Deck 11: Pricing

Question 1

Cost-based pricing relies on consumer perception of value to drive pricing.

Answer 1

False

Question 2

Demand and consumer value perceptions set the floor for prices.

Answer 2

False

Question 3

An upward-sloping experience curve is beneficial for a company.

Answer 3

False

Question 4

Value-based pricing uses the company's perception of value.

Question 5

Using value-based pricing,a marketer would not design a product and marketing program before setting the price.

Question 6

Markup pricing is popular because prices tend to be similar and price competition is thus minimized.

Question 7

Product costs set a floor to the price; consumer perceptions of the product's value set the ceiling.

Question 8

Value-based pricing is being used when costs vary directly with the level of product.

Question 9

Overhead cost is another term for fixed cost.

Question 10

A break-even chart shows the total cost and total revenue expected at various sales volume levels.

Question 11

Under pure competition,the market consists of few buyers and sellers trading in a uniform commodity,such as wheat,copper,or financial securities.

Question 12

EDLP is very similar to high-low pricing.

Question 13

Average unit cost increases with accumulated production experience.

Question 14

The simplest pricing method is cost-plus pricing,which involves adding a standard markup to the cost of the product.

Question 15

When faced with price competition,cutting prices is often not the best answer.

Question 16

Prices have a direct impact on a company's bottom line.

Question 17

Target pricing is pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met.

Question 18

Value-based pricing is the reverse of cost-based pricing.

Question 19

Target profit pricing is used when a firm tries to determine the price at which it will break even or make the profit it is seeking.

Question 20

Environmental elements are categorized as external factors that affect pricing decisions.

Question 21

Under oligopolistic competition,the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.

Question 22

A product's price __________ is set by the product costs.

Question 23

The buyers' perceptions of what a product is worth,not the seller's cost,is the key to ________ pricing.

Question 24

Consumers will base their judgments of a product's value on the prices that competitors charge for similar products.

Question 25

With market-penetration pricing,the company makes fewer but more profitable sales.

Question 26

Trade-in allowances are most common in the automobile industry but are also given for other durable goods.

Question 27

Amos Zook,an Amish farmer,sells organically grown produce.Often he will trade some of his produce for dairy products produced by other Amish farmers.The sum of the values that others exchange is called a ________.

Question 28

The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged.In normal cases,the higher the price,the lower the demand.

Question 29

________ is the amount of money charged for a product or service

Question 30

________ is an important element in the marketing mix.It is the only element that does not represent costs

Question 31

If demand changes greatly with price,we say the demand is inelastic.

Question 32

Wherever possible,a company should consider ways to meet higher costs or demand by raising prices.

Question 33

Price is the only element in the marketing mix that produces ________ ; all other elements represent costs.

Question 34

TurboTAx offers an entire line of personal tax software,including Basic,Standard,Premier,Home & Business,and TurboTax 20,priced at $19.99,$39.99,$69.99,$99.99,and $129.99,respectively.This is product line pricing.

Question 35

The more elastic the demand,the more it pays for the seller to raise the price.

Question 36

Under monopolistic competition,the market consists of few buyers and sellers who trade over a range of prices rather than a single market price.

Question 37

In a pure monopoly,the market consists of one seller.

Question 38

Marketers may learn a few simple rules that apply equally to all price-demand relationships.

Question 39

The _______ for prices is how consumer perceive a product's value.

Question 40

__________is a customer-oriented approach to pricing.

Question 41

A company that charges a constant,everyday low price with few or no temporary price discounts uses ________.

Question 42

Rent,electricity and executive salaries are examples of ________.

Question 43

With ________,price is set to match consumers' perceptions of product value.

Question 44

Costs that vary directly with the level of production are referred to as ________.

Question 45

When prices are based on the costs for producing,distributing,and selling the product plus a fair rate of return for the company's efforts and risks,this is called __________ pricing.

Question 46

Costs that do not vary with production or sales level are referred to as ________.

Question 47

When McDonald's and other fast-food restaurants offer "value menu" items at surprisingly low prices,they are using ________.

Question 48

Some companies offer just the right combination of quality and good service at a fair price.This is called a ________ strategy.

Question 49

Underpriced products sell very well,but they produce less revenue than they would have if prices were raised to the ________ level.

Question 50

Trader Joe's offers an assortment of exclusive gourmet products at impossibly low prices.These prices are not limited-time offers or special discounts.Instead,they reflect Trader Joe's ________ strategy.

Question 51

Measuring ________ can be difficult.A company might conduct surveys or experiments to test this in the different products they offer.

Question 52

Consumers who have less time and patience to spend watching for supermarket specials and clipping coupons would most likely prefer ________.

Question 53

Jimmy's Hardware,an independent local retailer,is losing business to Walmart.This is most likely because he cannot match Walmart's pricing strategy of ________.

Question 54

Department stores such as Sears and The Bay practise _________ by having frequent sales days,early-bird savings,and bonus earnings for store credit-card holders.

Question 55

A company's sales will ________ if a seller charges ________ than the buyer's perceived value.

Question 56

Because there are so many discount florists in the community,Bill's Bouquets decides to adopt ________ rather than cutting prices to match competitors.

Question 57

When features and services are attached to an offer to support charging higher prices,a company is using ________________.

Question 58

In ________,price is considered along with the other marketing mix variables before the marketing program is set.

Question 59

Value-based pricing is the reverse process of ________.

Question 60

Fixed costs ________ as the number of units produced increases.

Question 61

Many people feel that ________ pricing is fairer to both buyers and sellers.Sellers earn a fair return on their investment but do not take advantage of buyers when buyers' demand becomes great.

Question 62

When a downward-sloping experience curve exists,a company should usually ________ the selling price of that product in order to bring in higher revenues.

Question 63

One reason ________ remains popular is that sellers are more certain about costs than about demand

Question 64

Lawyers,accountants,and other professionals typically price by adding a standard markup for profit.This is known as ________

Question 65

Which of the following is a cost-based approach to pricing?

A) Value-based pricing
B) Going-rate pricing
C) Target return pricing
D) Good value pricing
E) EDLP

Question 66

As production workers become better organized and more familiar with equipment,the average cost per unit decreases.This is called the ________.

Question 67

A company building its pricing strategy around the experience curve would be likely to ________.

Question 68

With a higher volume of product,most companies can expect to ________.

Question 69

________ are the sum of the ________ and ________ for any given level of production

Question 70

The company designs what it considers to be a good product,totals the expenses of making the product,and sets a price that adds a standard markup to the cost of the product.This approach to pricing is called ________.

Question 71

The experience curve reveals that ________

Question 72

Price competition is minimized when all firms in an industry use which pricing method?

A) Variable pricing
B) Markup pricing
C) Elasticity pricing
D) Value-added pricing
E) Value-based pricing

Question 73

The simplest pricing method is ________.

Question 74

________ pricing works only if that price actually brings in the expected level of sales.

Question 75

Break-even pricing,or a variation called ________,is when the firm tries to determine the price at which it will break even or make the profit it is seeking.

Question 76

SRAC is the acronym for which concept related to costs at different levels of production?

A) Strategic reasoning and costs
B) Short-run accounting costs
C) Short-run average cost
D) Strategic rights and company
E) Strategic revenues and costs

Question 77

Which of the following is a risk a company takes when building a strategy around the experience curve?

A) Competitors will likely not be able to meet the company's price cuts.
B) Existing technologies are likely to become more expensive as the company expands.
C) The method does not take competitors' prices into account.
D) The method may cause consumers to become frustrated with changing prices.
E) Aggressive pricing may give the product a cheap image, causing customers to lose interest.

Question 78

Target profit pricing uses the concept of a ________,which shows the total cost and total revenue expected at different sales volume levels.

Question 79

The long-run average cost curve (LRAC)helps the producer understand which of the following?

A) It shows how large a business should be, to be most efficient.
B) It shows how competitors arrive at their prices.
C) It demonstrates the influence of external factors.
D) It shows how pricing should be customer-driven.
E) It demonstrates how break-even analysis should work.

Question 80

The break-even volume is the point at which ________.