Question 1

Which pricing method is based on the expectations of customers? Explain how this is so.

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Question 2

A linen manufacturer is looking to introduce a quality line of sheet sets to be sold to mass merchants such as the Real Canadian Superstore, Walmart, and so on. Market research indicates that consumers are willing to pay $59.98 for a Queen set (fitted sheet, flat sheet, and two pillow cases). The retailers expect their gross margin to be 50% of the selling price. The manufacturer expects to earn a 40% mark up on cost. What is the maximum amount the manufacturer can spend in production and distribution of the new sheets?

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Question 3

Define "fixed costs"and "variable costs."Assume you are working for a manufacturer of cookies. Give an example of a fixed cost and a variable cost that you would need to consider when making pricing decisions.

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Question 4

Explain how the use of a manufacturer's suggested list price can be misleading. What act and specific law relates to this?

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Question 5

Explain how a toy store could practise "bait and switch"pricing.

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Question 6

A large pizza chain moved into a small town and offered a prolonged promotion on their pizza. This severely affected the local small family-owned pizza place. Could there be a legal issue? What would it be? Explain.

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Question 7

You are responsible for marketing a new, highly unique, and innovative personal smart watch. What pricing strategy do you recommend for the introduction of this new product?

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Question 8

Outline the conditions that are conducive to penetration pricing.

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Question 9

Outline the conditions that are conducive to price skimming.

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Question 10

Setting a price of $500 per plate at a political fundraiser is commonplace. Explain why the strategy underlying this high price is more than just raising funds for the party in question.

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Question 11

Explain, using examples from two different industries, the practice of drip pricing.

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Question 12

Explain why uniform delivered pricing used by automobile dealerships may cause consumer frustration.

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Question 13

Identify and explain the methods of paying freight charges in geographic pricing.

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Question 14

You are the brand manager for a line of heavy industrial cleaning supplies. These products are manufactured in Vancouver and distributed across Canada to other Canadian markets. Based on this information, what pricing policy should be used by this company?

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Question 15

What is a cash discount? Explain how a cash discount works and provide two examples.

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Question 16

What is the purpose of a slotting allowance? Why is the offering and accepting of slotting allowances a controversial issue?

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Question 17

A manufacturer is negotiating with a retailer. The quantity discount amount has been determined, but its application is still under discussion. The manufacturer wants to use a bill-back arrangement and the retailer prefers an off-invoice trade allowance. What are these arrangements and why are these preferences held?

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Question 18

Given the following, calculate the net price of the purchase by a customer who buys 1,000 cases of product and pays the supplier within 15 days of shipment. What is the total percentage discount on the sale?
- Cost of product: $75.00 per case
- Trade discount: $5.00 per case
- Quantity discount: 1.5% for each 500 cases
- Performance allowance: 5%
- Cash discount: 2/10, net 30

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Quiz 11: Pricing Decisions: Objectives, Strategies and Tactics