MM 4 4Th Edition Dawn Iacobucci Solutions Manual Full Chapter PDF

MM 4 4th Edition Dawn Iacobucci
Solutions Manual
Visit to download the full and correct content document: https://testbankdeal.com/dow
nload/mm-4-4th-edition-dawn-iacobucci-solutions-manual/
MM – Instructor Manual
CHAPTER 9 – PRICING
KNOWLEDGE OBJECTIVES
1. Understand the importance of pricing.

2. Recognize the impact of supply, demand, and elasticity on pricing.
3. Understand the breakeven analysis for low and high priced products and services.
4. Understand the importance of comparing units and revenue; and volume and
profits.
5. Understand the impact of the psychological aspects of pricing.
6. Create awareness about price discrimination.
7. Understand the concept of nonlinear pricing.
8. Acknowledge the reasons for changes in pricing.
CHAPTER OUTLINE
▪ Why is Pricing so Important?

▪ Background: Supply and Demand
▪ Low Prices
▪ High Prices
▪ Units or Revenue; Volume or Profits
▪ Customers and the Psychology of Pricing
▪ Price Discrimination, a.k.a. Segmentation Pricing
▪ Non-Linear Pricing
▪ Changes in Cha-Ching
▪ Managerial Recap
1. Why is Pricing so Important?
This section relates to knowledge objective #1
Pricing provides the company a mechanism of obtaining value back from customers. It is
also used as a segmentation tool. Marketers need to know how to set prices. They also have
to understand how customers perceive prices and price changes like promotions to know
how prices will be received and affect demand
2. Background: Supply and Demand
Figure 9.1 Demand Curve (Line)
The figure shows that demand tends to fall off as price goes up.
If a firm prices its brand too low, they could probably raise prices and pull in more money.
If the brand is priced too high, generally sales drop off, so if prices were adjusted
1
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
downward, then the volume of sales would pick up, and again, the company could pull in
more money. Pricing is easier to change than the other marketing mix variables but the
process is complicated.
TEACHING NOTE: Students can be asked to identify if any, products that violate the
“law of demand.”
(Veblen goods are a group of commodities for which people's preference for buying
them increases as a direct function of their price, as greater price confers greater status.
For example, high-end wines, designer handbags, luxury vehicles designer clothing,
luxury watches, etc.)
Figure 9.2 Typical Pricing Strategies
The figure illustrates the three simple and commonly employed pricing strategies: low,
medium, or high.
The lowest sensible price is set by covering costs, and then adding some margin. The
highest possible price is set by figuring out just how much a customer is willing to pay, and
pricing near that mark. Competitive pricing is at a medium level, uses the competitors’
prices as a starting point, and adjusts from there.
The C’s of directly affect pricing: The costs inherent to the company help determine the
low price point; the customer’s sense of the product’s value help determines the high price
point; and noting what the competition charges helps determine a sensible intermediate
price point.
Pricing typically varies over the course of product’s life cycle. Willingness to pay varies
across segments, so a firm might offer differential prices to those different segments.
The impact of changing price is easier to measure than modifications of the other Ps.
Pricing plays an important role in sending a signal to customers, competitors and
collaborators regarding the positioning and image of the brand.
If profit is defined as:
Profit = π = (price x demand) – (fixed costs) – (variable costs x demand) = [(price –
variable costs)] x demand – (fixed costs), then profits increase as price increases.
As per the demand function in Figure 9.1, however, demand typically falls off with those
price increases.
Profits increase as fixed or variable costs decrease.
The concept of elasticity or price sensitivity is introduced. One way to describe elasticity is
this: if the company drops prices, there should be a volume increase, and the question is
whether enough additional units will be sold to “stretch” and cover the profits lost due to
the price decrease.
Another popular interpretation of elasticity is from a consumer’s point of view: if there is a
price drop (or increase), just how much does demand increase (or decrease)? If demand is
barely affected, the demand is inelastic; whereas if demand bounces around, it is elastic.
Figure 9.3 Elastic vs. Inelastic Demand
2
The figure shows two demand scenarios. The left plot shows relatively elastic demand. The
right scenario shows inelastic demand.
Inelastic demand means that a particular item will be purchased by many even if the prices
are raised.
The figure also shows that elasticity is characterized differently depending on the slope of
the lines. Indeed, elasticity is defined by the slopes. Elasticity is defined as the proportion
change in quantity compared to the proportion change in price.
The equation for determining elasticity is given as:
Q2 − Q1
Q1 P (Q − Q1 )
E= = 1 2
P2 − P1 Q1 (P2 − P1 )
P1
Elasticity is always computed to be negative.
• If E >1, demand is said to be elastic (price and revenue go in opposite directions;
with a price drop, revenues shoot up, with a price increase, revenues fall off).
• If 0 < E <1, demand is inelastic (revenue follows price in the same direction, if
price goes up, revenue goes up, if price goes down, so do revenues).
• If E = 1, demand is said to be “unitary” (prices goes up or down but revenues
remain about the same).
Figure 9.4 Elasticity varies with Customer Segments
The figure shows that elasticity varies with customer segments.

For the purchase of almost everything, there are very likely to be two customer segments.
Brand loyal customers are inelastic and less price sensitive—they will buy a particular
brand no matter what the price. In contrast, the price sensitive segment is quite elastic, and
deal-prone, and will run to a competitor (or even drop out of the category) when prices are
raised. Demand goes up:
• as a function of a customer’s desire: the more customers who want the brand, or the
more any customer wants the brand.
• with perceptions of the product’s benefits or brand image.
• if competitors’ brands are not great—if there are few good substitutes, or they are
priced even higher.
Customers are more price-sensitive (price is more elastic for them) when they do not care
that much about the purchase, purchase category, brand, their preferences are not strong, or
they feel no particular brand loyalty. Price sensitivity is greater when the item is a luxury
good rather than a necessity, when many substitutes are available, or when the purchase is a
relative big one compared to a customer’s household income. Price sensitivity is also
greater for customers with lower household incomes.
3. Low Prices
There are two issues regarding low prices:
3
• How to determine whether costs are covered? (Breakeven analyses help answer this
question.)
• Whether low prices are a strategic choice that is constant?
Covering costs to make sure that the firm can stay in business sets the absolute minimum
floor on pricing.
Cost-plus pricing is simply computed per unit, as: (unit cost) / (1-X%), where X% is the
intended return.
If fixed costs are high relative to variable costs, the strategic objective is to maximize sales
volume. If instead variable costs are relatively high, the strategic objective is to maximize
per unit margins.
Breakeven for a Good
A breakeven (BE) analysis is a means of figuring out how many units the firm has to sell
before its costs are recovered.
BE can be computed in terms of number of units sold or monetary values.
BE in terms of unit sold is calculated as follows:
Profit = [(price – variable costs) x demand] – (fixed costs)
BE = (fixed costs) / [(price – variable costs)]
The term “[(price – variable costs)]” is also called “(contribution per unit to fixed costs).”
Figure 9.5 Costs for e-Book Reader Business
This figure shows the breakdown of basic costs for an e-book reader business.
Figure 9.6 Breakeven for e-Book Reader Business
This figure shows the breakeven for the e-book reader business.
Figure 9.7 Costs for e-Book Software Service Business
This figure shows the fixed costs, variable costs, and the total for an e-book software
service business.
Figure 9.8 Breakeven for e-Book Software Service Business
This figure shows the possible income, depending on the price and demand for the e-book
software service business.
Figure 9-9 Breakeven for e-Book Software Service Business
4
This figure shows the profits for the e-book software service business.
BE in terms of revenue is calculated as follows:
BE$ = (fixed costs) / (1 – variable costs per unit price)

= (fixed costs) / [1 – (variable costs/price)]
If the firm incorporates a profit goal:
Target profit = [(price – variable costs) x demand] – (fixed costs),

so, BE = (fixed costs + target profit) / (price – variable costs)
Figure 9.10 Breakeven, if Service Fee = $100
This figure shows the breakeven goal in terms of linear functions.
BE analyses should be performed for every price decision to understand the lower bounds.
4. High Prices
Marketers must calculate the upper limit on what people will pay for their products.
In relatively stable markets, marketing managers might see that their price sensitivity
estimates are also fairly stable. If that is the case, they can turn the elasticity or price
sensitivity (PS) equation inside out. The price changes are under their control, and if PS is
largely stable, they can plug that estimate in, and solve for a decent forecast as to what the
sales change might be: “%change in sales” = PS  (P2 − P1 ) , an estimate that would be very
P1
useful in budgeting.
If they do not have good estimate for price sensitivity, or if the recent historical data moves
around a lot, they should get current estimates.
Using Scanner Data
Scanner data can yield very precise estimates of demand and price sensitivities at numerous
price points. Scanner data include indicators of which brands are bought, the quantities
bought, the shelf price of the objects, the paid price (e.g., if a coupon was used), the price
of competitors’ brands that week, a flag for whether any of the brands were featured in
local weekend newspaper flyers or in end-of-aisle displays in the store, advertising
exposures to panel households, etc.
If all of these variables remain constant, a firm can run an experiment by randomly
selecting some outlets as a test market and dropping prices by say by 20% in some stores,
5
33% in others, and allowing still other outlets to serve as a control group, a benchmark for
comparison.
For example, the effect of a 20% decrease would be estimated to be:
(S @ 20%off − S benchmark )/ S benchmark ,where the benchmark might be initial sales, or the
PS =
(P@ 20%off − Pbenchmark )/ Pbenchmark
sales averaged over the control group outlets.
If this PS is large, then the 20% discount was effective in stimulating sales. If it is small,
then either the discount was not big enough, or these customers are not price sensitive.
Companies can use scanner data to forecast sales as a function of price, and include any
other marketing or market information they might have as control variables, to see the
effect of price:
SalesEst . = b0 + b1 Price + b2 Ad + ... + bk Factork
Using Survey Data
Even without scanner data, there are several marketing research tools that can be used to
assess a customer’s Willingness To Pay (WTP). For one, marketers can simply ask their
customers, “What are you willing to pay?”
Price studies can also be tested using different samples.
Conjoint Analysis
In a conjoint study, customers are shown products with various combinations of features
and attributes, price being one of them. The customers are asked, “Which combination do
you prefer most?” and then, “Next most?” and so on.
Figure 9.11 A Conjoint Experiment
This figure provides an example of a conjoint study for a Red Bull kind of energy drink
that is offered in a 4-pack for $2.99 or $3.99, and a store brand drink of the same variety is
offered at the same price points.
The major advantage of the conjoint approach is that customers aren’t ever directly asked
about price, so the method obviates the customer’s natural inclination to say “I want to pay
less.” Marketers also know that customers are willing to pay more for what they want, and
the conjoint technique helps detect what those attributes are.
TEACHING NOTE: The class can be divided into groups of five. They can be asked to
conduct a conjoint analysis for Blackberry, Motorola, Nokia, Samsung, and Sony
Ericsson phones within their groups and present a report. They should consider at least
five attributes with price being one of them. Findings of each group can be discussed
and the preferred choice of the students can be determined.
6
5. Units or Revenue; Volume or Profits
There is a difference between maximizing the number of units sold to produce volume vs.
objectives to maximize revenue and profits.
Figure 9.12 Units vs. Profits
This figure shows the market share and revenue share of three airlines: American, Delta,
and Southwest.
If {profit = revenue – expense} and {revenue = price x (quantity sold)}, then to maximize
profits the companies need to find a price where any further increase in price would lead to
a large falloff in demand. Profit maximization occurs when marginal revenue (MR, the
extra money brought in by selling one more unit) equals marginal cost (MC, the extra cost
by selling one more unit); that is Pmax: MR=MC.
Figure 9.13 Profit Maximization
In the figure prices are listed, from $1 to $2, for say a soft drink from a vending machine.
As price goes up, fewer customers partake. The third column represents the variable (or
marginal) cost of $1 a unit, and the fourth column shows revenue (price x quantity). The
final column presents marginal revenue.
These numbers are computed as follows: the $1.50 is [($350-$200) / (200-100)], the $1.00
is [($450-$350) / (300-200)], and so on.
Marginal cost was stated to be $1, and marginal revenue achieves $1 when we price at
$1.50, thus covering costs nicely.
6. Customers and the Psychology of Pricing
Many models of pricing (marketing, statistical, economic, etc.) have the form:
“firm’s prediction = firm’s model + ε,” where ε (epsilon) is the “error” term, also referred
to as noise, variability, heterogeneity, or a fudge factor.
The idea is that no matter how well the firm thinks it knows a system, they are still dealing
with human beings, and even if the purchase seems simple, there are seemingly endless
factors that contribute to the decisions.
Much of pricing is derived from economics, and it sort of makes economists nuts that
human beings introduce systematic variation into ε. There are 8 kinds of so-called bias that
are actually quite rational:
• Price often serves as a cue to quality: Counter to the anticipated economic effect of
higher prices causing a decrease in demand, for some products and services, higher
prices can make a purchase seem more appealing. For some purchases, customers
use price as a cue to quality, implicitly reasoning that the brand can command a
high price because its quality is so good.
7
• Consumers process absolute numbers and relative numbers differently: Consumers

tend to compare the discount amount to the original price of the product. The
greater the discount amount to the original price, the more likely it is that the
consumers will act.
• The contextual frame in which information is expressed matters: This is explained
using an example. If the customers have to choose between two holiday
destinations, one priced at $499 and the other priced at $599 with a $100 discount
when they book, they will prefer the $599 destination because they feel that it is of
better quality and they will get more value for the same price.
• Price discounts serve as mood inductions: Customers think they are smart shoppers
when they get a good deal.
• Prices ending in 9 ($4.99, $49.99) are more attractive to customers than prices
ending in whole numbers ($5, $50).This is because majority of customers read from
left to right. So, they process the “4” before they reach the “.99” and think that the
price is “$4-ish” and not “$5!”
• Consumers keep track of their spending—it is called “mental accounting.” They
also rationalize compensatory or future purchasing. Another category of mental
accounting that the customers do is that they categorize their purchases and budgets
within a particular category. Customers also process alternative currencies (e.g.
company loyalty programs that generate additional currencies which usually have
fairly transparent monetary values and can be traded or given away).
• Marketers frequently observe the “compromise effect” in consumers: Given the
choice between two prices ($250 and $200), most people will opt for the lower
price ($200). But, when a third price ($300) is introduced, people tend to choose the
middle price ($250). This effect is called a compromise because the middle choice
in the second choice set is an attractive “compromise” between the two extremes.
• Consumers work with referent pricing: When people evaluate a product’s price to
determine whether the price being charged is “fair,” they compare the price to some
reference (either an externally-available price, or an internally-mentally-stored
price).
Marketers know that customers vary and that is why they consider segmentation.
Customers also vary in these psychological profiles of reactions to prices, and marketers
can use this information to price smartly.
TEACHING NOTE: Students can be asked if they have ever fallen for the 8 biases
discussed in this section and describe those situations and experiences.
7. Price Discrimination, a.k.a. Segmentation Pricing
Price discrimination as such is not legal. Marketers are not allowed to charge different
prices to different people for the same goods or services. However, marketers frequently
indulge in segmentation pricing.
8
Good marketers find customer segments who value different things. Then it is perfectly
acceptable to charge different customers different prices for different goods and services. In
most markets, there is almost always a “price sensitive” segment, and another that seeks
“quality.” There is nothing wrong with a company offering a stripped down product at
lower prices to the former, and a souped-up version at a higher price to the latter.
Figure 9.14 Price for Brand and Deal Segments
The figure shows that as price goes up (in column 1), demand falls off for both the deal-
prone and brand-loyal segments (columns 2 and 3). The difference is that there is high
volume of buyers in the deal segment at the low prices, whereas the brand-loyal segment is
willing to pay more. Column 4 sums these purchases, in units and revenues. Column 5
shows that if the firm offers just one price, contribution is maximized at a price of $4. The
final two columns separate out the segments. For the deal-prone customers, $4 remains the
optimal price. For the brand-loyals, the firm maximizes at a price of $7.The firm can either
determine that a hi-end image is their strategy, price at $7, and let the deal-prone group fall
off or, it can price $7 during a “regular” season and get the purchases of the brand-loyal
segment, and then price around $4 for the deal-prone segments during promotion times.
It is important to keep these distinct segments separate. Customers can get irritated if they
learn that they have paid more than another.
Quantity Discounts
Another completely legitimate and accepted form of segmentation pricing is to offer

“quantity discounts”—as in, “the more you buy, the more you save!”
Figure 9.15 Pricing with a Quantity Discount
The figure shows the calculation of pricing with a quantity discount for an Internet access
offer.
Yield or Demand Management
Just as customers can be divided into segments that are more or less price sensitive,
customers can also be more or less time sensitive.
Services are perishable. All the customers rush a system when they want to be served, and
if they overload the capacity, it can be a problem for the service provider and the quality of
service can deteriorate. So another example of segmentation pricing is to vary prices during
peak and non-peak seasons.
Whether a customer experiences a price or time shift, it is important that the company
manage perceptions of fairness. With regard to time, FIFO (first in, first out) seems
universally fair in queuing, but customers also tend to be understanding when there are
exceptions (e.g., larger parties wait longer to be seated at restaurants).
These practices of yield management are popular in services, many of which are
characterized by high fixed costs and lower variable costs (e.g., airlines, hotels, rental cars)
9
to enhance revenue and capacity utilization. An advantage of this approach to pricing is

that it is based on the market, not on costs per se.
TEACHING NOTE: The instructor can ask students to describe situations where they
have experienced price discrimination (e.g., children pay less for a movie ticket than an
adult; publishers charge different prices for paperback and hardbound editions). They
can be asked to debate the necessity and validity of such pricing practices.
8. Nonlinear Pricing
This section relates to knowledge objectives #7
Marketers try to coordinate the pricing of multiple pieces of their product offerings. Some
prices are set using a “two-part tariff,” meaning that a customer pays some amount for one
part of the service (usually a fixed fee, such as an entry fee at a night club) and another
amount for another part of the service (usually this fee is a charge per unit of usage, such as
drinks at the club).
Figure 9.16 Two-Part Tariffs
The plot on the left shows that cell phones charge a monthly fee with some basic coverage,
but calls beyond that are charged extra. The plot to the right illustrates a theme park, with
an initial charge (the admissions ticket), and additional fees for whatever consumption is
enjoyed in the park (e.g., beverages). Part A of each graph shows the base fee, and part B
shows the extra fees, so the total amount charged per customer depends on how much the
customer wishes to buy.
Figure 9.17 Using Self-Reported Demand Data to Set Prices
The figure depicts data sampled from patrons of local upscale restaurants responding to
survey questions about the fees proposed for a newly opening wine bar.
It shows all the data required to calculate the price at which the restaurants will achieve the
greatest profitability. The calculations are outlined in the text.
With two-part tariffs, the firms price items separately even though they know that the
customers will probably purchase both pieces.
Price bundling is the opposite of two-part tariffs. It aggregates prices of 2 or more
complementary products for a single price.
9. Changes in Cha-Ching
Some of the reasons why companies change prices include the product life cycle, coupons,
and price discounts.
10
Pricing and the Product Life Cycle
Firms use two contrasting pricing strategies during the product life cycle (PLC):
• Market penetration: If the firms want to disperse their brand quickly and widely
throughout the marketplace, that is, penetrate the market, the brand would be priced
low at the time of its introduction to stimulate sales, encourage trial and word of
mouth. With time, the price is usually raised, as the brand reaches maturity and
finds its segments, the product is adorned with more features that customers care
about, etc.
• Market skimming: Here, a high price is set because the company is seeking profit
margin, not volume. The only customers who will buy this brand at a high price are
the ones who really want it. Over time, price is lowered to make the brand
accessible to more customer segments.
Regardless of the starting point, skimming or penetration, modifications can occur as the
product matures. For example, as segments develop, different product lines could be priced
differently. As the brand matures, a drop in prices might re-stimulate sales, but if a firm
believes in the brand, sales would also be re-stimulated by maintaining (or raising) prices,
and adding features and benefits. Finally, when the brand has one foot in the ground, prices
often tumble as the firm wants to dump inventory.
TEACHING NOTE: Students can be asked to recall the product life cycle as discussed
in Chapter 8 and discuss the pricing strategies followed in each phase of the life cycle.
Price Fluctuations
Another element of changing prices is a price promotion, through temporary price cuts or
the issuance of coupons. These techniques are reliable in generating a modest short-term
up-tick in sales, but there are also equally predictable side-effects that are not as positive.
The negative side-effects are:
• Competitors can imitate price cuts immediately, so whatever market share increase
in volume a firm was aiming for gets negated.
• Price drops attract disloyal customers.
• Price discounts are often not profitable.
• Price fluctuations have a negative effect on the image of the brand.
Coupons
Coupons are more temporary because they are relevant only to customers who are coupon
clippers. For these customers, it is likely that price is more important to them than brand
image, so the concern of temporary price drops reflecting poorly on the brand is less.
Coupons are big business and especially effective at encouraging new customers to try
current products and brand extensions.
Competitive Strategy and Game Theory
11
Marketers must consider that the competition won’t sit idly while they enjoy increased
sales due to price cuts. Marketers frequently use game theory to try to estimate likely
results of various actions, most frequently price cuts and competitive response. Game
theory is a structured way to think about the behavior of interdependent players, like two
(or more) firms. It encourages each player to think about the broader market, rather than
only optimizing their own needs. While it may seem counter-intuitive at first, and it is
important to avoid collusion or appearances thereof, the point is to find a solution to avoid
price wars. Mutual cooperation can yield even better outcomes than both parties acting
selfishly on their own accord.
Figure 9.18 Price Wars!
The figure illustrates a price-cut game between two firms.
Auctions
Auctions are a mechanism of competition, pricing and distribution. Auctions are an

example of “dynamic pricing”. They give bargaining power to both buyer and seller.
Buyers have strength if they account for a significant portion of the seller’s sales or if they
have multiple options for meeting their procurement needs. Sellers have strengths when
products are in short supply, in high demand, if they have differentiated products, or simply
during good economic times. Prices stay down when there is high supply relative to
demand, intense brand competition, etc. Prices are boosted by controlled supply, high
product value, product differentiation, high buyer dependency on suppliers, high switching
costs, etc.
Their defining characteristic is that the price point is not set or fixed, nor is it even
negotiable between a seller and one buyer. Rather, buyers/bidders compete to obtain the
item. Sellers want to yield high prices and buyers want low prices.
An auction can be comprised of very few bidding participants, as when B2B suppliers bid
for projects (e.g., an architectural design for a new office building, territorial rights for
energy and minerals, etc.). In consumer bidding, the numbers of potential buyers can be
quite large.
Many nonprofit organizations hold sealed auctions, during which attendees at the event
offer to pay a certain sum for a desired item, and there is no knowledge by any bidder what
the other bidders’ price offers are.
In contrast, many large scale consumer bidding systems are open auctions in which all bids
are transparent to all participants, and the bidding proceeds in a sequential manner.
In English auctions, bids increase among players over time. As the price surpasses the
value to a customer, that customer drops out of the auction, and with time, whoever
remains standing pays the last, highest bid, to obtain the item. In contrast, Dutch auctions
begin high and prices drop over time. When the price finally drops low enough that a buyer
is willing to buy the item at that price, the item is sold and the auction is concluded.
10. Managerial Recap
12
▪ Pricing strategies are basically: low, medium, or high. The company and its
costs dictate the lower-bound price. Customers’ willingness to pay marks the
upper-bound. In the middle, price is tweaked up or down relative to
competitors’ prices.
▪ Pricing can be used to shape a brand’s positioning, and can attract different
target segments.
SUGGESTED ANSWERS TO MARKETING PLAN QUESTIONS

Encourage students to download an Excel ® spreadsheet on the book’s website at
www.cengagebrain.com that contains all of these Chapter 17 tables to assist them in
developing a marketing plan. A set of marketing plan questions is provided in the
Instructor’s Manual as a guide to help students develop a marketing plan as they take the
course and work through the chapters. By chapter 17, all of the pieces will have come
together and created a marketing plan if the students work through each section as they
study each chapter. The Marketing Plan tear-out reference card in the student edition of
MM serves as a chapter guide for the students to know when to fill out each section of the
Marketing Plan.
Price: fill in descriptions here:

Given strategic positioning, shall we price high (skim) or low (penetrate); if price low,
conduct internal audit to assure exceed breakeven, if price high, conduct marketing
research to assess
Customers’ price sensitivities: Price1
Shall we consider occasional price discounts: Price2
How might we benefit from pricing differentially to our segments: Price3
Price:
Given our strategic positioning, shall we price high (skim) or low (penetrate)? If we price
low, we conduct internal audit to assure we exceed; if we price high, we conduct
marketing research to assess
Customers’ price sensitivities: Price1
This is an excellent opportunity to have students conduct something similar to a Gabor

Granger study having students conduct a short survey asking a sample how much they
would pay for the product at various prices. Students can then plot the demand curve.
Alternatively, students could do a Brand Price Trade Off analysis through conjoint study
essentially replicating figure 8.10. You could have students do a number of trade-offs with
price in addition to brand (having all of the attributes done in a single trade off or as pairs
of attributes). Figure 8.10 uses the energy Red Bull versus a store brand in the example
plan, the store brand could be the new brand. You could also examine price in conjunction
to amount of caffeine, calories, or carbohydrates or flavor.
Shall we consider occasional price discounts: Price2
13
IF the product is a new product, ask students to how trial can be encouraged. If the product
is being repositioned, the same question applies – how can we get people to try the
repositioned product. IF the product needs a sales boost, what type of discounting should
be offered? Remind students of pricing across the PLC. Get students to think about the
psychological aspects of the different types of discounting, straight price cut, BOGO’s,
coupon, or rebate? What signal does the type of discount send to the customer? The
particular message depends upon the context within which it is offered (new product,
reposition, stimulate). Have students monitor other products in the category and/or if the
product is an existing product its own past.
How might we benefit from pricing differentially to our segments: Price3
Encourage students to think of the different ways to differentially price (price

discriminate). While for many product categories there are segments that can be priced
differently, the challenge is to not alienate the higher paying segment. One way in the case
energy drinks is to offer different package sizes. This could be through either sizes (small
or large) or through offering single units and multiple unit packages (4 packs).
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
1. Lawyers are changing their pay structures. It used to be that they would bill hourly
(top dollar for top lawyers, less experienced helpers had cheaper rates). Now
they’re beginning to price like consultants—per project. Thus they must begin
assessing the value-added to the client firm of the legal expertise and assistance.
What advice would you give a law firm to proceed fairly and profitably?
Answer:
Consider bringing in a consultant (not to consult, heavens) but for a dinner or
something, to just talk about the changes they’ve experienced, and the things
they’ve tried—including what’s worked and what’s not worked. Consultants often
tie their pay to a percentage of profits enhanced by taking their advice. Lawyers are
presumably not going to want to tie their pay to the outcomes of their clients’
situations, so what part of the unfolding process would make better
sense…timeliness of updates?
BUSPROG: Reflective Thinking
Tier II: DISC: Pricing
Tier III: MBA: Knowledge of general business functions
Bloom’s: Analysis
Topic: Background: Supply and Demand
Difficulty: Moderate
2. Why do you think the fashionista segment pays such high prices for designer
clothing with the knowledge that it will be passé after the current season?
Answer:
This is due to people’s insecurity and motivations to be attractive, hip, and
accepted.
14
Tier II: DISC: Customer

Tier III: MBA: Knowledge of human behavior & society
Bloom’s: Analysis
Topic: Customers and the Psychology of Pricing
3. What are the kinds of purchases for which you’ll “spare no expense”? What kinds
of purchases do you want to buy spending as little as possible? What are the major
differences between these two categories that drive your attitude regarding price?
Answer:
Consumer involvement (recall chapter 2).
Tier II: DISC: Customer
Tier III: MBA: Knowledge of human behavior & society
Bloom’s: Analysis
SUGGESTED ANSWERS TO MINI-CASE: INEXPENSIVE LEATHER

PORTFOLIOS
1. Last year they sold 200 at $50, so income was $10,000, minus the variable $10 per
200 (or $2000), leaving $8,000, and minus the fixed costs of $3000, so last year
they made $5000. Assume fixed costs go forward, and variable costs remain at $10
per, then this year, to make (at least $5000), they’d have to see xx units. Why?
In the chapter we saw: profits = [(price – variable costs)] x demand – (fixed costs).
We can put in the pieces we know: $5000 = [($45-$10)] x demand-($3000), or
$8000 = $35 x demand, so solve for demand = $8000/$35 = 228.57 or 229 folios.
BUSPROG: Analytic
Tier III: MBA: Generative thinking
Bloom’s: Application
2. We’d be guessing. If they dropped prices more, they might get more demand.
Raising prices might be more problematic if the students complained last year about
$50.
BUSPROG: Analytic
Tier III: MBA: Strategic & systems skills
Bloom’s: Application
3. We could use some data from the students on this.
15

Tier II: DISC: Strategy
Bloom’s: Analysis
SUGGESTED ANSWERS TO ONLINE MINI-CASE: ESHOCK
As a company that assembles electronics parts to create music players for

consumers (MP3s, car audio systems, etc.), eShock recently was notified that one of its
major suppliers of a central component to its products was raising prices. It faced several
options: (1) take a hit on profits; (2) try to build up business with alternative suppliers; or
(3) raise prices. The company didn’t want to do #1, and #2 seemed daunting, so it
wondered if its customers would tolerate a price hike.
So eShock ran a small-scale experiment in one of its local marketplaces to see what
demand fluctuations would look like for a couple of different prices. In one market, it
raised its price 10%, from $100.
Last quarter sales in the test market ran to 2,000 units. During the test quarter, with
the price increase, units sold fell to 1,500.
1. For most purchases, we expect demand to fall off with an increase in price, but was
this falloff acceptable?
Students could conduct an analysis based upon Figure 9.12.

Assuming that for every $10 increase or decrease in price, results in a 500 unit
change in demand the following results are obtained. Assuming a $55 per unit cost.
This cost was assumed to follow figure 8.12 (cost half of revenue and $55 being half
of $110, it was assumed that the cost increased from $50 to $55 hence the
consideration to cover the cost increase).
Price Qty $55/cost Revenue MR

120 1000 55000 120000
110 1500 82500 165000 1.636364
100 2000 110000 200000 1.272727
90 2500 137500 225000 0.909091
80 3000 165000 240000 0.545455
70 3500 192500 245000 0.181818
69 3550 195250 244950 -0.01818
68 3600 198000 244800 -0.03636
65 3750 206250 243750 -0.09091
60 4000 220000 240000 -0.18182
Calculations to determine marginal revenue (MR) for a price change of 120 to 110
are as follows: Revenue = P x Q or $110 x 1500 = $165,000. Marginal cost is
assumed to be 1/2 price (as in example in figure 8.12), so $55 x 110 = $82,500. To
obtain MR, ($165,000 - $120,000) / ($82,500 - $55,000) = 1.636364. Continue until
16
MR=MC which occurs at between 70 and 69 units, so 70 units. It should also be

noted, that looking at the REVENUE column, that the difference in revenue between
69 units ($244,950) and 70 units ($245,000) is the first occurrence of a negative
amount and is near 0 ($50).
Students could also calculate the elasticity.
E = [P1(Q2 - Q1)] / [Q1(P2 – P1)] = [100(1500 - 2000)] / [2000(110 – 100)] =
E = -2.50, since E > 1.0 demand is elastic. As a cursory observation and without
any further information (students will be making some assumptions), students would
likely say this is not acceptable. After all, a 10% price increase resulted in a 25%
decrease in demand, seems rather drastic.
HOWEVER, if students develop a spreadsheet for analysis, they will quickly find
that demand falls approximately 50 units for each $1 increase in price. (This can be
calculated
P1 Q2 Q1
98 2052 2106 -54 -5292
98 to 99 2106 99 98 1 2106 -2.513
Q1 P2 P1
P1 Q2 Q1
99 2000 2052 -52 -5148
99 to 100 2052 100 99 1 2052 -2.509
Q1 P2 P1
P1 Q2 Q1
100 1500 2000 -500 -50000
100 to 101 2000 110 100 10 20000 -2.500
Q1 P2 P1
P1 Q2 Q1
101 1902 1950 -48 -4848
101 to 102 1950 102 101 1 1950 -2.486
Q1 P2 P1
Students can then develop a worksheet, similar to the one above.
Price Qty $55/cost TR Cost Revenue MR

110 1500 82500 165000
109 1550 85250 168950 2750 3950 1.436364
108 1600 88000 172800 2750 3850 1.40000
107 1650 90750 176550 2750 3750 1.36364
106 1700 93500 180200 2750 3650 1.32727
105 1750 96250 183750 2750 3550 1.29091
104 1800 99000 187200 2750 3450 1.25455
17
103 1850 101750 190550 2750 3350 1.21818

102 1900 104500 193800 2750 3250 1.18182
101 1950 107250 196950 2750 3150 1.14545
100 2000 110000 200000 2750 3050 1.10909
99 2050 112750 202950 2750 2950 1.07273
98 2100 115500 205800 2750 2850 1.03636
97 2150 118250 208550 2750 2750 1.00000
96 2200 121000 211200 2750 2650 0.96364
95 2250 123750 213750 2750 2550 0.92727
94 2300 126500 216200 2750 2450 0.89091
93 2350 129250 218550 2750 2350 0.85455
92 2400 132000 220800 2750 2250 0.81818
91 2450 134750 222950 2750 2150 0.78182
90 2500 137500 225000 2750 2050 0.74545
89 2550 140250 226950 2750 1950 0.70909
88 2600 143000 228800 2750 1850 0.67273
87 2650 145750 230550 2750 1750 0.63636
86 2700 148500 232200 2750 1650 0.60000
85 2750 151250 233750 2750 1550 0.56364
84 2800 154000 235200 2750 1450 0.52727
83 2850 156750 236550 2750 1350 0.49091
82 2900 159500 237800 2750 1250 0.45455
81 2950 162250 238950 2750 1150 0.41818
80 3000 165000 240000 2750 1050 0.38182
79 3050 167750 240950 2750 950 0.34545
78 3100 170500 241800 2750 850 0.30909
77 3150 173250 242550 2750 750 0.27273
76 3200 176000 243200 2750 650 0.23636
75 3250 178750 243750 2750 550 0.20000
74 3300 181500 244200 2750 450 0.16364
73 3350 184250 244550 2750 350 0.12727
72 3400 187000 244800 2750 250 0.09091
71 3450 189750 244950 2750 150 0.05455
70 3500 192500 245000 2750 50 0.01818
69 3550 195250 244950 2750 -50 -0.01818
Students can obviously obtain an exact estimate for demand at any given price by
using the formula for price elasticity and solving for the unknown demand since
elasticity is known (-2.5).
Yet, another alternative is for students to use the following formula:
% change in sales = [Price Sensitivity x (Price 2 – Price1)] / Price1
In this case, with elasticity known to be -2.5 and IF assumed to be stable, one can
calculate the various percent change in sales for a given price change. 25%
corresponds to the difference between 2000 and 1500, so students could develop a
spreadsheet that follows the first analysis with demand changing (increasing) by
25% for each $10 decrease in price.
18
Price Qty $55/cost Revenue Cost Revenue MR

120 1125 61875 135000
110 1500 82500 165000 20625 30000 1.454545
100 2000 110000 200000 27500 35000 1.272727
90 2500 137500 225000 27500 25000 0.909091
80 3125 171875 250000 34375 25000 0.727273
70 3906 214844 273438 42969 23438 0.545455
60 4883 268555 292969 53711 19531 0.363636
50 6104 335693 305176 67139 12207 0.181818
40 7629 419617 305176 83923 0 0
BUSPROG: Analytic
Bloom’s: Evaluation
2. Should eShock raise prices 10%? Why or why not? Should it raise prices higher?
Why or why not?
IF, one follows the principle that Pmax: MR=MC, eShock should if fact not raise
prices, but lower prices substantially. However, there are reasons why eShock
would NOT want to lower prices. Fear of a retaliation by competitors (price war)
and/or erosion of brand image (might be viewed by the public as cutting quality,
etc.,) to name just two.
BUSPROG: Analytic
3. What assumptions are you making?
Several assumptions include: 1. Constant marginal cost. 2. Constant elasticity. 3.

Firm has ability to change production in the short run. 4. Assumes that drop in
demand was strictly and only due to price increase.
Bloom’s: Analysis
© Cengage Learning 2013
19
VIDEO CASE & DISCUSSION QUESTIONS
Washburn Guitars: Well into the Second Century of Supplying Musicians
Washburn Guitars is no newcomer to the music industry, being founded in Chicago,

Illinois in 1883 with its guitar factory being just blocks away from Maxwell Street. In the
early 1920s, Maxwell Street emerged as a hotbed for Delta Blues music as thousands of
African-Americans moved to Chicago from the Mississippi Delta. “There, on Maxwell
Street, as well as in alleyways, city sidewalks, bars, and honky-tonks around the country,
Washburn guitars were embraced as the very embodiment and reflective spirit of the hard-
working musicians who played them as well as the employees who designed and crafted
them. It is the same spirit that guides Washburn to this day.”1
A hundred years after its founding, Washburn Guitars was acquired by Rudy
Schlacher and became known as Washburn International.2 Then in December 2002,
Washburn International announced that it had acquired the assets of U.S. Music
Corporation ⎯ including intellectual property and goodwill ⎯ and that as of January 1,
2003 Washburn would be renamed U.S. Music Corporation.3 In the press release,
Schlacher said,” [t]his acquisition gives us the opportunity to clearly separate the parent
corporation from the name of its producing division Washburn Guitars. It also helps us to
provide more equality and focus on our other producing divisions, which are helping to
provide us with growth in revenues and excitement in the marketplace.” 4
Today, Washburn Guitars is but one of the brands owned by U.S. Music
Corporation, which is based in Mundelein, Illinois ⎯ just north of Chicago. Schlacher, as
President and Chief Executive Officer, oversaw the development of U.S. Music into a
manufacturer and distributor of musical instruments to guitar players and musicians
throughout the world.5 U.S. Music “produces and imports mass-market acoustic and
electric guitars at prices of up to $3,000. One of the  United States’ top guitar makers
(behind Fender, Gibson, and Martin), U.S. Music also makes banjos, mandolins, and basses
under the Washburn name. In addition, it manufactures Parker guitars and basses, Oscar
Schmidt autoharps and ukuleles, Randall amplifiers and Eden bass amplifiers, Vinci guitar
strings, and SoundTech professional audio equipment.”6
From its early days near Chicago’s Maxwell Street and onward into the
contemporary music scene, Washburn has encouraged people to enjoy music and to learn
to play musical instruments. For instance, several years after Schlacher acquired Washburn
Guitars, the company partnered with the International House of Blues Foundation in
developing a national music network to give students an opportunity to learn to play the
guitar. Chicago-area schools and community centers without resources to fund music
education were the first targets of the partnership, with subsequent expansion to other
major American cities. Intended in part to help at-risk youngsters stay out of trouble and
encourage them to complete school, the Washburn/House of Blues partnership trained
instructors and provided guitars, textbooks, sheet music, and videos for the students.7
20
Programs such as the Washburn/House of Blues partnership help to stimulate interest in

and demand for quality guitars at the lower end of the company’s guitar price range.
Lower-cost, quality guitars are but one group of offerings in the Washburn brand.
Washburn sells a wide array of electric guitars in its RX Series, XM series, Hollow Bodies,
and Idol Series; these guitars are priced from a few hundred dollars to just under $1,000.
Washburn’s electric guitars also include a Signature Series featuring artists Paul Stanley,
Greg Tribett, and Nino Bettencourt; price points in the Signature Series range from just
over a $1,000 to several thousand dollars.8 The company also sells a vast array of acoustic
guitars, banjos, and mandolins, which are priced from a few hundred to a couple of
thousand dollars. There is also a premium-priced Signature Series featuring the George
Lynch acoustic guitar, the Sonny Smith banjo, and the Richie Owens mandolin.9 In
addition, Washburn sells basses in its Taurus Series, Force Series, Acoustic/Electric Series,
and Signature Series. Prices for basses in the Taurus, Force, and Acoustic/Electric Series
range from a few hundred dollars to around $1,500. The Stu Hamm Signature Series sells
for just above $1,500 to over $3,000.10
With its product line of stringed instruments selling at various price points,
Washburn Guitars seems well-positioned to continue supplying instrument to musicians at
all levels of the musical-talent spectrum ⎯ and to do so well into the foreseeable future. As
the company states on its website, “Washburn continues to be a consistent leader in
combining design, innovation, and technology to deliver the rich, bold sounds for a vast
musical landscape.”11
1. How does the concept of segmentation pricing relate to Washburn Guitar’s four
different price points?
Answer:
Segmentation pricing refers to the strategy of pricing goods or services differently
for each market segment that is looking for a particular combination of features in a
product. Washburn has four price points: (1) entry level at $349 and below; (2)
intermediate level at $1,000 and below; (3) professional level at $1,000 to $3,000;
and (4) collectors level at $3,000 and above. Each of these price points targets a
different market segment, and each segment desires different features given its
idiosyncratic needs, wants, and desires. The entry level price point targets novice
musicians; the intermediate level targets far more accomplished but still developing
musicians; the professional level is for highly skilled musicians; and the collectors
level is for customers who desire to own fine musical instruments that are typically
associated with specific musical artists.
BUSPROG: Analytic
Tier III: MBA: Strategic and systems skills
Bloom’s: Synthesis
Topic: Price Discrimination, a.k.a. Segmentation Pricing
2. How does Washburn’s four different price points reflect customer wants and needs?
21
Answer:
The four price points are attached to guitars that appeal to different types of
customers/musicians. The entry level price point is targeted toward novice
musicians; people who are learning to play the guitar but still want a good, solid
instrument that is also affordable. The intermediate level provides a finer instrument
that is targeted toward those customers who are more accomplished guitarists. The
professional level is targeted toward those customers who require very durable high
quality instruments because the musical equipment is essential to the users’
livelihood. The collectors’ level is for people who want to own exceptional quality
musical instruments that are typically co-branded with a famous, popular guitarist.
BUSPROG: Analytic
Tier III: MBA: Knowledge of human behavior and society
Bloom’s: Synthesis
3. Are Washburn’s four price points an accurate indicator of differential quality? Why
or why not?
Answer:
Given the range of price points and the market segments toward which these
differentially priced products are targeted, it would be difficult to argue that there
are no quality differences. Clearly, a quality guitar made for a beginner is not going
to be the same product as a quality guitar made for a professional musician. The
materials, level of detail, and craftsmanship of the product are likely to vary across
the price points. However, Washburn strives to produce as high a quality product as
possible at each of the price points given the available technologies while
simultaneously considering customers’ needs, wants, and desires.
BUSPROG: Analytic
Tier III: MBA: Strategic and systems skills
SOURCE: This case was written for this textbook by Michael K. McCuddy, The Louis S. and Mary L.
Morgal Chair of Christian Business Ethics and Professor of Management, College of Business
Administration, Valparaiso University. © 2013 Cengage Learning.
Concepts Illustrated:
• Demand and supply
• Price sensitivity
• Pricing strategies
• Price and quality
• Brands and high prices
• Segmentation pricing
22
1
Anonymous, “The History of Washburn,” Washburn Guitars website,
http://www.ehow.com/about_5040554_history-washburn-guitar.html (accessed June 28, 2011).
2
Anonymous, “U.S. Music Corp. Company Profile,” Yahoo! Finance,
http://biz.yahoo.com/ic/104/104760.html (accessed June 29, 2011).
3
Anonymous, “Washburn International Becomes U.S. Music Corp.,” U.S. Music Corp. website,
http://www.usmusiccorp.com/pr/usm.htm (accessed June 29, 2011).
4
Anonymous, “Washburn International Becomes U.S. Music Corp.,” U.S. Music Corp. website,
http://www.usmusiccorp.com/pr/usm.htm (accessed June 29, 2011).
5
Anonymous, “U.S. Music Corp. Company Overview,” Bloomberg Businessweek,
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=30563815 (accessed June
29, 2011).
6
Anonymous, “U.S. Music Corp. Company Profile,” Yahoo! Finance,
http://biz.yahoo.com/ic/104/104760.html (accessed June 29, 2011).
7
D. Muret, “HOB, Washburn to Help Provide Guitar Lessons,” Amusement Business 111(40) (October 4,
1999): 4.
8
Anonymous, “Electrics,” Washburn Guitars website, http://www.washburn.com/instruments/electrics/
(accessed June 30, 2011).
9
Anonymous, “Acoustics,” Washburn Guitars website, http://www.washburn.com/instruments/acoustics/
(accessed June 30, 2011).
10
Anonymous, “Basses,” Washburn Guitars website, http://www.washburn.com/instruments/bases/ (accessed
June 30, 2011).
11
Anonymous, “The History of Washburn,” Washburn Guitars website,
http://www.ehow.com/about_5040554_history-washburn-guitar.html (accessed June 28, 2011).
23
Another random document with
no related content on Scribd:
The others exchanged bulletins with him. He was, he said, as
rampageous as a long-legged hill two-year-old.
“Mr. Hollister!” Betty quavered.
The engineer was nowhere to be seen. They called, and no answer
came. Betty’s heart dropped like a plummet. She turned upon her
father anguished eyes. They begged him to do something. He
noticed that her cheeks were blanched, the color had ebbed from her
lips. His daughter’s distress touched him nearly. He could not stand
that stricken look.
“I’ll find him,” he promised.
Jammed between two trees, upside down, with one end sticking out
of the snow, they found the wagon bed at the bottom of the ravine.
Forbes spoke to Reed in a low voice, for his ears alone.
“Not a chance in fifty of findin’ him in all this snow, an’ if we do, he’ll
not be alive.”
“Yes,” agreed the ranchman. “If a fellow knew where to look. But no
telling where the snow carried him.”
“Might still be under the wagon bed, o’ course.”
“Might be.”
A low groan reached them. They listened. It came again, from under
the bed of the wagon apparently.
“He’s alive,” Clint called to Betty.
The drooping little figure crouched in the snow straightened as
though an electric current had been shot through it. The girl waded
toward them, eager, animate with vigor, pulsing with hope.
“Oh, Dad. Let’s hurry. Let’s get him out.”
Reed rapped the wagon bed with his knuckles. “How about it,
Hollister? Hurt much?”
“Knocked out,” a weak voice answered. “Guess I’m all right now. Arm
scraped a bit.”
The handle of a shovel stuck out of the snow like a post. Lon worked
it loose, tore the lower part free, and brought it to the bed. He began
to dig. Reed joined him, using his leather gauntlets as spades. It took
nearly half an hour to get Hollister out. He came up smiling.
“Cold berth down there,” he said by way of comment.
“You’re not really hurt, are you?” Betty said.
“Nothing to speak of. The edge of the sled scraped the skin from my
arm. Feels a bit fiery. How about the horses?”
Lon and his employer were already at work on them. Three of the
animals had pawed and kicked till they were back on their feet. The
men helped them back to the road, after unhitching them from the
sled. It was necessary to dig the fourth horse out of a deep drift into
which it had been flung.
Betty sat beside Hollister in the wagon bed on a pile of salvaged
blankets. She felt strangely weak and shaken. It was as though the
strength had been drained out of her by the emotional stress through
which she had passed. To be flung starkly against the chance, the
probability, that Tug was dead had been a terrible experience. The
shock had struck her instantly, vitally, with paralyzing force. She
leaned against the side of the bed laxly, trying to escape from the
harrowing intensity of her feeling. That she could suffer so acutely,
so profoundly, was a revelation to her.
What was the meaning of it? Why had the strength and energy
ebbed from her body as they do from one desperately wounded? It
was disturbing and perplexing. She had not been that way when her
father was shot. Could she find the answer to the last question in the
way she had put it? Desperately wounded! Had she, until hope
flowed back into her heart, been that?
“You’re ill,” she heard a concerned, far-away voice say. “It’s been too
much for you.”
She fought against a wave of faintness before she answered. “I
suppose so. It’s—silly of me. But I’m all right now.”
“It’s no joke to be buried in an avalanche. Hello! Look there!”
Her gaze followed the direction in which he was pointing, the edge of
the bluff above. Two men were looking down from the place where
the slide had started. It was too far to recognize them, but one
carried a rifle. They stood there for a minute or two before they
withdrew.
“Do you think—that they—?”
His grave eyes met hers. “I think they attempted murder, and, thank
God! failed.”
“Don’t say anything to Dad—not now,” she cautioned.
He nodded assent. “No.”
Reed had looked at his watch just before the avalanche had come
down on them. The time was then ten o’clock. It was past two before
the outfit was patched up sufficiently to travel again.
Not till they were safely out of the hills and gliding into Paradise
Valley did the cowman ask a question that had been in his mind for
some time.
“Why do you reckon that slide came down at the very moment we
were in the ravine?”
“I’ve been wonderin’ about that my own se’f. O’ course, it might just
a-happened thataway.” This from Forbes.
“It might, but it didn’t.”
“Meanin’?”
“There was an explosion just before the slide started. Some one
dynamited the comb to send it off the bluff.”
“Are you guessin’, Clint? Or do you know it for a fact?”
“I’m guessing, but I pretty near know it.”
Betty spoke up, quietly, unexpectedly. “So do Mr. Hollister and I.”
The two ranchmen pivoted simultaneously toward her. They waited,
only their eyes asking the girl what she meant.
“While you were digging, Mr. Hollister saw two men up there. He
pointed them out to me.”
“And why didn’t you show ’em to me?” demanded her father.
“What would you have done if I had?” she countered.
“Done! Gone up an’ found out who they were, though I could give a
good guess right now.”
“And do you think they would have let you come near? We could see
that one of them had a rifle. Maybe both had. They didn’t stay there
long, but I was afraid every second that you’d look up and see them.”
The foreman grunted appreciation of her sagacity. “Some head she’s
got, Clint. You’d sure have started after them birds, me like as not
trailin’ after you. An’ you’d sure never have got to ’em.”
The cowman made no comment on that. “He timed it mighty close.
Saw us coming, of course, an’ figured how long it would take us to
reach where we did. Good guessing. An old fox, I’ll say.”
“Same here.”
“He didn’t miss smashing us twenty seconds,” Hollister said. “As it
was, that’s no kind of snowstorm to be out in without an umbrella
and overshoes.”
Betty looked at him and smiled faintly. It was all very well to joke
about it now, but they had missed being killed by a hair’s breadth. It
made her sick to think of that cackling little demon up there on the
bluff plotting wholesale murder and almost succeeding in his plan.
She lived over again with a bleak sinking of the heart that five
minutes when she had not known whether Tug Hollister was dead or
alive.
If he had been killed! She knew herself now. Justin’s instinct of
selfishness had been right, after all. His niggardliness resolved itself
into self-protection. He had been fighting for his own. Even his
jealousy stood justified. She had talked largely of friendship, had
deceived herself into thinking that it was expression of herself she
craved. That was true in a sense, but the more immediate blinding
truth was that she loved Hollister. It had struck her like a bolt of
lightning.
She felt as helpless as a drowning man who has ceased struggling.
CHAPTER XXXII
WITHOUT RHYME OR REASON
It was an upsetting thing, this that had happened to Betty, as

decided and far less explainable than a chemical reaction. It seemed
to her as though life had suddenly begun to move at tremendous
speed, without any warning to her whatever that Fate intended to
step on the accelerator. She was caught in the current of a stream of
emotion sweeping down in flood. Though it gave her a great thrill,
none the less it was devastating.
She wanted to escape, to be by herself behind a locked door, where
she could sit down, find herself again, and take stock of the situation.
To sit beside this stranger who had almost in the twinkling of an eye
become of amazing import to her, to feel unavoidable contact of
knee and elbow and shoulder, magnetic currents of attraction
flowing, was almost more than she could bear.
Betty talked, a little, because silence became too significant. She felt
a sense of danger, as though the personality, the individuality she
had always cherished, were being dissolved in the gulf where she
was sinking. But what she said, what Hollister replied, she could
never afterward remember.
Ruth ran to meet them with excited little screams of greeting. “Hoo-
hoo, Daddy! Hoo-hoo, Betty! Oh, goody, goody!”
Her sister was out of the sled and had the child in her arms almost
before the horses had stopped. “You darling darling!” she cried.
Buxom Bridget came to the door, all smiles of welcome. “And is it
your own self at last, Betty mavourneen? It’s glad we are to see you
this day.”
Betty hugged her and murmured a request. “Better fix up the south
bedroom for Mr. Hollister. He ought to rest at once. I’m kinda tired.”
“Sure, an’ I’ll look after him. Don’t you worry your head about that.
The room’s all ready.”
The girl’s desire to question herself had to be postponed. She had
reckoned without Ruth, who clung to her side until the child’s
bedtime. Pleading fatigue, Betty retired immediately after her sister.
She slipped into a négligée, let her dark hair down so that it fell a
rippling cascade over her shoulders, and looked into the glass of her
dressing-table that reflected a serious, lovely face of troubled youth.
A queer fancy moved in her that this girl who returned her gaze was
a stranger whom she was meeting for the first time.
Did love play such tricks as this? Did it steal away self-confidence
and leave one shy and gauche? She saw a pulse fluttering in the
brown slender throat. That was odd too. Her nerves usually were
steel-strong.
She combed her hair, braided it, and put on a crêpe-de-chine
nightgown. After the light was out and she was between the sheets,
her thoughts settled to more orderly sequence. She could always
think better in the dark, and just now she did not want to be
distracted by any physical evidences of the disorder into which she
had been flung.
How could she ever have thought of marrying Justin? She had spent
a good deal of time trying to decide calmly, without any agitation of
the blood, whether she was in love with him. It was no longer
necessary for her to puzzle over how a girl would know whether she
cared for a man. She knew. It was something in nature, altogether
outside of one’s self, that took hold of one without rhyme or reason
and played havoc with dispassionate tranquillity; a devouring flame
clean and pure, containing within itself all the potentialities of tragedy
—of life, of death, of laughter, love and tears.
And then, as is the way of healthy youth, in the midst of her
puzzlement she was asleep—and with no lapse of time, as though a
curtain had rolled up, she was opening her eyes to a new day.
If Tug had let himself count on long full hours with Betty in the
pleasant living-room, of books and ideas to be discussed together, of
casual words accented to meaning by tones of the voice and flashes
of the eye, he was predestined to disappointment. In the hill cabin
they had been alone together a good deal. She contrived to see that
this never occurred now. Except at table or in the evening with Ruth
and her father, he caught only glimpses of her as she moved about
her work.
Her eyes did not avoid his, but they did not meet in the frank, direct
way characteristic of her. She talked and laughed, joined in the give-
and-take of care-free conversation. To put into words the difference
was not easy. What he missed was the note of deep understanding
that had been between them, born less of a common point of view
than of a sympathy of feeling. Betty had definitely withdrawn into
herself.
Had he offended her? He could not think how, but he set himself to
find out. It took some contriving, for when one will and one will not a
private meeting is not easily arranged.
He was in the big family room, lying on a lounge in the sunshine of
the south window. Ruth had finished her lessons and was on the
floor busy with a pair of scissors and a page of magazine cutouts.
She babbled on, half to herself and half to him. They had become
great friends, and for the time she was his inseparable, perhaps
because he was the only one of the household not too busy to give
her all the attention she craved. Her talk, frank with the egotism of
childhood, was wholly of herself.
“I been awful bad to-day,” she confided cheerfully, almost proudly.
“Gettin’ in Bridget’s flour bin ’n’ ev’ryfing to make a cake ’n’ spillin’ a
crock o’ milk on the floor.”
“I’m sorry,” he said.
“Oh, I been the baddest,” she reflected aloud enjoyably. Then,
unhampered by any theory of self-determination, she placed the
blame placidly where it belonged, “When I said my prayers last night
I asked God to make me good, but he didn’t do it.”
Tug did not probe deeper into this interesting point of view, for Betty
came into the room with an armful of books and magazines.
“Thought from what you said at breakfast you’re hungry for reading,”
she said. “So I brought you some. If you’re like I am, you’ll want to
browse around a bit before you settle down. This Tarkington story is
good—if you haven’t read it. But maybe you like Conrad better.”
Through the open door came a delicious odor of fresh baking from
the kitchen. Out of the corner of his eye Tug took in Ruth. He sniffed
the spicy aroma and audibly sounded his lips.
“My! Cookies!” he murmured.
Instantly Ruth responded to the suggestion. She scrambled to her
feet and trotted out, intent on achieving cookies at once. Betty turned
to follow, but her guest stopped her with a question.
“What’s the Tarkington story about?”
“About a girl who’s hanging on to the outskirts of society and making
all kinds of pretenses—a pushing kind of a girl, who has to fib and
scheme to get along. But he makes her so human you like her and
feel sorry for her.”
“Sounds interesting.” He fired his broadside while he still held her
eyes. “Miss Reed, why am I being punished?”
Into her cheeks the color flowed. “Punished?” she murmured, taken
aback.
Betty had stopped by the table and half turned. He reached for the
umbrella he used as a support and hobbled toward her. “Yes. What
have I done?”
A turmoil of the blood began to boil in her. “The doctor said you were
to keep off your feet,” she evaded.
“Yes, and he said you were to entertain me—keep me interested.”
“That was when you were too sick to read. And I’m busy now. Lots of
work piled up while I was away.”
“Then you’re not offended about anything.”
She had picked up a book from the table and was reading the title.
Her eyes did not lift to his. “What could I be—offended about?” In
spite of the best she could do, her voice was a little tremulous.
“I don’t know. Are you?”
“No.” The lashes fluttered up. She had to meet his gaze or confess
that she was afraid to.
“You’re different. You—”
He stopped, struck dumb. A wild hope flamed up in him. What was it
the shy, soft eyes were telling him against her will? He stood on the
threshold of knowledge, his heart drumming fast.
During that moment of realization they were lost in each other’s
eyes. The soul of each was drawn as by a magnet out of the body to
that region beyond space where the spirits of lovers are fused.
Betty’s hands lifted ever so slightly in a gesture of ultimate and
passionate surrender to this force which had taken hold of her so
completely.
Then, with no conscious volition on the part of either, they were in
each other’s arms, swept there by a rising tide of emotion that
drowned thought.
CHAPTER XXXIII
THE BLUEBIRD ALIGHTS AND THEN TAKES
WING
Tug pushed Betty from him. Out of a full tide of feeling he came to
consciousness of what he was doing.
“I can’t. I can’t,” he whispered hoarsely.
She understood only that something in his mind threatened their
happiness. Her eyes clung to his. She waited, breathless, still under
the spell of their great moment.
“Can’t what?” at last she murmured.
“Can’t ... marry you.” He struggled for expression, visibly in anguish.
“I’m ... outside the pale.”
“How—outside the pale?”
“I’ve made it impossible. We met too late.”
“You’re not—married?”
“No. I’m ... I’m—” He stuck, and started again. “You know. My vice.”
It took her a moment to remember what it was. To her it was
something done with ages ago in that pre-millennial past before they
had found each other. She found no conceivable relationship
between it and this miracle which had befallen them.
“But—I don’t understand. You’re not—”
She flashed a star-eyed, wordless question at him, born of a swift
and panicky fear.
“No. I haven’t touched it—not since I went into the hills. But—I
might.”
“What nonsense! Of course, you won’t.”
“How do I know?”
“It’s too silly to think about. Why should you?”
“It’s not a matter of reason. I tried to stop before, and I couldn’t.”
“But you stopped this time.”
“Yes. I haven’t had the headaches. Suppose they began again.
They’re fierce—as though the top of my head were being sawed off.
If they came back—what then? How do I know I wouldn’t turn to the
drug for relief?”
“They won’t come back.”
“But if they did?”
She gave him both her hands. There were gifts in her eyes—of faith,
of splendid scorn for the vice he had trodden underfoot, of faith
profound and sure. “If they do come back, dear, we’ll fight them
together.”
He was touched, deeply. There was a smirr of mist obscuring his
vision. Her high sweet courage took him by the throat. “That’s like
you. I couldn’t pay you a better compliment if I hunted the world over
for one. But I can’t let you in for the possibility of such a thing. I’d be
a rotten cad to do it. I’ve got to buck it through alone. That’s the price
I’ve got to pay.”
“The price for what?”
“For having been a weakling: for having yielded to it before.”
“You never were a weakling,” she protested indignantly. “You weren’t
responsible. It was nothing but an effect of your wounds. The doctors
gave it to you because you had to have it. You used it to dull the
horrible pain. When the pain stopped and you were cured, you quit
taking it. That’s all there is to it.”
He smiled ruefully, though he was deadly in earnest. “You make it
sound as simple as a proposition in geometry. But I’m afraid, dear, it
isn’t as easily disposed of as that. I started to take it for my
headaches, but I kept on taking it regularly whether I needed it for
the pain or not. I was a drug victim. No use dodging that. It’s the
truth.”
“Well, say you were. You’re not now. You never will be again. I’d—I’d
stake my head on it.”
“Yes. Because you are you. And your faith would help me—
tremendously. But I know the horrible power of the thing. It’s an
obsession. When the craving was on me, it was there every second.
I found myself looking for all sorts of plausible excuses to give way.”
“It hadn’t any real power. You’ve proved that by breaking away from
it.”
“I’ve regained my health from the hills and from my work. That
stopped the trouble with my head. But how do I know it has stopped
permanently?”
Wise beyond her years, she smiled tenderly. “You mentioned faith a
minute ago. It’s true. We have to live by that. A thousand times a day
we depend on it. We rely on the foundations of the house not to
crumble and let it bury us. I never ride a horse without assuming that
it won’t kick me. We have to have the courage of our hopes, don’t
we?”
“For ourselves, yes. But we ought not to invite those we love into the
house unless we’re sure of the foundations.”
“I’m sure enough. And, anyhow, that’s a poor cold sort of philosophy.
I want to be where you are.” The slim, straight figure, the dusky,
gallant little head, the eyes so luminous and quick, reproached with
their eagerness his prudent caution. She offered him the greatest gift
in the world, and he hung back with ifs and buts.
There was in him something that held at bay what he wanted more
than anything else on earth. He could not brush aside hesitations
with her magnificent scorn. He had lost the right to do it. His
generosity would be at her expense.
“If you knew, dear, how much I want you. If you knew! But I’ve got to
think of you, to protect you from myself. Oh, Betty, why didn’t I meet
you two years ago?” His voice was poignant as a wail.
“You didn’t. But you’ve met me now. If you really want me—well,
here I am.”
“Yes, you’re there, the sweetest girl ever God made—and I’m here a
thousand miles away from you.”
“Not unless you think so, Tug,” she answered softly, her dusky eyes
inviting him. “You’ve made me love you. What are you going to do
with me?”
“I’m going to see you get the squarest deal I can give you, no matter
what it costs.”
“Costs you or me?”
The sound in his throat was almost a groan. “Dear heart, I’m torn in
two,” he told her.
“Don’t be, Tug.” Her tender eyes and wistfully smiling lips were very
close to him. “It’s all right. I’m just as sure.”
He shook his head. “I’ve got to play the game,” he said miserably.
Betty talked, pleaded, argued with him, but his point of view
remained unchanged.
A reaction of irritation swept her. It was in part offended modesty.
She had offered herself, repeatedly, and he would not have her. How
did she know that he was giving the true reason? It might be only a
tactful way of getting rid of her.
“Play it then,” she replied curtly, and she walked out of the room
without another look at him.
He was astounded, shocked. He had been to blame, of course, in
ever letting his love leap out and surprise them. Probably he had not
made clear to her the obligation that bound him not to let her tie up
her life with his. He must see her at once and make her understand.
But this he could not do. A note dispatched by Ruth brought back the
verbal message that she was busy. At supper Betty did not appear.
The specious plea was that she had a headache. Nor was she at
breakfast. From Bridget he gathered that she had gone to the
Quarter Circle D E and would stay there several days.
“Lookin’ after some fencing,” the housekeeper explained. “That gir-
rl’s a wonder if iver there was one.”
Tug agreed to that, but it was in his mind that the fencing would have
had to wait if affairs had not come to a crisis between him and Betty.
He had no intention of keeping her from her home. Over the
telephone he made arrangements to stay at the Wild Horse House.
Clint, perplexed and a little disturbed in mind, drove him to town.
Most of the way they covered in silence. Just before they reached
the village, Reed came to what was in his mind.
“You an’ Betty had any trouble, Hollister?”
The younger man considered this a moment. “No trouble; that is, not
exactly trouble.”
“She’s high-headed,” her father said, rather by way of explanation
than apology. “But she’s the salt of the earth. Don’t you make any
mistake about that.”
“I wouldn’t be likely to,” his guest said quietly. “She’s the finest girl I
ever met.”
The cowman looked quickly at him. “Did she go to the Quarter Circle
D E because of anything that took place between you an’ her?”
“I think so.” He added a moment later an explanation: “I let her see
how much I thought of her. It slipped out. I hadn’t meant to.”
Reed was still puzzled. He knew his daughter liked the young fellow
by his side. “Did that make her mad?” he asked.
“No. I found out she cared for me.”
“You mean—?”
“Yes.” The face of the engineer flushed. “It was a complete surprise
to me. I had thought my feelings wouldn’t matter because she would
never find out about them. When she did—and told me that she—
cared for me, I had to tell her where I stand.”
“Just where do you stand?”
“I can’t marry. You must know why.”
Clint flicked the whip and the young team speeded. When he had
steadied them to a more sedate pace, he spoke. “I reckon I do. But
—you’ve given it up, haven’t you?”
“Yes.” He qualified the affirmative. “I’m not the first man who thought
he’d given it up and hadn’t.”
“Got doubts about it, have you?”
“No. I think I’m done with the cursed stuff. But how do I know?” Tug
went into details as to the nature of the disease. He finished with a
sentence that was almost a cry. “I’d rather see her dead than married
to a victim of that habit.”
“What did Betty say to that?”
“What I’d expect her to say. She wouldn’t believe there was any
danger. Wouldn’t have it for a minute. You know how generous she
is. Then, when I insisted on it, she seemed to think it was an excuse
and walked out of the room. I haven’t seen her since. She wouldn’t
let me have a chance.”
“I don’t see as there’s much you could say—unless you’re aimin’ to
renig.” Reed’s voice took on a trace of resentment. “Seems to me,
young fellow, it was up to you not to let things get as far as they did
between you an’ Betty. That wasn’t hardly a square deal for her. You
get her to tell you how she feels to you, an’ then you turn her down. I
don’t like that a-tall.”
Tug did not try to defend himself. “That’s one way of looking at it. I
ought never to have come to the house,” he said with humility.
“I wish you hadn’t. But wishing don’t get us anywhere. Point is, what
are we going to do about it?”
“I don’t see anything to do. I’d take the first train out if it would help
any,” Hollister replied despondently.
“Don’t you go. I’ll have a talk with her an’ see how she feels first.”
Hollister promised not to leave until he had heard from Reed.
CHAPTER XXXIV
BORN THAT WAY
It was impossible for Betty to escape the emotions that flooded her,
but she was the last girl to sit down and accept defeat with folded
hands. There was in her a certain vigor of the spirit that craved
expression, that held her head up in the face of disaster.
At the Quarter Circle D E she was so briskly businesslike that none
of the men would have guessed that she was passing through a
crisis. Except for moments of abstraction, she gave no evidence of
the waves of emotion that inundated her while she was giving orders
about the fencing of the northwest forty or the moving of the pigpens.
When she was alone, it was worse. Her longing for Hollister became
acute. If she could see him, talk with him, his point of view would be
changed. New arguments marshaled themselves in her mind. It was
ridiculous to suppose that a man’s past—one not of his own
choosing, but forced on him—could determine his future so greatly
as to make happiness impossible. She would not believe it. Every
instinct of her virile young personality rebelled against the
acceptance of such a law.
Tug’s persistence in renouncing joy had wounded her vanity. But at
bottom she did not doubt him. He had stood out because he thought
it right, not because he did not love her. In spite of her distress of
mind, she was not quite unhappy. A warm hope nestled in her
bosom. She loved and was loved. The barrier between them would
be torn down. Again they would be fused into that oneness which for
a blessed ten minutes had absorbed them.
Her father drove over in the rattletrap car. Ostensibly he had come to
discuss with her plans for fertilization and crops of the Quarter Circle
D E for the coming season.
“I took Hollister to town this morning. He wouldn’t stay any longer,”
Reed presently mentioned, as though casually.
“Oh! Why wouldn’t he stay?” Betty was rather proud of the
indifference she contrived to convey in her voice.
“Said he didn’t want to keep you away from home.”
“Was he keeping me away?” she asked.
“Seemed to think so. Wasn’t he?”
“I see you know all about it, Dad. What did he tell you?”
“I asked him point-blank what the trouble was between you and him.
He told me.”
A faint crimson streamed into her cheeks. “What did he say it was?”
“He’s afraid. Not for himself, but for you.”
“I think that’s awf’ly silly of him.”
“I’m not so sure about that, Bettykins. If there’s any doubt whatever,
he’d better wait till he’s certain.” He let his arm fall across her
shoulders with a gentleness she knew to be a caress. “Have you
found the man you want, dear? Sure about it?”
She smiled ruefully. “I’m sure enough, Dad. He’s the one that seems
in doubt.” To this she added a reply to a sentence earlier in his
period. “He didn’t say anything to me about waiting. His ‘No, thank
you,’ was quite definite, I thought.”
Clint’s wrath began to simmer. “If he’s got a notion that he can take
or leave you as he pleases—”
Betty put a hand on his arm. “Please, Dad. I don’t mean what I said.
It’s not fair to him. He doesn’t think that at all.”
“There’s no man in the Rockies good enough for you—”
“Are you taking in enough territory?” she teased, her face bubbling to
mirth. “I don’t even know whether you’re including Denver. Justin
came from there, and he’s too good for me.”
“Who says he’s too good?”
“Too perfect, then. I couldn’t live up to him. Never in the world.” Her
eyes fixed on something in the distance. She watched for a moment
or two. “Talking about angels, Dad. There’s the flutter of his engine
fan.”
Reed turned.
Merrick was killing the engine of his runabout. He came across to
them, ruddy, strong, well-kept. Every stride expressed the self-reliant
and complacent quality of his force.
The girl’s heart beat faster. She had not seen him since that
moment, more than two weeks ago, when they had parted in anger.
Her resentment against him had long since died. He had not been to
blame because they were incompatible in point of view and
temperament. It was characteristic of her that she had written to ask
him to forgive her if she had in any way done him a wrong. If she
could, she wanted to keep him for a friend.
He shook hands with them. Reed asked about the work.
“We’ve finished the tunnel and are laying the line of the main canal
between it and the draw where it runs into Elk Creek Cañon. Soon
as the ground is thawed out, I’ll have dirt flying on it,” the engineer
said.
“Lots of water in the dam?” asked the cowman.
“Full up. The mild weather this last week has raised it a lot. There’s a
great deal of snow in the hills. We’ll have no difficulty about a
sufficient supply.”
“Good. You’ve got old Jake Prowers beat.”
“Justin has done a big thing for this part of the country. That’s more
important than beating Mr. Prowers,” Betty said.
“Yes,” agreed Merrick impersonally. “By the way, the old fellow is still
nursing his fancied injuries. He was hanging around the dam
yesterday. I warned him off.”
“Say anything?” asked Clint.

MM 4 4Th Edition Dawn Iacobucci Solutions Manual Full Chapter PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MM 4 4Th Edition Dawn Iacobucci Solutions Manual Full Chapter PDF

Uploaded by

Copyright:

Available Formats

MM 4 4th Edition Dawn Iacobucci

1. Understand the importance of pricing.

▪ Why is Pricing so Important?

1. Why is Pricing so Important?

This section relates to knowledge objective #1

2. Background: Supply and Demand

This section relates to knowledge objective #2

Figure 9.1 Demand Curve (Line)

Figure 9.2 Typical Pricing Strategies

Figure 9.3 Elastic vs. Inelastic Demand

Figure 9.4 Elasticity varies with Customer Segments

The figure shows that elasticity varies with customer segments.

This section relates to knowledge objective #3

There are two issues regarding low prices:

Breakeven for a Good

BE can be computed in terms of number of units sold or monetary values.

BE in terms of unit sold is calculated as follows:

Profit = [(price – variable costs) x demand] – (fixed costs)

BE = (fixed costs) / [(price – variable costs)]

Figure 9.5 Costs for e-Book Reader Business

Figure 9.6 Breakeven for e-Book Reader Business

Figure 9.7 Costs for e-Book Software Service Business

Figure 9.8 Breakeven for e-Book Software Service Business

Figure 9-9 Breakeven for e-Book Software Service Business

BE in terms of revenue is calculated as follows:

BE$ = (fixed costs) / (1 – variable costs per unit price)

If the firm incorporates a profit goal:

Target profit = [(price – variable costs) x demand] – (fixed costs),

Figure 9.10 Breakeven, if Service Fee = $100

This figure shows the breakeven goal in terms of linear functions.

This section relates to knowledge objective #3

Using Scanner Data

Using Survey Data

Figure 9.11 A Conjoint Experiment

5. Units or Revenue; Volume or Profits

This section relates to knowledge objective #4

Figure 9.12 Units vs. Profits

Figure 9.13 Profit Maximization

6. Customers and the Psychology of Pricing

This section relates to knowledge objective #5

• Consumers process absolute numbers and relative numbers differently: Consumers

7. Price Discrimination, a.k.a. Segmentation Pricing

This section relates to knowledge objective #6

Figure 9.14 Price for Brand and Deal Segments

Another completely legitimate and accepted form of segmentation pricing is to offer

Figure 9.15 Pricing with a Quantity Discount

Yield or Demand Management

to enhance revenue and capacity utilization. An advantage of this approach to pricing is

This section relates to knowledge objectives #7

Figure 9.16 Two-Part Tariffs

Figure 9.17 Using Self-Reported Demand Data to Set Prices

This section relates to knowledge objective #8

Pricing and the Product Life Cycle

Competitive Strategy and Game Theory

Figure 9.18 Price Wars!

The figure illustrates a price-cut game between two firms.

Auctions are a mechanism of competition, pricing and distribution. Auctions are an

10. Managerial Recap

SUGGESTED ANSWERS TO MARKETING PLAN QUESTIONS

Price: fill in descriptions here:

Customers’ price sensitivities: Price1

This is an excellent opportunity to have students conduct something similar to a Gabor