Question 1

Washburn recently purchased Parker Guitar,another guitar manufacturer that designed products for professionals and collectors,and will combine the two production facilities into a new location.Washburn expects the acquisition to reduce its rent and tax expenses by 40 percent,and the new skilled employees will reduce the hours of work needed for each unit by 15 percent.This would cause the slope of the total cost curve to _________ and the break-even quantity to _________.

Accepted Answer

The acquisition is expected to reduce costs, which would decrease the slope of the total cost curve. Additionally, with lower costs, the break-even quantity would also decrease.

Question 2

1 of the price-setting process identifies pricing objectives and constraints.Describe the reasons these objectives may change and give examples of objectives a firm may set.

Accepted Answer

The answer of 1 of the price-setting process identifies pricing...

Question 3

reduce the price sensitivity for some of its products,Washburn

Accepted Answer

By using endorsements from internationally known musicians, Washburn can create a perception of high quality and exclusivity for its guitars, reducing price sensitivity for their products. Many consumers may see the guitars as valuable due to being associated with well-known and successful musicians, thereby justifying the higher price tag.

Question 4

are the six broad objectives that an organization may pursue that tie in directly to its pricing policies?

Accepted Answer

The answer of are the six broad objectives that an...

Question 5

Washburn Guitars markets its guitars to four distinct market segments.The firm's one-of-kind custom instruments are targeted at

Accepted Answer

Washburn Guitars targets its one-of-a-kind custom instruments at stars and famous musicians, who often seek unique and personalized instruments to match their status and performance needs.

Question 6

Washburn Guitars markets its guitars to four distinct market segments.The firm's mass customization instruments are targeted at

Accepted Answer

The question states that Washburn markets its mass customization instruments to four distinct market segments, and the options provided span across beginner level (first-time buyers) to professional level (stars and famous musicians). However, the fact that these instruments are customizable suggests that they are suited to individual preferences and requirements, which is likely to appeal to intermediate-skill players who have developed some specific preferences but are not yet established in the industry. Thus, E is the best choice.

Question 7

primary reason for Washburn's success is

Accepted Answer

Developing product lines at different price points for different market segments allowed Washburn to cater to a wider range of customers and compete in both the high-end and low-end guitar markets. This strategy helped them grow their customer base and increase overall sales.

Question 8

average price Washburn charges for a guitar is $349.This price must cover its variable costs of $25 for direct materials and $120 in direct labor.It must also cover fixed expenses of $38,000.Assuming everything else stays the same,the company's planned move to Nashville,Tennessee,will reduce its fixed costs by $4,800.This would cause total costs to __________ and the break-even quantity to __________.

Accepted Answer

The reduction in fixed costs will decrease total costs, and since fixed costs are lower, the break-even quantity will also decrease.

Question 9

executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n)________ pricing objective.

Accepted Answer

Unit volume pricing objective is focused on achieving a specific level of sales or unit volume. In this case, the executive vice president has set a sales target of 2,000 units, which is a unit volume pricing objective. The other pricing objectives are not as closely related as the unit volume pricing objective in this scenario.

Question 10

Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $6 million and unit variable costs of $5 per pair.Ace would like to earn a profit of $2 million; how many pairs must they sell at a price of $15?

Accepted Answer

To earn a profit of $2 million, Shoe Company needs to cover their fixed costs ($6 million) and variable costs per unit ($5), plus the desired profit of $2 million.

Let's represent the number of pairs of heel replacement kits sold as "Q".

Thus, the equation for total revenue can be written as:

Total Revenue = Price x Quantity (Q)

Since the price is given as $15, the equation becomes:

Total Revenue = $15Q

The equation for total cost can be written as:

Total Cost = Fixed Costs + Variable Costs per unit x Quantity (Q)

Plugging in the given values:

Total Cost = $6 million + $5Q

We know that Ace wants to earn a profit of $2 million, so we can write:

Total Revenue - Total Cost = Desired Profit

$15Q - ($6 million + $5Q) = $2 million

Simplifying:

$10Q = $8 million

Q = 800,000

Therefore, Shoe Company needs to sell 800,000 pairs of heel replacement kits at a price of $15 to earn a profit of $2 million.

The correct answer is D, 800,000 kits.

Question 11

Washburn sells their guitars through a number of channels such as chains and online dealers,but they feel it is their independent dealers who sell the guitar for them.In recognition of their hard work,Washburn takes a smaller profit margin from them because they have to do more work.In essence,this special adjustment to the list price or quoted price is an example of a(n)

Accepted Answer

The special adjustment to the list price granted to independent dealers is an example of a trade discount, which is a discount given to channel members for performing certain functions such as selling, storing, and record-keeping.

Question 12

average price Washburn Guitars charges for a guitar is $349.99.This pricing level is most reflective of a(n)__________ approach.

Accepted Answer

The price of $349.99 is an example of odd-even pricing, where prices are set just below a round number to make them appear cheaper.

Question 13

do consumers use price as an indicator of value?

Accepted Answer

The answer of do consumers use price as an indicator...

Question 14

Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $6 million and unit variable costs of $5 per pair.Suppose a consultant tells Ace it can sell 750,000 heel repair kits,what price must it charge to achieve a profit of $2.5 million?

Accepted Answer

The answer of Shoe Company sells heel replacement kits for...

Question 15

What is StubHub's pricing formula?

Accepted Answer

The answer of What is StubHub's pricing formula?...

Question 16

Washburn Guitars markets its guitars to four distinct market segments.The firm's mass-produced instruments are targeted at

Accepted Answer

The answer of Washburn Guitars markets its guitars to four...

Question 17

Explain the price equation in the context of a new car purchase.

Accepted Answer

The answer of Explain the price equation in the context...

Question 18

Washburn Guitars markets its guitars to four distinct market segments.The firm's batch-custom products instruments are targeted at

Accepted Answer

Washburn Guitars' batch-custom products are aimed at professional musicians who require high-quality, customized instruments for their performances and recordings.

Question 19

the process of setting price,a marketer must first identify pricing objectives and constraints.Next,in Step 2,three specific estimates are necessary.What are they?

Accepted Answer

The answer of the process of setting price,a marketer must...

Question 20

are the six major steps involved in setting prices?

Accepted Answer

The answer of are the six major steps involved in...

Quiz 13: Building the Price Foundation