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BUSML 3250 Final OSU Questions and Answers
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BUSML 3250 Final OSU Questions and Answers
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BUSML 3250 Final OSU Questions andAnswers
What is a price? - Answer-price is the sum of all the values that customers give up to
gain the benefits of having or using a product or service.
Value-based pricing - Answer-uses buyers' perceptions of value as the key to pricing.
Price is considered along with all other marketing mix variables before the marketing
program is set.
Good value pricing - offering the right combination of quality and good service at a fair
price.
Value Added Pricing - Rather than cutting prices to match competitors, they add quality,
services, and value-added features to differentiate their offers and thus support their
higher prices
Cost-based pricing - Answer-involves setting prices based on the costs of producing,
distributing, and selling the product plus a fair rate of return for the company's effort and
risk.
Cost plus pricing - adding a standard markup to the cost of the product. Construction
companies, for example, submit job bids by estimating the total project cost and adding
a standard markup for profit.
Break even pricing - The firm sets a price at which it will break even or make the target
return on the costs of making and marketing a product.
Competition-based pricing - Answer-involves setting prices based on competitors'
strategies, costs, prices, and market offerings.
Demand curves - Answer-shows the number of units the market will buy in a given time
period at different prices that might be charged
Price elasticity of demand - Answer-how responsive demand will be to a change in
price. If demand hardly changes with a small change in price, we say demand is
inelastic. If demand changes greatly, we say the demand is elastic.
Pricing new products: Market-skimming pricing vs. Market-penetration pricing - Answer-
Skimming - With each new generation of Apple iPhone, iPad, or Mac computer, new
models start at a high price then work their way down as newer models are introduced
Penetration - Companies set a low initial price to penetrate the market quickly and
deeply—to attract a large number of buyers quickly and win a large market share. The
, high sales volume results in falling costs, allowing companies to cut their prices even
further
Product mix pricing strategies - Answer-product line pricing - setting prices across an
entire product line
optional product pricing - Pricing optional or accessory products sold with the main
product
captive product pricing - Pricing products that must be used with the main product
by-product pricing - Pricing low-value by-products to get rid of or make money on them
product bundle pricing - Pricing bundles of products sold together
For example, Quicken offers an entire line of financial management software, including
Starter, Deluxe, Premier, Home & Business, and Rental Property Manager versions
priced at $29.99, $64.99, $94.99, $104.99, and $154.99, respectively
Reference prices - Answer-aspect of psychological pricing. prices that buyers carry in
their minds and refer to when looking at a given product
Price image - Answer-When designing price strategies price image must be considered
as to how it influences shopping behaviour.
Similar to brand image however it is uni-dimensional as opposed to multidimensional as
price is main focus.
Price image = a function of two types of factors: retail based factors which retailers can
directly influence, and consumer based factors which are personal and can't be
influenced by retailers directly
Everyday low pricing vs. high-low pricing - Answer-Create value in different ways
EDLP saves search costs of finding lowest overall prices
High/low provides the thrill of the chase for the lowest price
Odd-even pricing - Answer-Ending the price with certain numbers (odd numbers just
under even numbers) to influence buyers' perceptions of the price or product
Price-quality relationship - Answer-The perception of price as an indicator of product
quality (e.g., the higher the price, the higher the perceived quality of the product.)
Loss leader pricing - Answer-the pricing policy of setting prices very low or even below
cost to attract customers into a store
Legal and ethical aspects of pricing - Answer-price-fixing states that sellers must set
prices without talking to competitors.
predatory pricing—selling below cost with the intention of punishing a competitor or
gaining higher long-run profits by putting competitors out of business.
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