Deck 12: Pricing

Question 1

For customers, value is a function of the product's:

A) quality attributes.
B) price.
C) price and durability.
D) quality and functional attributes.
E) quality relative to the quality of competing brands.

Answer 1

A

Question 2

Use examples to show the differences among value-conscious, price-conscious, and prestige-sensitive customers?

Answer 2

Marketers who understand these characteristics are better able to set pricing objectives and policies. Value-conscious consumers are concerned about both the price and the quality of a product. Recent economic difficulties have altered the purchasing habits of many consumers and business customers, with many more placing value-for-money high on their list of key customer values when making purchasing decisions. Price-conscious consumers strive to pay low prices. Prestige-sensitive consumers focus on purchasing products that signify prominence and status.

Question 3

Which of the following is a requirement for setting pricing objectives?

A) The objectives should be short-term oriented.
B) There should be only one pricing objective.
C) An evaluation of competitors' prices should be made.
D) The cost structure should be identified.
E) The objectives should be explicitly stated.

Answer 3

E

Question 4

Discuss how buyers' perceptions might influence marketers.

Question 5

Give examples of perceived value.

Question 6

Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm's primary pricing objective is:

A) status quo.
B) profit.
C) survival.
D) market share.
E) recovery.

Question 7

Discuss the advantages of demand based pricing over cost based pricing.

Question 8

What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?

A) Return on investment
B) Cash flow
C) Profit
D) Status quo
E) Survival

Question 9

A market share objective:

A) is not recommended when sales for the total industry are declining.
B) is not especially useful when sales for the total industry are increasing.
C) is not especially useful when sales for the total industry are flat.
D) is useful primarily in an industry where total sales are increasing.
E) can be used effectively whether total industry sales are rising or falling.

Question 10

Explain what is meant by price elasticity of demand.

Question 11

When marketers emphasize price as an issue and match or beat the prices of other companies, they are using:

A) price competition.
B) Non-price competition.
C) comparative pricing strategies.
D) demand-based pricing.
E) supply-based pricing.

Question 12

Based on stage 7 of stages for establishing pricing assess the effectiveness of different price setting strategies.

Question 13

The three primary bases for developing prices are:

A) profit, demand, and competition.
B) supply, demand, and marketing objectives.
C) demand, competition, and cost.
D) markup, cost, and cost-plus.
E) negotiation, periodicity, and randomness.

Question 14

When establishing prices, a marketer's first step is to:

A) determine demand.
B) develop pricing objectives.
C) select a pricing policy.
D) evaluate competitors' prices.
E) determine a pricing method.

Question 15

Use the Virgin experiences detailed in the Topical Insights Box to explore what is market orientated pricing?

Question 16

Marketers must take steps to make sure that the pricing objectives they set are consistent with the organization's ____ objectives and ____ objectives.

A) advertising; marketing
B) overall; marketing
C) marketing; promotional
D) overall; promotional
E) overall; revenue

Question 17

Maintaining or increasing market share:

A) can be achieved even if industry sales are flat or decreasing.
B) is an infrequently used pricing objective in most industries.
C) depends upon the overall growth of the total industry.
D) is a profit-related objective based on price.
E) is directly tied to leading an industry in product quality.

Question 18

Which of the following pricing objectives sets prices to recover cash as quickly as possible?

A) Market share
B) Profit
C) Cash flow
D) Return on investment
E) Product quality

Question 19

Marketers improve their ability to establish prices appropriately when:

A) there is non-price competition.
B) they know prices charged for competing brands.
C) their products are of better quality than the competition's.
D) the main objective is image building.
E) using psychological pricing.

Question 20

Which of the following statements about non-price competition is false ?

A) Companies that use non-price competition do not need to keep track of their competitor's prices.
B) A company must be able to distinguish its brand through some unique feature in order to successfully engage in non-price competition.
C) A firm using non-price competition can build loyalty to both its company and its products.
D) When using non-price competition, a company should promote the distinguishing characteristics of its brand.
E) Buyers must view the distinguishing characteristics of a product offered through non-price competition as being important.

Question 21

For most products, the quantity demanded goes up as the price goes down.

Question 22

Generally, customers are most likely to rely on the price-quality association when:

A) they cannot judge the quality of the product for themselves.
B) the product is a well-known brand.
C) customers can judge the product's quality for themselves.
D) the product is purchased through the use of the Internet.
E) products are being purchased from well-established retailers that are familiar to customers.

Question 23

To maintain market share and revenue in an increasingly price-sensitive market, companies have focused on quality, used labor-saving technologies, and used efficient manufacturing processes. These tactics have provided gains in productivity that have translated into ____ for the consumer.

A) higher costs for the company and higher prices
B) higher costs for the company and lower prices
C) lower costs for the company and lower prices
D) lower costs for the company and higher prices
E) no change in the costs for either the company or

Question 24

Price competition is a very flexible marketing strategy.

Question 25

Price is the most easily adjusted ingredient in the marketing mix.

Question 26

Marginal analysis involves examining:

A) what happens to a firm's costs and revenues when production is changed by one unit.
B) the extra revenue produced by the sale of one more product.
C) the extra cost incurred by the production of one more unit.
D) the difference between marginal revenue and total revenue.
E) the difference between marginal cost and total cost.

Question 27

Which factor is least likely to affect pricing decisions?

A) Competitive prices
B) Legal and regulatory issues
C) Organizational and marketing objectives
D) Customers' interpretation and response
E) Shifting stock values

Question 28

Price is the value that is exchanged for products in a marketing transaction.

Question 29

____ consumers are concerned about both the price and the quality aspects of a product.

A) Price-conscious
B) Prestige-sensitive
C) Value-conscious
D) Price-conscious and prestige-sensitive
E) Quality-conscious

Question 30

When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on:

A) internal reference prices.
B) symbol prices.
C) high value products.
D) discounted reference prices.
E) external reference prices.

Question 31

A measure of sensitivity of demand in relation to changes in price is:

A) a demand curve.
B) a prestige graph.
C) marginal analysis.
D) price elasticity of demand.
E) quantity elasticity.

Question 32

What does the demand curve for a prestige product look like?

A) It is a straight line where the quantity sold continues to increase as the price of each product increases.
B) It is a curve where the highest and the lowest prices yield the greatest quantity sold and mid-range prices produce the fewest sales.
C) It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases.
D) It forms a straight vertical line because of the prestige of the product, and quantity sold will remain stable regardless of the price.
E) It slopes from left to right at a very mild slope; that is, as quantity increases, price decreases slowly.

Question 33

The purpose of the pricing concept is to quantify and express the value of items in a market exchange.

Question 34

Because buyers have unlimited purchasing power, they do not have to allocate it to the most desired products.

Question 35

At the breakeven point,

A) the money a company brings in from selling products equals the amount spent producing the products.
B) the total fixed costs are exactly equal to the total variable costs.
C) profits are exactly equal to the difference between revenue and total variable costs.
D) the marginal revenue of a product is exactly equal to the marginal cost of producing one more unit.
E) the marginal cost curve and the average cost curve will be identical for a particular product.

Question 36

A company trying to position itself as value oriented should not:

A) set prices that are reasonable relative to product quality.
B) use premium pricing for its products.
C) set prices similar to those of its competitors.
D) use any advertising for its products.
E) consider costs when determining the price of products.

Question 37

Buyers who focus on purchasing products that signify prominence and status are:

A) value-conscious consumers.
B) price-conscious consumers.
C) socially elite buyers.
D) prestige-sensitive buyers.
E) brand aware consumers.

Question 38

If a company provides price differentials that harm competition by giving one or more buyers a competitive advantage, it is committing:

A) price discrimination.
B) price-consciousness.
C) functional discounting.
D) price competition.
E) price fixing.

Question 39

If demand is elastic, a change in price causes a parallel change in total revenue.

Question 40

Non-price competition emphasizes distinctive product features, service, and product quality.

Question 41

Periodic discounting is often predictable so consumers wait to make purchases until they can benefit from the price reductions.

Question 42

Transfer pricing involves the sale of a product to another unit within the same organization.

Question 43

The more experience the customer has with a product, the more he or she relies on external reference prices.

Question 44

Cost-plus pricing is popular in periods of rapid inflation.

Question 45

Pricing decisions can be based on determining whether the demand for a product is price elastic or price inelastic.

Question 46

Noncumulative discounts are one-time reductions in prices based on the number of units purchased, the dollar value of the order, or the product mix purchased.

Question 47

The objective of maintaining or increasing market share depends on growth in industry sales.

Question 48

Differential pricing means different buyers pay different prices for the same quality and quantity of product.

Question 49

Ideally, pricing decisions have little relation to a firm's marketing objectives.

Question 50

The idea behind prestige demand is that many prestige products seem to sell better at a high price than at a low price.

Question 51

Knowing the target market's evaluation of price allows the marketer to know how much emphasis to place on price and how to price a product relative to competition.

Question 52

Penetration pricing and price skimming of the market are two types of new-product pricing.

Question 53

Marketers that evaluate competitors' prices do so to set their own prices slightly below those of competitors.

Question 54

Customers always interpret a higher price to mean higher quality.

Question 55

Pricing objectives should be considered overall goals to aid the organization in its long-range plans.

Question 56

The use of price skimming discourages competitors from entering a market.

Question 57

The six stages of setting prices should always be followed if prices are to be set correctly.