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Exam 12: Pricing Products and Services

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Question 21

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What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

A) seasonal discounts
B) trade discounts
C) cash discounts
D) promotional allowance
E) trade-in allowance

F) All of the above
G) B) and C)

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Question 22

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What is the difference between fixed costs and variable costs?

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Fixed cost is the sum of the expenses of...

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Question 23

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Larry's Lawn Care allows customers to use a credit card for purchases.Larry pays 3 percent of the sale to the credit card company.To promote more business, Larry decides to offer a lower price to customers paying cash-that price being 3 percent less than the standard list price.Larry is giving his customers a(n) :

__________.

Forever Quilting is a small company that makes quilting kits priced at $120 each.(There is no quantity discount.) The costs of the materials that go into each kit are $45.It costs $5 in labor to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner.Last month the company sold 150 kits.Forever Quilting's total revenue for the month was

"Value" involves the judgment by a consumer of the worth and desirability of a product or service __________

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other machine on the market.Oriented on this price, Asko determined the margins that would have to be allowed for wholesalers and retailers to give the $989 retail price.Asko used

FIGURE 12-7 -In Figure 12-7 above, "A" identifies

FIGURE 12-4 -Position "A" in Figure 12-4 above represents the price premium of which of the following?

Netflix used to charge $14.99 per month for its movie rental service.However when Blockbuster introduced the same service at $13.99, Netflix then dropped its price to $13.99.Netflix most likely made this price reduction in an attempt to

The price equation formula is final price equals [list price] minus [(incentives) plus (allowances) ] plus [__________]

Before setting the final price for a product or service, marketing managers must first

The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle.He decides to offer a promotion-an oil change for $10 with a coupon mailed to 800 households in a 2-mile radius from his station.The $10 will just cover the costs of the oil change, and the cost of printing and mailing is $1000.He hopes the promotion will increase regular maintenance service calls, which average $40.(Materials and labor per job cost $30.) If two hundred customers used the coupon, what will be the total cost of the promotion? (Disregard any opportunity costs.)

What are the two general methods for quoting prices related to transportation costs? Explain how each is used.

Marketing managers often use break-even analysis to analyze the relationship between total revenue and total cost to determine profitability at various levels of output.What is the break-even formula? Use the formula to calculate how many compact disc players a dealer must sell if her fixed costs are $6,000, unit variable costs are $140, and the selling price is $200.

Target return-on-sales pricing refers to

competition-oriented approaches.

Figure 12-1 above, indicates that there are four common approaches for selecting an approximate price level.List and provide a brief description for each one.

To promote their business, some psychics advertise free tarot-card readings and other insights into their customers' futures on television.Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges.This sort of deceptive pricing practice would be primarily monitored by the

Resale price maintenance was declared illegal in 1975 under the