Vocab
the anticipated satisfaction consumers place on a product: __________
value
Bob's Car Wash offers different levels of washes at price points starting at $8, $10, $14, and $18
Price Lining
What is the most temporary pricing strategy?
Promotional pricing
When supply equals demand...
The point at which sales equal the cost and expenses businesses have spent to make and distribute a product is
Break even
As a product manager for a women’s apparel company, Samantha always begins each pricing assignment by calculating the cost of making an item, such as a bathing suit. She adds the projected profit margin in order to arrive at the lowest retail price. Thus, Samantha uses the concept of ____________________ pricing
Cost oriented pricing
Wendy's offers a 4 for $4 deal where the total is cheaper than if you purchase the 4 items separately. This pricing strategy is known as...
Bundle Pricing
What is BOGO?
Buy one, get one
Define supply
How much of something is produced and available for consumers.
Jaden and Adam just finished their meal at Olive Garden and were ready to pay the bill. Adam’s bill was $21.31 for his pasta and salad. He decides to leave a 20% tip. How much will he will pay including the tip?
During the introduction stage, Chick-fil-A prices their salad low to attract customers. This pricing technique is known as...
Penetration Pricing
Sean was comparing prices for a new Computer. Apple priced its computers at $800, or $1000.00 whereas Walmart brand computers were priced at $999 and $799. Which pricing strategy does this relate to?
Odd/Even pricing
pricing items at or below cost in order to encourage customers to visit their business, hoping that they will purchase additional products at marked up prices.
Loss Leader Pricing
Define demand and explain how price affects demand.
How much people are willing to purchase of something. Price decreases and demand increases.
Target has all bathing suits on sale for 25% off the regular price. The regular price of a bathing suit is $35. What is the sales price of the bathing suit?
35 * .25= 8.75
$35-$8.75= $26.25
What is Flexible pricing policy? Provide an example.
Flexible pricing is a strategy that allows businesses to change their prices in response to changes in demand or as a result of negotiation between buyers and sellers (bargaining).
What is multiple unit pricing? Provide an example.
4 sodas for $8 instead of each soda being priced at $2
Give an example of Special Event Pricing
In July stores begin heavily promoting Back to School Sales
In October store begin promoting Christmas decor
Name a product that is elastic and explain elasticity of demand.
Cereal, when price changes demand is affected if a product is elastic. If a product is inelastic, when price changes, demand does not change.
A computer software retailer used a markup rate of 60%. Find the selling price of a computer game that cost the retailer $15.
15 * .6= 9
15 + 9 = $24
What is pricing discrimination? Provide an example.
Carter stopped by Auto Zone to price the cost of a new tire. The sales person quoted him a price that was two times the price he quoted Ethan. Carter and Ethan are brothers so they found out about this situation.
List 4 of the 6 psychological pricing strategies
everyday low pricing
Bundle pricing
ODD/EVEN Pricing
Price Lining
Prestige pricing
Multiple Unit pricing
Publix is offering Cheeto's on sale. Buy two at regular price and get one half off. The regular price is $3.98 for one bag. What is the average price for three bags of Cheeto's on sale?
$3.98 * 2.5 = $9.95 / 3 = $3.32
The law of demand states:
when price increases demand decreases
when price decreases demand increases
Kroger is offering 10 for $10 on Reese's. They are normally $1.99 each. If you purchase 10 Reese's at the sales price, how much are you saving in total?
$1.99 * 10 = $19.90 - $10.00 = $9.9