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Consumer Influence on Pricing Strategy

1. What are examples of fixed price policies, i.e., using menu-based prices, and what effect do they have on buyers and their perceptions of value?

Importance of Costs

2. Explain (utilizing specific examples) the relationship of costs and sales volume as it affects profitability.

Break Even Analysis

3. Provide example of a company initiating a reactive price change when confronted with a competitorâ??s price change that would impact the formers sales unless it responded.

Sustainable Competitive Advantages

4. Some products and services are widely perceived as commodities. Still some companies build sustainable product advantages for even those products. How do they do it? Cite at least two examples from your own experiences.

Pricing and the Product Life Cycle

5. In each stage of a product's life cycle different pricing strategies are utilized. Please choose an example of a product or service representing pricing strategies in each stage of the product life cycle. Please be specific in your response.

Research Studies

6. In designing a trade-off analysis study for a new washing machine, what factors would you want to evaluate?

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Solution Preview

1. In some cultures buyers compete at open markets, to see who can get an item at the lowest price. With fixed prices, industries compete for the most buyers, using price. Fixed pricing policies in menu based offerings eliminate the ability of consumers to haggle over price, taking away their bargaining power. However, offer a menu or a variety of options gives them back some power in the ability to choose various items at different price points.

2. Costs are an important determinant of profitability, as the greater the volume sold, the greater the profit. A firm considers the fixed costs, variable costs and selling price, when conducting a break even analysis.

The breakeven price is calculated as follows:

Fixed costs/price - variable costs

In an organization that produces automatic pet food bowls, assuming the fixed costs of bringing the product to market are ...

Solution Summary

This solution discusses the advantages of various pricing policies, from a perspective of the consumer and the industry competition.