Question 1

In retail settings,________ involves charging a constant low price with few or no temporary price discounts.
A)high-low pricing
B)target return pricing
C)cost-plus pricing
D)everyday low pricing (EDLP)
E)penetration pricing

Accepted Answer

Everyday low pricing (EDLP) involves charging a constant low price with few or no temporary price discounts. This strategy aims to attract customers with low prices consistently rather than trying to lure them in with temporary discounts. It can also increase customer loyalty, as customers know they can expect low prices every time they shop.

Question 2

When there is price competition,many companies adopt ________ rather than cutting prices to match competitors.
A)pricing power
B)value-added pricing strategies
C)fixed costs
D)price elasticity
E)image pricing

Accepted Answer

Value-added pricing strategies involve adding extra features or services to a product to justify a higher price, rather than simply lowering the price to compete with rivals. This approach may allow companies to maintain profitability while still offering unique benefits to customers.

Question 3

A company faces fixed costs of $100 000 and variable costs of $8.00\unit.They plan to directly sell their product to the market for $12.00.How many units must they produce and sell to break even?
A)20 000
B)25 000
C)40 000
D)50 000
E)not enough information to calculate

Accepted Answer

B

Question 4

Costs that do not vary with production or sales level are referred to as ________ costs.
A)fixed
B)variable
C)target
D)total
E)unit

Accepted Answer

Fixed costs are costs that do not vary with changes in production or sales level. Variable costs vary with production or sales level. Target costs are a specific cost management technique. Total costs and unit costs are broader terms that can include both fixed and variable costs.

Question 5

Product costs set a(n)________ to a product's price.
A)demand curve
B)experience curve
C)floor
D)ceiling
E)breakeven cost

Accepted Answer

Product costs set a floor to a product's price, meaning that the cost of producing the product determines the minimum price it can be sold for in order for the company to make a profit. The demand curve, experience curve, breakeven cost, and ceiling are all factors that can influence a product's price, but they do not set a limit or minimum like the product costs do.

Question 6

In retail settings,________ involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.
A)high-low pricing
B)target return pricing
C)cost-plus pricing
D)everyday low pricing (EDLP)
E)penetration pricing

Accepted Answer

High-low pricing strategy involves charging higher prices on a regular basis but frequently running promotions to lower prices temporarily on selected items. This creates a sense of urgency in consumers to take advantage of the temporary price cuts and can lead to increased sales for the retailer.

Question 7

Which of the following is NOT an example of value-based pricing?
A)a less expensive version of an established brand
B)re-design of existing brand to offer increased quality at a fair price
C)lesser value offered at rock-bottom prices
D)everyday low prices
E)setting prices based on production costs plus a fair margin

Accepted Answer

Value-based pricing focuses on the perceived value of a product to the customer rather than the cost of producing the product. Option E, which describes setting prices based on production costs plus a fair margin, is an example of cost-plus pricing, not value-based pricing.

Question 8

Rent,electricity and executive salaries are examples of ________ costs.
A)fixed
B)variable
C)total
D)accumulated
E)marketing

Accepted Answer

Fixed costs are those that do not change with respect to the level of output or sales. Rent, electricity, and executive salaries are costs that do not vary with the number of units produced or sold.

Question 9

________ is the amount of money charged for a product or service.
A)Experience curve
B)Demand curve
C)Price
D)Wage
E)Salary

Accepted Answer

The amount of money charged for a product or service is the definition of "price." The other choices are not relevant to this definition.

Question 10

Xbox 360 decides to add a free subscription to XBOX magazine with every game bought in an effort to differentiate its offering from PS3 games.This is an example of ________.
A)good-value pricing
B)add-on pricing
C)product-support pricing
D)value-added pricing
E)cost-based pricing

Accepted Answer

This is an example of value-added pricing, where Xbox 360 is offering additional value or benefits to its customers beyond just the game itself. By adding a free subscription to XBOX magazine with every game purchase, Xbox 360 is differentiating its offering from the competition and creating additional value for customers.

Question 11

Consumer perceptions of the product's value set the ________ for prices.
A)demand curve
B)floor
C)ceiling
D)variable cost
E)image

Accepted Answer

Consumer perceptions of value set the ceiling for prices, meaning that companies cannot charge above what consumers feel the product is worth without losing sales or customers. The demand curve reflects how much consumers are willing to pay at various price points, but it is influenced by the perceived value of the product. The floor represents the minimum price a company can charge in order to cover variable costs and make a profit, but it is not necessarily determined by consumer perceptions of value. Variable cost is the cost of producing the product and is not directly influenced by consumer perceptions of value. Image is important for branding and marketing, but it is not directly related to pricing.

Question 12

________ uses buyers' perceptions of what a product is worth,not the seller's cost,as the key to pricing.
A)Value-based pricing
B)Target return pricing
C)Variable costs
D)Price elasticity
E)Product image

Accepted Answer

Value-based pricing focuses on the perceived value of the product to the buyer, rather than the cost of producing it for the seller. This approach allows the seller to set a price that reflects the value that the buyer places on the product, resulting in greater customer satisfaction and potentially higher profits.

Question 13

The Sydney Opera House charges different prices for seats in different areas of the concert hall,even though the costs of supplying these seats are the same.What is this form of pricing called?
A)location-based pricing
B)price skimming
C)functional pricing
D)customer-segment pricing
E)dynamic pricing

Accepted Answer

Location-based pricing is when different prices are set for the same product or service based on the location they are being sold or delivered to. In this case, the Sydney Opera House charges different prices for seats in different areas of the concert hall despite the fact that the cost of supplying the seats is the same.

Question 14

Price is the only element in the marketing mix that produces ________.
A)revenue
B)variable costs
C)expenses
D)fixed costs
E)stability

Accepted Answer

Price is the element of the marketing mix that directly impacts revenue, as it determines the amount customers are willing to pay for a product or service. The other elements of the marketing mix, such as product, promotion, and place, can indirectly affect revenue through their impact on customer demand and sales, but price is the only element that directly affects the revenue generated from sales.

Question 15

Fixed costs ________ as the number of units produced increases.
A)decrease
B)increase
C)divide in half
D)remain the same
E)increase at a diminishing rate

Accepted Answer

Fixed costs remain the same regardless of the number of units produced. These costs do not vary with the level of production.

Question 16

Costs that vary directly with the level of production are referred to as ________ costs.
A)fixed
B)variable
C)target
D)total
E)unit

Accepted Answer

Costs that vary directly with the level of production are called variable costs. Fixed costs, on the other hand, remain the same regardless of the level of production. Target, total, and unit costs are not relevant to this question.

Question 17

In ________,price is considered along with the other marketing mix variables before the marketing program is set.
A)target return pricing
B)value-based pricing
C)variable costs
D)price elasticity
E)cost-based pricing

Accepted Answer

Value-based pricing considers the perceived value of the product or service by the customer and prices it accordingly, along with other marketing mix variables, before the marketing program is set. Target return pricing, variable costs, price elasticity, and cost-based pricing do not necessarily consider customer value perception in determining the price of the product or service.

Question 18

Measuring ________ can be difficult.A company might conduct surveys or experiments to test this in the different products they offer.
A)target returns
B)fixed costs
C)perceived value
D)breakeven pricing
E)variable costs

Accepted Answer

Measuring perceived value can be difficult as it is subjective and varies from person to person. Surveys and experiments can be conducted to test the perceived value of different products offered by a company. Option A (target returns) can be measured through financial analysis, option B (fixed costs) can be easily identified and quantified, option D (breakeven pricing) can be calculated using a formula, and option E (variable costs) can also be identified and quantified.

Question 19

With ________ pricing,price is set to match consumers' perceptions of product value.
A)variable cost
B)cost-plus
C)cost-based
D)value-based
E)everyday low

Accepted Answer

Value-based pricing is when the price of a product is set according to the perceived value of the product to the customer. It focuses on the customer's willingness to pay, rather than the cost of production or competitors' pricing. This technique is commonly used for luxury products, where a high price tag adds to the prestige of the product.

Question 20

________ pricing involves setting prices based on the costs for producing,distributing and selling the product,plus a target profit.
A)Variable cost
B)Cost-plus
C)Cost-based
D)Good-value
E)Value-added

Accepted Answer

The answer of ________ pricing involves setting prices based on...

Quiz 9: Developing New Products and Managing the Product

In retail settings,________ involves charging a constant low price with few or no temporary price discounts.

When there is price competition,many companies adopt ________ rather than cutting prices to match competitors.

A company faces fixed costs of $100 000 and variable costs of $8.00\unit.They plan to directly sell their product to the market for $12.00.How many units must they produce and sell to break even?

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

Product costs set a(n) ________ to a product's price.

In retail settings,________ involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Which of the following is NOT an example of value-based pricing?

Rent,electricity and executive salaries are examples of ________ costs.

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

Xbox 360 decides to add a free subscription to XBOX magazine with every game bought in an effort to differentiate its offering from PS3 games.This is an example of ________.

Consumer perceptions of the product's value set the ________ for prices.

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

The Sydney Opera House charges different prices for seats in different areas of the concert hall,even though the costs of supplying these seats are the same.What is this form of pricing called?

Price is the only element in the marketing mix that produces ________.

Fixed costs ________ as the number of units produced increases.

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

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

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

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

________ pricing involves setting prices based on the costs for producing,distributing and selling the product,plus a target profit.