Read the overview below and complete the activities that follow. Setting prices is a critical decision in implementing a retail strategy because price is a critical component in customers' perceived value. In setting prices, retailers consider the price sensitivity of customers in their target market, the cost of merchandise and services offered, competitive prices, and ethical restrictions. Retailers need to consider legal and ethical issues when setting pricing. Some of the legal and ethical pricing issues are predatory pricing, resale price maintenance, horizontal price fixing, bait-and-switch tactics, scanned versus posted prices, and deceptive reference prices. Match the example with the pricing issue. PRICING ISSUE EXAMPLE Two major department stores decide to sell named- brand luggage at a discounted price to discourage competition from a specialty luggage store. Predatory pricing An electronics store advertised a 32 inch flat screen television for $399.00. When customers arrived, the store did not have any of those televisions, but had another model for sale at $499.00. Horizontal Price Fixing Promotional coupons being sent by text to customers (who have opted in) within a certain radius of a retailer Bait and Switch A local coffee shop opened up across the street from a national chain and the national chain radically lowered their prices. Scanned versus posted prices Jill picked a dress off the rack for $29.99, so she purchased it. When she got home, she realized that the cashier charged her $31.99 for the dress. Deceptive reference prices The MSRP on a blouse is $50.00. The retailer gets a very special deal, and retails it from the day it is received at $30.00. It prepares in-store signage that says' Regularly $50.00, special price, $30.00" Geofencing