔Skimming Pricing - ✔✔setting the highest initial price that customers really desiring
the product are willing to pay
✔✔Penetration Pricing - ✔✔setting a low initial price on a new product to appeal
immediately to the mass market & gain market share
✔✔trial pricing - ✔✔pricing a new product low for a limited period of time to lower the
risk for a customer
, ✔✔odd-even pricing - ✔✔setting prices a few dollars or cents under an even number
✔✔prestige pricing - ✔✔charging a high price to help promote a high-quality image
✔✔loss leader pricing - ✔✔the pricing policy of setting prices very low or even below
cost to attract customers into a store
✔✔captive pricing - ✔✔two prices, one doesn't work without the other
✔✔price lining strategy - ✔✔A technique that sets a range of several distinct
merchandise price levels
✔✔predatory pricing (illegal) - ✔✔With predatory pricing, prices are deliberately set very
low by a dominant competitor in the market in order to restrict or prevent competition.
Competitors cannot match because costs are too high -> can put price wherever you
want to
Have to find intention to drive company out of business
✔✔bait and switch pricing (illegal) - ✔✔advertising or promoting a product at an
unrealistically low price to serve as "bait" and then trying to "switch" the customer to a
higher-priced product
✔✔false former pricing (illegal) - ✔✔Price tag has expensive price crossed out then
cheaper price is below it
Legally - needs to have been offered at that former price
✔✔anchor and adjustment - ✔✔Vons example
Regular price vs club price in font
Ex) 10 for $10 -> $1.00 each , don't need to get 10 of them for get the club price
Counting on the customer to see the club price first, anchoring on that, then adjusting
downward
If we saw the reverse ($1.00 each), we would work up from 1 versus down from 10 ->
changes the quantity of how much you buy
✔✔Direct channel structure - ✔✔From company to customer
Advantages
- Access to customer data
- Possibly greater cost efficiency long term
A+
✔✔Goals of promotion change - ✔✔BOTTOM TO TOP:
Confirmation, adoption, trial, evaluation, interest, awareness
✔✔Profit - ✔✔TR - TC
(P x Q) - TC
✔✔How to increase demand without changing price? - ✔✔Decrease quantity
Change promotions
Change target market
Change distribution strategy
✔✔Breakeven Point (quantity) - ✔✔FC / (Price - VC)
✔✔Profit Point (quantity) - ✔✔(FC + Desired Profit) / (Price - VC)
✔✔fixed-price policy - ✔✔setting one price for all buyers
✔✔dynamic pricing policy - ✔✔setting different prices for products and services in real
time in response to supply and demand conditions
ex) airplane tickets
✔✔Skimming Pricing - ✔✔setting the highest initial price that customers really desiring
the product are willing to pay
✔✔Penetration Pricing - ✔✔setting a low initial price on a new product to appeal
immediately to the mass market & gain market share
✔✔trial pricing - ✔✔pricing a new product low for a limited period of time to lower the
risk for a customer
, ✔✔odd-even pricing - ✔✔setting prices a few dollars or cents under an even number
✔✔prestige pricing - ✔✔charging a high price to help promote a high-quality image
✔✔loss leader pricing - ✔✔the pricing policy of setting prices very low or even below
cost to attract customers into a store
✔✔captive pricing - ✔✔two prices, one doesn't work without the other
✔✔price lining strategy - ✔✔A technique that sets a range of several distinct
merchandise price levels
✔✔predatory pricing (illegal) - ✔✔With predatory pricing, prices are deliberately set very
low by a dominant competitor in the market in order to restrict or prevent competition.
Competitors cannot match because costs are too high -> can put price wherever you
want to
Have to find intention to drive company out of business
✔✔bait and switch pricing (illegal) - ✔✔advertising or promoting a product at an
unrealistically low price to serve as "bait" and then trying to "switch" the customer to a
higher-priced product
✔✔false former pricing (illegal) - ✔✔Price tag has expensive price crossed out then
cheaper price is below it
Legally - needs to have been offered at that former price
✔✔anchor and adjustment - ✔✔Vons example
Regular price vs club price in font
Ex) 10 for $10 -> $1.00 each , don't need to get 10 of them for get the club price
Counting on the customer to see the club price first, anchoring on that, then adjusting
downward
If we saw the reverse ($1.00 each), we would work up from 1 versus down from 10 ->
changes the quantity of how much you buy
✔✔Direct channel structure - ✔✔From company to customer
Advantages
- Access to customer data
- Possibly greater cost efficiency long term
