BUS 312 Final Exam Questions &
Answers 2024/2025
3 Major Pricing Strategies - ANSWERS1. Cost Based
2. Customer Value
3. Competitor Based
Cost Based Pricing Strategy - ANSWERSBased on costs for producing, distributing, and selling the product
+ fair rate of return for effort & risk
Customer Value Pricing Strategy - ANSWERSUses buyers' perceptions of value rather than seller's cost
Competition Based Pricing Strategy - ANSWERSBased on competitors' strategies, costs, prices, & market
offerings
What is Price Floor? (Major consideration when setting a price) - ANSWERS- Lowest legal price a
commodity can be sold at
- Used by the government to prevent prices from being too low
What is Price Ceiling? (Major consideration when setting a price) - ANSWERS- Maximum prices set by the
government for particular goods and services that they believe are being sold at too high of a price and
thus consumers need some help purchasing them.
Good Value Pricing (+ Examples) - ANSWERSOffering right combo of quality & good service at a fair price
- Everyday low pricing (constant everyday low price w/ few/no temp. price discounts)
- High-low pricing (charge higher prices but frequent promos for temp. price discounts)
Examples:
,- Everyday low pricing: Walmart
- High-low pricing: Macy's
Value Added Pricing (+ Examples) - ANSWERSAttaches value-added features & services to differentiate
the companies offers & higher prices
Example:
- Lululemon (Indulge customers at a premium price)
Break Even Pricing (What are fixed costs, variable costs) - ANSWERSSet price to break even on costs or to
make a target return (Target return pricing)
Trader Joe's Example (Good Value Pricing) - ANSWERS"Cheap gourmet"
- Offering right combo of quality & good service at a fair price
Lululemon Company Case (Prestige pricing, psychological pricing, added value pricing) - ANSWERS- High
price for high quality
- Paying for customer service, experience
- Never goes on sale to keep up brand image
Market Skimming Pricing - ANSWERSSet high initial price (but eventually lower it?)
- Quality & image must support price
- Buyers want to pay premium price (be first to have it)
Example:
- Apple iPhones
, Market Penetration Pricing - ANSWERSSet low price for new product in order to attract large # of buyers
& large market share
Example:
- Wavestorm Surfboard -> $99 @ Costco
- Samsung in African markets (emerging markets)
What are the 5 Product Mix Pricing Strategies? - ANSWERS- Bundle pricing
- By product
- Optional
- Captive
- Line
Explain Bundle Pricing (Product Mix Pricing Strategy) - ANSWERSCombines several products @ a reduced
price (promote sales of products consumers might not otherwise buy)
Example:
- Combo price for Burger, fires, drink
- TV, phone, internet service
Explain By Product (Product Mix Pricing Strategy) - ANSWERSHelp offset the costs of disposing of them &
help make price of main product more competitive (turning cash into trash)
Example:
- Dasani's "plant bottle"
Explain Optional (Product Mix Pricing Strategy) - ANSWERSTakes into account optional or accessory
products along w/ main product
Example:
Answers 2024/2025
3 Major Pricing Strategies - ANSWERS1. Cost Based
2. Customer Value
3. Competitor Based
Cost Based Pricing Strategy - ANSWERSBased on costs for producing, distributing, and selling the product
+ fair rate of return for effort & risk
Customer Value Pricing Strategy - ANSWERSUses buyers' perceptions of value rather than seller's cost
Competition Based Pricing Strategy - ANSWERSBased on competitors' strategies, costs, prices, & market
offerings
What is Price Floor? (Major consideration when setting a price) - ANSWERS- Lowest legal price a
commodity can be sold at
- Used by the government to prevent prices from being too low
What is Price Ceiling? (Major consideration when setting a price) - ANSWERS- Maximum prices set by the
government for particular goods and services that they believe are being sold at too high of a price and
thus consumers need some help purchasing them.
Good Value Pricing (+ Examples) - ANSWERSOffering right combo of quality & good service at a fair price
- Everyday low pricing (constant everyday low price w/ few/no temp. price discounts)
- High-low pricing (charge higher prices but frequent promos for temp. price discounts)
Examples:
,- Everyday low pricing: Walmart
- High-low pricing: Macy's
Value Added Pricing (+ Examples) - ANSWERSAttaches value-added features & services to differentiate
the companies offers & higher prices
Example:
- Lululemon (Indulge customers at a premium price)
Break Even Pricing (What are fixed costs, variable costs) - ANSWERSSet price to break even on costs or to
make a target return (Target return pricing)
Trader Joe's Example (Good Value Pricing) - ANSWERS"Cheap gourmet"
- Offering right combo of quality & good service at a fair price
Lululemon Company Case (Prestige pricing, psychological pricing, added value pricing) - ANSWERS- High
price for high quality
- Paying for customer service, experience
- Never goes on sale to keep up brand image
Market Skimming Pricing - ANSWERSSet high initial price (but eventually lower it?)
- Quality & image must support price
- Buyers want to pay premium price (be first to have it)
Example:
- Apple iPhones
, Market Penetration Pricing - ANSWERSSet low price for new product in order to attract large # of buyers
& large market share
Example:
- Wavestorm Surfboard -> $99 @ Costco
- Samsung in African markets (emerging markets)
What are the 5 Product Mix Pricing Strategies? - ANSWERS- Bundle pricing
- By product
- Optional
- Captive
- Line
Explain Bundle Pricing (Product Mix Pricing Strategy) - ANSWERSCombines several products @ a reduced
price (promote sales of products consumers might not otherwise buy)
Example:
- Combo price for Burger, fires, drink
- TV, phone, internet service
Explain By Product (Product Mix Pricing Strategy) - ANSWERSHelp offset the costs of disposing of them &
help make price of main product more competitive (turning cash into trash)
Example:
- Dasani's "plant bottle"
Explain Optional (Product Mix Pricing Strategy) - ANSWERSTakes into account optional or accessory
products along w/ main product
Example:
