Deck 13: Price and Customer Value

Question 1

The pricing approach where prices are set based on what competitors are charging is called the:________

A) demand-oriented approach.
B) value-oriented approach.
C) competitor-oriented approach.
D) cost-oriented approach.

Answer 1

C

Question 2

Fixed costs do not vary according to the number of units of product made or service sold. Which of the following is not an example of a fixed cost?

A) Office buildings.
B) Salaries.
C) Energy costs.
D) Cars and other vehicles.

Answer 2

C

Question 3

With the ________to pricing, the firm sets prices according to how much customers will pay. This approach is prevalent in marketing services, but again could be used in B2B or consumer marketing contexts.

A) demand-oriented approach .
B) cost-oriented approach .
C) Price differentiation.
D) Price fixing.

Answer 3

A

Question 4

This is when a product or service is offered together with an offering to make the price look more reasonable______

A) Odd-number pricing.
B) Pure price bundling.
C) Product pricing.
D) Price differentiation.

Question 5

Prices are based on customer location (e.g. pharmaceutical companies sell their prescription drugs at different prices in different countries). This pricing approach for business-to-business is known as:_______________

A) value-in-use pricing
B) geographical pricing
C) negotiated pricing
D) discount pricing

Question 6

___________ act as cues by indicating to a potential customer that there is a bargain to be had.

A) Price surplus.
B) Sale signs.
C) Odd-number pricing.
D) Relative price.

Question 7

The setting of prices depends on a number of factors. Which of the following is not a factor?

A) How price affects demand.
B) How sales revenue is linked to price.
C) How cost is linked to price.
D) All of the options given above are correct.

Question 8

For emergency purchases such as funeral services or prescription pharmaceutical products for life-threatening diseases, when companies do set charges that are perceived to be unfair, they are liable to claims of __________.

A) price collusion
B) price war
C) price bundle
D) price gouging

Question 9

_____ refers to setting a price low relative to competition to gain market share.

A) Penetration pricing
B) Price skimming
C) Economy pricing
D) Bundling

Question 10

This term is associated with the winning bidder obtains an unprofitable contract that she or he is duty-bound to deliver because their bid price was set so low so that they won the contract.

A) Winner's curse.
B) Bidding curse.
C) Pitch chase.
D) Black bid.

Question 11

Pricing refers to 'the amount of money expected, required, or given in payment for something; an unwelcome experience or action undergone or done as a condition of achieving an objective; decide the amount required as payment for something offered for sale; and discover or establish the price of something for sale'.

Question 12

Fixed costs are costs that vary according to the number of units of product made or service sold. For instance, in the pharmaceutical market this would include plastic bottles to place the pills into.

Question 13

Determining costs and prices is easier when organizations are split into separate profit centres selling onto other divisions within the same company-especially when these adopt inefficient transfer pricing mechanisms.

Question 14

When customers assess prices, they estimate value using pricing cues, because they do not always know the true cost and price of the item that they are purchasing.

Question 15

Proposition Quality defined as the standard of something as measured against other things of a similar kind; the degree of excellence of something; general excellence of standard or level; a distinctive attribute or characteristic possessed by someone or something.

Question 16

Odd-Number pricing is when marketers highlight their prices to customers by bundling other products and services into an offering to make the price look more reasonable.

Question 17

A cost-oriented approach allows customers to pay whatever they wish and is based on value and demand considerations.

Question 18

Negotiated pricing is when prices are set according to specific agreements between a company and its clients or customers.

Question 19

Discount pricing focuses our attention upon customer perceptions of product attributes and away from cost-oriented approaches.

Question 20

When launching new offerings, organizations tend to adopt either penetration pricing or the price skimming strategy. In the first approach, they charge a lower price to generate a large volume of sales and recoup their research and development (R&D) investment (hence penetration pricing).

Question 21

A study designed to understand the relationship between price and quality when price information is available online found that US consumers believe that higher prices correspond to higher quality for _______________but less likely to perceive this with soft goods (e.g. foodstuffs).

A) non-durables
B) consumer durables
C) consumables.
D) Fast-moving consumer goods

Question 22

This is a notion is where the winning bidder obtains an unprofitable contract that she or he is duty-bound to deliver because their bid price was set so low so that they won the contract.

A) Winner's blessing.
B) Loser's blessing.
C) Winner's curse.
D) Loser's curse.

Question 23

Which of the following is not the pricing approach used in the business-to-business setting?

A) Competitor-oriented approach.
B) Geographical approach.
C) Negotiated approach.
D) Value-in-use approach.

Question 24

This pricing approach is used when the firm sets prices according to how much customers are prepared to pay:__________

A) Demand-oriented approach.
B) Value-oriented approach.
C) Cost-oriented approach.
D) Competitor-oriented approach.

Question 25

____________, including both working capital and fixed capital, also affect prices, with lower prices tending to require higher sales volume targets to be set with correspondingly higher levels of investment.

A) Fixed costs
B) Variable costs
C) Promotion costs
D) Investment costs

Question 26

In reality, when setting prices, an organization trades off the different approaches by considering all the following factors except:________

A) competition.
B) cost.
C) satisfaction.
D) value.

Question 27

__________involves setting low prices based on cost and competition considerations. This tactic is used in supermarkets to price price-sensitive items.________

A) Loss-leader pricing.
B) Promotional pricing.
C) List pricing.
D) Segmentation pricing.

Question 28

__________ uses customers' previous purchase transaction histories and data, often recognizing repeat and new consumers from the data, to offer them different prices.________

A) Behaviour-based pricing.
B) Falsereemium pricing.
C) List pricing.
D) Segmentation pricing.

Question 29

There are differing views on how it should be calculated. In marketing terms, value refers to the quality of what we get for what we pay. It is often expressed as: