Question 1

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as
A) target return on sales.
B) industry profit.
C) unit volume.
D) market share.
E) profit.

Accepted Answer

Market share is the ratio of a firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself).

Question 2

Three different pricing objectives relate to a firm's profit. One objective, known as ________, is common in many firms because the targets can be set and performance measured quickly though sometimes criticized for its short-term orientation.
A) managing for long-run profits
B) target return
C) break-even strategy
D) maximizing current profit
E) minimizing risk

Accepted Answer

Maximizing current profit is a pricing objective that focuses on achieving the highest possible profit in the short term, allowing for quick performance measurement and target setting.

Question 3

An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to
A) decrease revenue but increase profit.
B) increase profit by increasing revenue.
C) maintain market share.
D) decrease market share.
E) increase efficiency.

Accepted Answer

The firm likely reduced its price to match the competitor's price to maintain its market share and prevent losing customers to the competitor.

Question 4

A target return profit pricing objective implies that a company chooses to
A) set targets whose performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.

Accepted Answer

A target return profit pricing objective involves setting a specific profit goal, which is often determined by the company's board of directors.

Question 5

If the CEO of the Clorox Co. were to say, "We want to control 40 percent of the household bleach category within the next five years," he would have set a ________ pricing objective.
A) profit
B) sales
C) unit volume
D) market share
E) social responsibility

Accepted Answer

The CEO's statement is focused on achieving a specific percentage of the market, which is a market share objective.

Question 6

A maximizing current profit pricing objective implies that a company chooses to
A) set targets for which performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.

Accepted Answer

A maximizing current profit pricing objective focuses on setting targets that allow for quick performance measurement, often prioritizing immediate financial gains over long-term strategies like market share growth or research investment.

Question 7

Three different objectives relate to a firm's profit, each of which have different implications for pricing strategy. One of these is
A) accumulating profits.
B) reinvesting profits.
C) redistributing profits.
D) maximizing gross margin.
E) achieving a target return.

Accepted Answer

Achieving a target return is a specific profit objective that involves setting prices to ensure a certain level of profitability, often expressed as a percentage of sales or investment.

Question 8

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.
A) maximizing current profit
B) managing for long-run profits
C) target return
D) break-even strategy
E) minimizing risk

Accepted Answer

Target return is a pricing objective where a firm sets a specific profit goal, often determined by its board of directors.

Question 9

Market share is the ratio of the ________ to those of the industry, including the firm itself.
A) target return on sales
B) marginal profit of the firm
C) firm's sales revenues or unit sales
D) marketing expenses of the firm
E) profits of the firm

Accepted Answer

Market share is calculated by dividing the firm's sales revenues or unit sales by the total sales revenues or unit sales of the entire industry, including the firm itself.

Question 10

Companies often pursue a market share objective when
A) industry sales are flat or declining.
B) profits are increasing.
C) industry sales are beginning to rise.
D) there is a sudden increase in production costs.
E) stockholders are seeking higher dividends.

Accepted Answer

Companies pursue a market share objective when industry sales are flat or declining to capture a larger portion of the market and ensure long-term survival and competitiveness.

Question 11

Unit volume as a pricing objective refers to
A) the quantity of products to be produced or sold.
B) the ratio of price per unit to unit variable cost.
C) the ratio of production costs to the minimum sales price that would still generate profit.
D) the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry.
E) variable cost expressed on a per unit basis for a product.

Accepted Answer

Unit volume as a pricing objective focuses on the quantity of products to be produced or sold, aiming to maximize the number of units sold.

Question 12

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.
A) increase the commitment to social responsibility
B) increase dollar sales revenue
C) decrease unit volume while maintaining price
D) increase research and development funding for new product line extensions
E) continue with previous policies that seem to be working

Accepted Answer

Increasing dollar sales revenue can lead to higher market share and profit, as it focuses on expanding sales and potentially capturing a larger portion of the market.

Question 13

A negative aspect of selecting unit volume as a pricing objective is that
A) production often cannot keep up with demand.
B) there are increased carrying costs with extensive inventories.
C) if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.
D) it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources.
E) it always positively correlates with a sales revenue objective.

Accepted Answer

If price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits, as lowering prices to increase volume may reduce the overall profit margin.

Question 14

Which of the following statements regarding a market share pricing objective is most accurate?
A) A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits).
B) Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits.
C) Selecting market share as a pricing objective is particularly effective if industry sales are growing.
D) An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions.
E) Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle.

Accepted Answer

A market share objective can be a primary goal or a means to achieve other goals like increased sales or profits.

Question 15

Some firms pursue a ________ pricing objective, perhaps using discounting to generate cash to stave off bankruptcy.
A) market share
B) survival
C) sales revenue
D) single product line
E) profit

Accepted Answer

The survival pricing objective is used by firms to generate enough cash flow to continue operations and avoid bankruptcy, often through discounting strategies.

Question 16

Which of these statements regarding sales goals is most accurate?
A) For marketing managers, sales revenue or unit sales objectives can be easily translated into meaningful targets for a product line or brand.
B) Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line.
C) Very often, cutting prices results in a decrease in market share.
D) Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with few competitors.
E) An advantage of increasing unit volume sales is that it always results in an increase in profits.

Accepted Answer

Marketing managers can translate sales revenue or unit sales objectives into meaningful targets for a product line or brand, making it a practical approach for setting sales goals.

Question 17

Managing for long-run profits as a pricing objective implies that a company will
A) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
B) maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.
C) invest excess cash in bonds and certificates of deposit in order to counteract any inflationary economic changes in the future.
D) reinvest all profits into market research or product research rather than returned to shareholders.
E) drop all products, product lines, or divisions that cannot maintain their pricing goals.

Accepted Answer

Managing for long-run profits involves sacrificing short-term profits to gain a larger market share, which can lead to greater profitability in the future.

Question 18

Several pricing objectives relate to a firm's profit. In one known as ________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.
A) maximizing current profit
B) target return
C) break-even strategy
D) minimizing risk
E) managing for long-run profits

Accepted Answer

Managing for long-run profits involves sacrificing immediate profits to gain a larger market share, with the expectation that this will lead to greater profitability in the future.

Question 19

A firm may forgo a higher profit on sales and follow which of the following pricing objectives because it wants to recognize its stakeholder obligations?
A) profit
B) market share
C) unit volume
D) survival
E) social responsibility

Accepted Answer

A firm may choose social responsibility as a pricing objective to fulfill its obligations to stakeholders, such as customers, employees, and the community, even if it means sacrificing higher profits.

Question 20

RadioShack, an electronics retail chain, couldn't compete with the prices offered by other retailers. The company enacted price matching programs and promoted large discounts on its merchandise to raise cash and to try to stave off bankruptcy. The best pricing objective at this point for RadioShack most likely was
A) profit.
B) market share.
C) unit volume.
D) survival.
E) social responsibility.

Accepted Answer

RadioShack's actions to match prices and offer large discounts indicate a focus on generating immediate cash flow to avoid bankruptcy, which aligns with a survival pricing objective.

Quiz 13: Building the Price Foundation

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

Three different pricing objectives relate to a firm's profit. One objective, known as ________, is common in many firms because the targets can be set and performance measured quickly though sometimes criticized for its short-term orientation.

An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to

A target return profit pricing objective implies that a company chooses to

If the CEO of the Clorox Co. were to say, "We want to control 40 percent of the household bleach category within the next five years," he would have set a ________ pricing objective.

A maximizing current profit pricing objective implies that a company chooses to

Three different objectives relate to a firm's profit, each of which have different implications for pricing strategy. One of these is

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Market share is the ratio of the ________ to those of the industry, including the firm itself.

Companies often pursue a market share objective when

Unit volume as a pricing objective refers to

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.

A negative aspect of selecting unit volume as a pricing objective is that

Which of the following statements regarding a market share pricing objective is most accurate?

Some firms pursue a ________ pricing objective, perhaps using discounting to generate cash to stave off bankruptcy.

Which of these statements regarding sales goals is most accurate?

Managing for long-run profits as a pricing objective implies that a company will

Several pricing objectives relate to a firm's profit. In one known as ________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

A firm may forgo a higher profit on sales and follow which of the following pricing objectives because it wants to recognize its stakeholder obligations?