Contemporary Marketing (MindTap Course List)
17th Edition
ISBN: 9781305075368
Author: Louis E. Boone, David L. Kurtz
Publisher: Cengage Learning
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Chapter 18, Problem 9ALR
Summary Introduction
To discuss: The manner in which yield management could result in higher revenue than other pricing strategies.
Yield management refers to the strategy that is based on selling the products to the right customer, at the right place, at the right time, and for the right price. This strategy helps to improve the profits of the business and it is complex because it includes many aspects of management control, distribution channel management, rate management, and revenue streams management.
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Students have asked these similar questions
. Explain how the use of yield management can result in greaterrevenue than other pricing strategies.
What is your perspective of a Balanced Scorecard?
Do you see the value to an organization this could provide?
Explain the cost-price interrelationship, and why it's important that organizations understand their cost structure, as it relates to pricing decisions.
Cost-Based Pricing Decision
Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $2,610 of direct materials, $2,349 of direct labor, and $1,697 of
overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in
light of other factors (e.g., competitive pressure). Last year's income statement is as follows:
Sales
$175,500
Cost of goods sold
94,770
Gross margin
$80,730
Selling and administrative expenses
46,300
Operating income
$34,430
Required:
1. Calculate the markup that Jeremy will use. Round your answer to one decimal place.
%
2. What is Jeremy's initial bid price? Round your answer to the nearest dollar.
Chapter 18 Solutions
Contemporary Marketing (MindTap Course List)
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- Explain the term target costing?arrow_forwardMidnight Magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using? O a. competitive pricing O b. market-skimming pricing O c. cost-plus pricing O d. market-penetration pricingarrow_forwardList and explain four key influencers on pricing decisions . A new customer ABC Ltd, wants to buy 500 units of your product, but is only prepared to pay RM4 per clock. This will not cover the total cost of making the product, but it will cover the variable costs – anything over RM3 makes a Provide and discuss three factors that you would take into account when deciding whether or not to take the order.arrow_forward
- According to the Hanson Production: Pricing for Opening Day Case Study by Peter Famiglietti, What should be the primary pricing objective for the upcoming production? Why?arrow_forwardHere is the question: Is it ethical for the airline and hotel industries to use Yield Management techniques? Is it ethical for Mcdonald's and Beauty Salons to use Senior Citizen pricing in their offerings? Here's a reply from my classmate: Can you guys give some comments on this reply? Thank you!arrow_forwardHow does value pricing strategy affect the company's performance and how they benefit from this?arrow_forward
- Lately, customers have become more price conscious, so companies have changed their pricing strategies to emphasize value. Identify the pricing methods adopted by these companies.arrow_forwardFor the following scenarios suggest a pricing strategy and justify why that strategy is most suitable for that business. Scenario 1 Corey has just launched an online business selling customized hoodies. The hoodies are high quality and made uniquely for each individual customer. He sells them solely online through his Shopify store. Highlight the correct answer. a. Penetration pricing b. Economy pricing c. Price skimming d. Psychological pricing e. Premium pricing f. Competitor pricing g. Cost plus pricing Scenario 2 Ellie writes eBooks for people in business and has a very reputable name but is branching out to follow her passion of writing eBooks for children. This is a highly competitive market where her name as an author is not known. Highlight the correct answer. a. Penetration pricing b. Economy pricing c. Price skimming d. Psychological pricing e. Premium pricing f. Competitor pricing g. Cost plus pricing Scenario 3 Maurice is a well-established roofer within…arrow_forwarda premier league football club estimates that whilst the price elasticity of demand for its first-team fixtures is (-)0.3, for second-team games the corresponding elasticity is (-)2 2. provide an explanation for this difference in elasticities and advice the club how this might influence its pricing strategy.arrow_forward
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