1. When Apple first introduced its iPhone in the U.S. market, it priced it at $600. Several months later, Apple reduced the price to $400. And several months after that, it reduced the price again to $200. What pricing policy was Apple using in its initial price strategy?
2. Some developers of apps for the Apple iPhone price their apps low at launch to encourage sales and get attention so they can move into the prestigious "Top 25" list. Then, they frequently raise prices to get a higher profit margin on later sales. The initial low price is a(n):
3. Jackson Motors, Inc. normally sells its electric motors to all buyers for $100. However, a competitor offered to sell similar motors to one of Jackson Motors' biggest customers for only $80 and Jackson Motors offered that customer-but not its other customers-a $80 selling price. According to the Robinson-Patman Act:
4. Ballyhoo Nights Sound and Lighting Systems has conducted marketing research that indicates the final consumers of its new System 30 outdoor lighting are willing to pay $50. Thus, Ballyhoo wants to use demand backward pricing to set a suggested retail list price of $50. Ballyhoo knows that its wholesalers typically use a 10 percent markup and the retailers generally apply a 30 percent markup.At what price should Ballyhoo sell its System 30 outdoor lighting to the wholesaler in order to achieve a $50 retail selling price?
5. Savannah Grace and Trevor Reid opened a new retail outlet called Holland's Happy Holidays Home. They carry lines of decorations to be used in the home at various holidays and they buy direct from a limited number of small manufacturers without going through a wholesaler. A Thanksgiving decorative kit is in great demand this year. They pay the manufacturer $40 for each kit, knowing that the manufacturer has included a 25% markup. Given the strong demand for the product even before it hits store shelves, Savannah and Trevor decide to include a 75% markup on these kits. Thus, the retail selling price will be $___________ and the manufacturer's cost to produce the kit was $_________.
6. Hazel's Landscape Services has determined that its target clientele has an aversion to paying for design services, but the target is far more satisfied with results if a landscape design is developed prior to planting. In order to provide "free" design services, Hazel decides to cover her costs associated with design by having a sufficiently high markup on the plantings for a design, that she more than covers her cost associated with both the plantings, and the design activities. It has been her experience that the average consumer with a relatively small suburban yard is willing to spend nothing on design services, but is willing to spend up to $2000 to beautify their lawns. Hazel estimates that it costs her $200 to develop the landscape design, and another $1200 for the plantings. What is the highest percent markup Hazel can charge and still remain competitive?
7. Komatsu Mfg. Co. uses target return pricing and expects to sell 40,000 units of its product in the coming year. Its fixed costs will be $500,000 and its variable costs will be about $20 per unit. If Komatsu seeks to earn a 20 percent return on its investment of $500,000, what price should it charge?
8. The Roulette Corporation, a video game manufacturer, sets a single price for a set of 5 video games, a video game console, and a pair of speakers. This pricing strategy is called _____.
9. Given the American economy's basic objective of meeting consumers' needs as THEY-the consumers-see them, it is sensible to evaluate our MACRO-marketing system in terms of:
10. Marketing inefficiencies are due to?
11.Which section of a formal marketing plan for a new product is most directly related to deciding how you want the target market to think about your product compared to competitive products?