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Merchants use a variety of methods to determine the price of their products. Describe a store and product for each of the pricing methods listed below and whether you consider it to be effective.
a. Referencing pricing
b. Leader pricing
c. Psychological pricing
d. Odd-End pricing
e. Price Lining
f. Prestige Pricing
In determining a price for your product, it is important to use your costs of production as base. Therefore, you must know your cost of production so that a break-even point can be established.
The first step in pricing is to determine your product cost. All costs can be divided into variable and fixed (overhead) costs. Variable costs, sometimes called out-of-pocket costs, are the costs of doing business. These are production-related and include materials, labor, advertising and packaging. The fixed costs are the costs of being in business. They include all items that you pay for regardless of whether or not you are producing or selling a product. Examples are tools, equipment, depreciation, utilities and taxes. Remember, the reason for establishing your product cost is to form the base for your pricing formula.
No single pricing formula will work for all businesses, nor is there a formula that will assure maximum profits in all situations. Every business must approach the problem individually. What follows are several formulas to help you determine a price. Each formula adds an additional item to consider in determining a selling price. By making conscious decisions based on facts, you can determine your price. If, after using the formulas, you find that your selling price is noticeably higher than that of your competitors, you may need to look for ways to lessen your production costs, reduce overhead costs or accept less profit, and become more efficient without affecting the quality of your product.
Prestige pricing refers to high markups and/or pricing above the ...
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A Variety of Marketing-Related Multiple Choice Questions
Markets are similar to products with respect to life-cycle concepts. All of the following are considered to be stages that markets pass through in market evolution EXCEPT ________.
_______ measures a product's handling costs from the time the product reaches the warehouse until a customer buys it in the retail store.
Direct Product Performance
Direct Product Profitability
Most products are established at one of four performance levels: low, average, high or superior. For example, mountain bikes come in a variety of sizes and physical attributes. When a consumer purchases a mountain bike costing $1,000 she/he expects the bike to perform to specifications and to have a high ________ meeting the promised specifications.
An alternative formulation to customer equity is provided by Blattberg, Getz, and Thomas. They view customer equity as being driven by three components: acquisition, ________, and add-on selling.
By adding more channels, companies can gain three important benefits. First, they can increase their market coverage, second, they can lower channel costs by moving to a lower cost channel, and third they can provide ________.
a. effective dollar costs/sale
b. increased volume of sales
c. more customized selling
d. increased exposure
Your product enjoys high brand loyalty and high involvement in the category. Your product has perceived differences that consumers recognize between brands. Your product is one of the few that its consumers choose before selecting the retail store/Web site to purchase the product. Which promotion strategy would hold the greatest opportunity for incremental sales for your product based upon the consumer criteria above?
Companies that practice ________ are implementing a total market orientation and are likely to be the most successful.
reactive market orientation
proactive marketing orientation
both reactive and proactive marketing orientation
"invent and market"
A customer's decision to be loyal or to defect is the sum of many small encounters with the company. Consulting firm Forum Corporation says that in order for all these small encounters to add up to customer loyalty, companies need to create ________.
a reward program
a branded customer experience
strong word-of-mouth promotions
a top-notch advertising campaign
____________is the set of measures that helps quantify, compare, and interpret marketing performance.
customer performance scorecard
________ is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
A ________ strategy involves the manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end users.
none of the above
The formula for the break-even calculation is ________.
fixed costs/(variable costs - price)
(price - variable costs)/fixed costs
fixed costs/(price - variable costs)
fixed costs/unit sales
When McDonald's used mystery shoppers to assess stores' internal speed standards, McDonald's was using which of the following steps to improve its marketing intelligence system?
A company can train and motivate the sales force to spot and report new developments.
A company can network externally.
A company can motivate distributors, retailers, and other intermediaries to pass along important intelligence.
A company can take advantage of government data sources.
Marketers must be concerned with transportation decisions. Transportation choices will affect product ________, on-time delivery performance, and the conditions of the goods when they arrive, all of which affects customer satisfaction.
none of the above
One of the don'ts of questionnaire construction is to ensure that fixed responses do not overlap. Which of the following is the best illustration of a problem that this "don't" might cause?
A consumer must describe a cartoon about buying a car.
An income question asks for an income designation in one of the following income categories: $0-$20,000, $20,000-$40,000, or $40,000 and above.
A consumer is asked whether or not he or she could spy on another consumer's shopping experience.
A consumer is asked to describe a recent event will driving.
________ can be defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand.
Consumer-based brand equity
Function-based brand equity
Service-driven brand equity
Mission-driven brand equity
Customers must see any competitive advantage as a ________ advantage for it to be effective.
Consumer reference prices includes all of the following EXCEPT:
last price paid
Sony's former president, Akio Morita, wanted everyone to have access to "personal portable sound," so his company created the Walkman and portable CD player. Which of the following planning aids most likely assisted Mr. Morita with his vision?
The mission statement.
A SWOT analysis.
Knowledge of customers.
If a marketing manager employs such marketing techniques as online buzz, student ambassadors, cool events, and street teams to reach target markets, the manager is most likely appealing to the ________ market.
The ________ is the rate at which the buyer forgets the brand.
One of the benefits of interactive marketing is that it is highly accountable and its ________ can be easily traced.
________ requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.
Integrated marketing communications
All of the following are considered to be advantages of online research EXCEPT ________.
online research is inexpensive
online research is prone to technological problems and inconsistencies
online research is more versatile
online research is faster
Three pillars that point to the brand's future value, rather than just reflecting its past, are differentiation, energy and relevance. Differentiation, energy and relevance combine to determine what is called Energized Brand ________.
Many countries have ________ industries to create greater competition and growth opportunities.
According to "The Law of the Few", three types of people help to spread an idea like an epidemic. They include connectors, salesmen, and ___________.
During which step of the segmentation process would the marketer group customers into segments based on similar needs and benefits sought by the customer in solving a particular consumption problem?
Step 1: needs-based segmentation
Step 3: segment attractiveness
Step 2: segment identification
Step 7: marketing-mix strategy
With regards to product-line pricing, companies normally develop product lines rather than single products and introduce price steps. The seller's task is to establish ________ quality differences between these price steps.
A conventional marketing channel comprises an ________, wholesaler(s), and retailer(s) each acting in his own self-interest.
Marketing is not a department so much as a ________.
branch of economics
Once the target market is defined, the marketer needs to obtain specific names. The company's best prospects are customers who have bought in the past. Additional names can be obtained by purchasing a list of names. The better lists include overlays of ________ and ________ information
c. financial/buying groups
The majority of sales representatives require encouragement and special incentives. To increase motivation, marketers reinforce intrinsic and ________ rewards of all types.
According to the illustrations describing the product life cycle, during which stage of the cycle is there a strong likelihood that negative profits will be the norm?
________ communicates to the market the company's intended value positioning of its product or brand.
In which of the following dimensions of holistic marketing might we find the focus on the marketing mix tools?
Socially Responsive marketing
If a marketing researcher selects the most accessible population members, he or she would have selected the ________ sampling method.
________ is a comprehensive systematic, independent, and periodic examination of a company's or business unit's marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company's marketing performance.
________ can be defined as the ability to alter channel members' behavior so that they take actions they would not have taken otherwise.
From a branding perspective, "green marketing" programs have not been entirely successful. ________ has been cited as one of the obstacles that must be overcome for "green marketing" programs to be more successful.
Resistance by the youth segment in the marketplace
The three major considerations in price setting includes, costs set as the "floor," ________, and customers' assessment of unique features establishing the price ceiling.
competitors' prices and the price of substitutes provide an orientation point
competitors' prices establishes a "target price" goal
the price of substitutes establishes a "target price"
none of the above
When Coca-Cola sold only one kind of Coke in a 6.5-ounce bottle, it was practicing what is called ________.
National populations vary in their age mix. At one extreme is _________ a country with a very young population and rapid population growth.
A brand manager is concerned that his organization's brand image and physical sales are slipping in the marketplace. The manager has decided to query consumers about the health of the brand and try to discover ways to leverage the brand's equity. Which of the following terms will most likely provide the structure and process for the manager's investigation?
A brand demographic matrix analysis.
A brand positioning study.
A brand audit.
An organizational audit.
A high market penetration index suggests that ________.
the price of the product or service is too high with respect to competition
it would be great time to expand distribution outlets
there will be increased costs of attracting the few remaining prospects
mistakes have been made in selecting the correct promotional alternatives
Which of the following terms matches to the phrase "it is a single business or collection of related businesses that can be planned separately from the rest of the company"?
Niche market unit.
Strategic business unit.
Diverse business unit.
Growth business unit.
One of the reasons new products fail is ________.
competitors who fight back hard
lack of marketing expertise
If a buyer is loyal to two or three different brands of soap, this buyer's loyalty status can be described as being among the ________.
Which of the following is by far the most popular American leisure activity in that it is preferred by 35 percent of adults who participate in such activities?
Traditional brick-and-mortar retailers are responding to the growth of e-commerce by providing and emphasizing a ________ as a strong differentiator to stay at home shopping.
celebrities on premises
expert advice in selecting
wider selection of merchandise