Chapter 14

Question 1

Four approaches for selecting an approximate price level:

Answer 1

1. Demand-oriented approaches
2. Cost-Oriented Approaches
3. Profit-oriented approaches
4. Competition-oriented approaches

Question 2

Demand-Oriented Pricing Approaches:

Answer 2

Weigh factors underlying expected customer tastes and preferences

• Skimming pricing
• Penetration Pricing
• Prestige Pricing
• Price Lining

Question 3

Choosing a Price Policy:

Answer 3

• One-Price Policy
• Flexible-Price Policy (Dynamic pricing and clickstream)

Question 4

Geographical Adjustments:

Answer 4

• FOB Origin Pricing
  -Basing-Point Pricing

Question 5

Basing-Point Pricing:

Answer 5

Involves selecting one or more geographical locations (basing point) from which the list prices for products plus freight expenses are charged to the buyer

Question 6

Deceptive Pricing:

Answer 6

price deals that mislead consumers and is outlawed by the Federal Trade Commission Act

Question 7

Bait and Switch:

Answer 7

A deceptive practice exists when a firm offers a very low price on a product (the bait) to attract customers to a store. Once in the store, the customer is persuaded to purchase a higher-priced item (the switch) using a variety of tricks, including 1. downgrading the promoted item 2. not having the item in stock or 3. refusing to take orders for the item