Final Exam - MKT 300 USM With complete
verified solutions (Guaranteed Pass)
Price - answer the amount of funds required to purchase a product
three foundations when building a pricing strategy: - answer - Costs
- Potential demand
- Competition
For most products, as price increases, - answer fewer consumers are
willing to buy them.
Pricing objectives, which vary among firms, can be classified as follows:
- answer - Volume or sales
- Competition
- Prestige
volume or sales objectives - answer pricing practices aimed at achieving
a particular sales volume or market share
Companies may price to drive a particular amount of sales volume
related to: - answer - Production capacity
- Distribution opportunities
,- Profit requirements
- Previous year sales
competition objectives - answer pricing practices intended to maintain
pricing parity or emphasize overall product value to avoid direct price
comparison
prestige pricing - answer establishing a relatively high price to develop
and maintain an image of quality and exclusiveness
Once managers know their pricing objectives, they can focus on pricing
calculations using one of two methods: - answer - Markup
- Margin
cost-based pricing - answer using the product cost plus a target markup
percentage to calculate the sales price
Called "cost-based pricing" because - answer the markup percentage is
related to cost
markup - answer the cost multiplied by one plus the target markup
percentage
,The sales price is calculated as: - answer Sales Price = Cost × One plus
target markup percentage
A winery may determine that the cost associated with one bottle of
merlot wine is $10 and the target markup for this type of product is
40%. - answer Sales Price = $10 × (1 + .40)
Sales Price = $10 × 1.4
Sales Price = $14
margin - answer the portion of sales revenue left over after paying
product costs
margin is also called - answer gross profit
By using margin approach firms can.. - answer price their products to
realize a desired percentage of profit
Margin: A shoe retailer wants to make 35% margin on all pairs of shoes
it sells; one pair of women's dress shoes costs the company $100. -
answer Sales Price = $100/(1 − .35)
Sales Price = $100/.65
Sales Price = $153.80
, variable costs - answer costs that change with the level of production
fixed costs - answer costs that remain stable at any production level
within a certain range
Fixed costs associated with running a fitness facility: - answer - Monthly
lease
- Insurance coverage to protect against damage plus liability insurance
- Cost of leasing weights and cardio equipment
- Electricity, telephone, Internet, and other utilities
- Salaries
Variable costs associated with running a fitness facility: - answer -
Protein powder as demand warrants
- Payment for instructor to teach a premium bootcamp class as demand
warrants
breakeven analysis - answer the method for determining the amount of
product that must be sold at a given price to generate sufficient
revenue to cover total costs—both fixed and variable
At the breakeven point, profits are - answer zero since all revenues
generated are used to cover costs
verified solutions (Guaranteed Pass)
Price - answer the amount of funds required to purchase a product
three foundations when building a pricing strategy: - answer - Costs
- Potential demand
- Competition
For most products, as price increases, - answer fewer consumers are
willing to buy them.
Pricing objectives, which vary among firms, can be classified as follows:
- answer - Volume or sales
- Competition
- Prestige
volume or sales objectives - answer pricing practices aimed at achieving
a particular sales volume or market share
Companies may price to drive a particular amount of sales volume
related to: - answer - Production capacity
- Distribution opportunities
,- Profit requirements
- Previous year sales
competition objectives - answer pricing practices intended to maintain
pricing parity or emphasize overall product value to avoid direct price
comparison
prestige pricing - answer establishing a relatively high price to develop
and maintain an image of quality and exclusiveness
Once managers know their pricing objectives, they can focus on pricing
calculations using one of two methods: - answer - Markup
- Margin
cost-based pricing - answer using the product cost plus a target markup
percentage to calculate the sales price
Called "cost-based pricing" because - answer the markup percentage is
related to cost
markup - answer the cost multiplied by one plus the target markup
percentage
,The sales price is calculated as: - answer Sales Price = Cost × One plus
target markup percentage
A winery may determine that the cost associated with one bottle of
merlot wine is $10 and the target markup for this type of product is
40%. - answer Sales Price = $10 × (1 + .40)
Sales Price = $10 × 1.4
Sales Price = $14
margin - answer the portion of sales revenue left over after paying
product costs
margin is also called - answer gross profit
By using margin approach firms can.. - answer price their products to
realize a desired percentage of profit
Margin: A shoe retailer wants to make 35% margin on all pairs of shoes
it sells; one pair of women's dress shoes costs the company $100. -
answer Sales Price = $100/(1 − .35)
Sales Price = $100/.65
Sales Price = $153.80
, variable costs - answer costs that change with the level of production
fixed costs - answer costs that remain stable at any production level
within a certain range
Fixed costs associated with running a fitness facility: - answer - Monthly
lease
- Insurance coverage to protect against damage plus liability insurance
- Cost of leasing weights and cardio equipment
- Electricity, telephone, Internet, and other utilities
- Salaries
Variable costs associated with running a fitness facility: - answer -
Protein powder as demand warrants
- Payment for instructor to teach a premium bootcamp class as demand
warrants
breakeven analysis - answer the method for determining the amount of
product that must be sold at a given price to generate sufficient
revenue to cover total costs—both fixed and variable
At the breakeven point, profits are - answer zero since all revenues
generated are used to cover costs
