GB 350 EXAM 4 OLE MISS CASCIO
QUESTIONS AND ANSWERS
price - Correct Answers -that which is given up in an exchange to acquire a good or
service
two perspectives of pricing - Correct Answers --price = sacrifice
-price = information signal
price = sacrifice - Correct Answers --what are we willing to give up?
Ex: 2/3 of Americans with children under 18 report willingness to spend beyond their
means for holiday presents
price = information signal (sometimes) - Correct Answers --when local identity is
important, price = quality
-when global identity is important, price = quality
Ex: Amazon launches lower priced grocery service
Ex: Panera bread, local
Ex: Eyewear company, global
price reasonable perceptions - Correct Answers --"reasonable price" means "perceived
reasonable value" at the time of the transaction
-more consumers saying now is not a good time to buy or sell a home; nothing new
under $200k
profit oriented - Correct Answers -a. Profit maximization- Lululemon
b. Satisfactory profits - Old Navy
c. Return on investment (ROI)
20-30% general rule of thumb
sales oriented - Correct Answers -d. market share - UPS simple rate
e. sales maximization- wait until to buy vehicle at the end of year
value-based pricing - Correct Answers --pricing products/services at a point that equals
the economic value perceived by the customer
-True Economic Value (TEV) = cost of closest alternative + performance value
differential
Ex: customer surveys helpful to determine
Ex: Chinese smartphone, pose threat to apple with increasing quality and lower prices
, Ex: discounts through loyalty programs to reward customers and increase overall spend
price building - Correct Answers --marketing two or more products/services in a single
package for a special price
Ex: Allegiant's new bundling policy offers base economy rates with frills for a fee
promotional strategy - Correct Answers -plan for the optimal use of the elements of
promotion to gain competitive advantage
status quo - Correct Answers -f. price matching - coastal contact lenses
e. maintain existing prices
elasticity of demand - Correct Answers -consumers' responsiveness or sensitivity to
changes in price
American Express - Correct Answers --price goes down
-revenue goes up
-demand is elastic
dynamic pricing - Correct Answers -adjusts prices in a real-time to balance changes in
demand, supply, and competitor pricing actions
-allows sellers to price in a competitive manner
-stimulate purchases when demand is low and supply is high
-maximize profits when demand is high and supply is low
-match or beat competitor prices
Ex: StubHub concert tickets, pricing assistant tools, adjust seller prices based on
competing prices
variable cost - Correct Answers -cost that varies with changes in the level of output
Ex: Cocoa prices, encourage farmers to pay workers fair wages
fixed cost - Correct Answers -cost that does not change as output is increased or
decreased
break-even prices - Correct Answers -price at which fixed and variable costs = revenues
price skimming - Correct Answers -setting the highest price the market will bear in the
introductury stages of the market, with plans to lower prices throughout the product life
cycle
-objective: profit maximization
Ex: pharmaceutical companies
Ex: plant based meat, beyond meat, expensive
penetration pricing - Correct Answers -setting a low price in the introductory stages of
the market, with plans to achieve a large customer base at low prices and/or increase
prices as product value increases during the growth stage of the product life cycle
QUESTIONS AND ANSWERS
price - Correct Answers -that which is given up in an exchange to acquire a good or
service
two perspectives of pricing - Correct Answers --price = sacrifice
-price = information signal
price = sacrifice - Correct Answers --what are we willing to give up?
Ex: 2/3 of Americans with children under 18 report willingness to spend beyond their
means for holiday presents
price = information signal (sometimes) - Correct Answers --when local identity is
important, price = quality
-when global identity is important, price = quality
Ex: Amazon launches lower priced grocery service
Ex: Panera bread, local
Ex: Eyewear company, global
price reasonable perceptions - Correct Answers --"reasonable price" means "perceived
reasonable value" at the time of the transaction
-more consumers saying now is not a good time to buy or sell a home; nothing new
under $200k
profit oriented - Correct Answers -a. Profit maximization- Lululemon
b. Satisfactory profits - Old Navy
c. Return on investment (ROI)
20-30% general rule of thumb
sales oriented - Correct Answers -d. market share - UPS simple rate
e. sales maximization- wait until to buy vehicle at the end of year
value-based pricing - Correct Answers --pricing products/services at a point that equals
the economic value perceived by the customer
-True Economic Value (TEV) = cost of closest alternative + performance value
differential
Ex: customer surveys helpful to determine
Ex: Chinese smartphone, pose threat to apple with increasing quality and lower prices
, Ex: discounts through loyalty programs to reward customers and increase overall spend
price building - Correct Answers --marketing two or more products/services in a single
package for a special price
Ex: Allegiant's new bundling policy offers base economy rates with frills for a fee
promotional strategy - Correct Answers -plan for the optimal use of the elements of
promotion to gain competitive advantage
status quo - Correct Answers -f. price matching - coastal contact lenses
e. maintain existing prices
elasticity of demand - Correct Answers -consumers' responsiveness or sensitivity to
changes in price
American Express - Correct Answers --price goes down
-revenue goes up
-demand is elastic
dynamic pricing - Correct Answers -adjusts prices in a real-time to balance changes in
demand, supply, and competitor pricing actions
-allows sellers to price in a competitive manner
-stimulate purchases when demand is low and supply is high
-maximize profits when demand is high and supply is low
-match or beat competitor prices
Ex: StubHub concert tickets, pricing assistant tools, adjust seller prices based on
competing prices
variable cost - Correct Answers -cost that varies with changes in the level of output
Ex: Cocoa prices, encourage farmers to pay workers fair wages
fixed cost - Correct Answers -cost that does not change as output is increased or
decreased
break-even prices - Correct Answers -price at which fixed and variable costs = revenues
price skimming - Correct Answers -setting the highest price the market will bear in the
introductury stages of the market, with plans to lower prices throughout the product life
cycle
-objective: profit maximization
Ex: pharmaceutical companies
Ex: plant based meat, beyond meat, expensive
penetration pricing - Correct Answers -setting a low price in the introductory stages of
the market, with plans to achieve a large customer base at low prices and/or increase
prices as product value increases during the growth stage of the product life cycle
