Question 1

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell.Naomi is using a _______ pricing strategy.
A) sales orientation
B) target profit
C) target return
D) status quo
E) competitive parity

Accepted Answer

Naomi is using a target return pricing strategy, as she has set a specific goal for the return on investment for the industrial building supplies being sold. A target profit strategy involves setting a specific profit level, whereas a target return strategy involves setting a specific return on investment level. Sales orientation, status quo, and competitive parity pricing strategies do not involve setting specific financial goals.

Question 2

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host.Since she does not know much about wine,she will likely use the price of the wines as
A) an indicator of quality.
B) a reflection of status quo pricing.
C) an indicator of the variety.
D) a measure of scarcity.
E) a measure of the income effect.

Accepted Answer

Margaret, who doesn't know much about wine, is likely to use price as an indicator of quality. While price is not always an indicator of quality, it is a common perception and can give Margaret some guidance in selecting a good bottle of wine as a gift for the host of the fancy dinner party.

Question 3

When Ursula decides how to price new products in her gift store,she measures the value of her product offerings against those of the other stores in her area.Ursula uses a _______ pricing strategy.
A) maximizing profits
B) target profit
C) target return
D) competitor-oriented
E) sales oriented

Accepted Answer

Ursula is considering the value of her products compared to her competitors' offerings. This indicates she is utilizing a competitor-oriented pricing strategy.

Question 4

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n)_______ orientation to pricing.
A) industry
B) sales
C) competitor
D) production
E) customer

Accepted Answer

A customer-oriented pricing strategy focuses on adding value to the product or service from the customer's perspective, rather than simply setting a price based on production costs or competing with other firms in the industry. By adding value to the customer through pricing, the firm can potentially increase customer loyalty and satisfaction, which can lead to increased sales and profits in the long term.

Question 5

Many years ago Honda's Accord and Ford's Taurus were the two top-selling cars in the United States.As the year was coming to an end,Ford cut the price of the Taurus,hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a _______ pricing strategy.
A) maximizing profits
B) target profit
C) sales orientation
D) status quo
E) target return

Accepted Answer

Ford's goal was to outsell the Accord and claim the title of "best-selling car in America," which suggests a sales orientation pricing strategy. This strategy focuses on increasing sales volume and market share, rather than maximizing profits or achieving a specific target profit or return.

Question 6

Health clubs often use a low,introductory offer price to get people to join their club.These low prices represent a _______ pricing strategy.
A) maximizing profits
B) target profit
C) target return
D) status quo
E) sales orientation

Accepted Answer

A low introductory price is often used as a sales promotion strategy to attract new customers by health clubs. This strategy is oriented towards sales and increasing the customer base rather than maximizing profits, target profit or return, or maintaining the status quo. Therefore, the best choice is E) sales orientation.

Question 7

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels,so that the price level that produces the highest return can be chosen.
A) sales orientation
B) target profit
C) target return
D) status quo
E) maximizing profits

Accepted Answer

The strategy described is maximizing profits, which involves analyzing data to determine the price point that will result in the highest return. Sales orientation focuses on increasing overall sales volume, target profit sets a specific profit goal, target return aims for a specific return on investment, and status quo maintains current pricing and strategies.

Question 8

Tess is the marketing manager for a fast-food restaurant chain.She uses a target return pricing strategy because her firm's primary objective is to
A) increase profits.
B) increase sales.
C) decrease competition.
D) build customer satisfaction.
E) broaden the product line.

Accepted Answer

A target return pricing strategy involves setting prices that will generate a specific return on investment, which in this case is likely to be maximizing profits. Therefore, the primary objective of the restaurant chain is to increase profits.

Question 9

Price is the _____________ a consumer is willing to make to acquire a specific product or service.
A) amount of money
B) overall sacrifice
C) fixed cost
D) target return
E) substitution

Accepted Answer

Price refers to the overall sacrifice a consumer is willing to make in order to acquire a specific product or service. It may involve more than just the amount of money paid, but can also include time, effort, and any other resources used in the purchase process.

Question 10

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that
A) rarely is the lowest-price offering the dominant brand in a market.
B) prestige products need to be competitively priced.
C) companies can gain market share by offering low-quality products at a high price.
D) total value equals total cost minus variable costs leading to price escalation.
E) price wars are the way to become the dominant brand.

Accepted Answer

Being the lowest-priced offering does not guarantee being the dominant brand in the market. Customers often associate quality with higher prices and may find it difficult to switch to a lower-priced or inferior product. Therefore, a pricing strategy solely based on lower pricing may not lead to significant market share gains.

Question 11

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?
A) because most managers feel it is the least important element of the marketing mix
B) because it is the least understood element of the marketing mix
C) because it has to be based on the promotion budget for the product
D) because it is difficult to calculate markups for products
E) because managers don't understand the relationship between benefits and costs

Accepted Answer

Price is often the most challenging of the four Ps to manage because it involves understanding cost structures, demand and competition within the market, and aligning pricing strategies with overall business objectives. It is also influenced by external factors such as economic conditions and consumer behavior, which makes it a complex and dynamic element of the marketing mix.

Question 12

Sharon knew that her established customers liked her product much better than her competitor's.She was planning to expand into new markets,and she was considering pricing.She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product.Sharon was considering
A) a top of market strategy.
B) the value of quality.
C) advantageous pricing.
D) premium pricing.
E) differential pricing.

Accepted Answer

Sharon is considering charging a higher price than competitors to demonstrate that hers is a high-quality product. This is an example of premium pricing, where a higher price is charged to reflect a higher quality product.

Question 13

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage.Earl perceived price as _______ for a good or service,while most consumers recognize price as the _______ made to acquire a good or service.
A) the money paid; overall sacrifice
B) a variable cost; fixed cost
C) a fixed cost; variable payment
D) the overall sacrifice; monetary payment
E) the break-even amount; total cost

Accepted Answer

Earl's behavior illustrates that he views price primarily as the monetary amount paid for a good, whereas the general consumer perspective is that price represents the total sacrifice (including time, effort, and money) made to obtain a product.

Question 14

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments.It was Bernard's job to examine the firm's pricing strategy to determine how to maximize market share,even at the expense of profits in the short run.What kind of company objective would guide Bernard's effort?
A) industry-oriented
B) sales-oriented
C) competitor-oriented
D) innovation-oriented
E) customer-oriented

Accepted Answer

A sales-oriented objective focuses on maximizing market share, even if it means sacrificing short-term profits. This aligns with Bernard's need to examine the firm's pricing strategy to achieve this objective.

Question 15

The full price of a product or service includes all of the following except
A) taxes.
B) shipping.
C) travel costs.
D) the price of alternative products and services.
E) value of the consumer's time.

Accepted Answer

The full price of a product or service includes taxes, shipping, travel costs, and the value of the consumer's time, but it does not include the price of alternative products and services. The price of alternative products and services is a consideration for the consumer in their decision-making process, but it is not included in the full price of the product or service being offered.

Question 16

According to your text,research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions?
A) Promotion
B) Place
C) Product
D) Perception
E) Price

Accepted Answer

Research has consistently shown that consumers usually rank price as one of the most important factors in their purchase decisions. Price is often seen as a signal of quality and value, and is often used by consumers as a way to compare different products and brands.

Question 17

Unlike product,promotion,or place,price is the only part of the marketing mix
A) that offers the opportunity for an oligopoly.
B) that is subject to gray market manipulation.
C) that leads to competition.
D) that generates revenue.
E) that is determined by the consumer.

Accepted Answer

Price is the only part of the marketing mix that directly generates revenue for the company. This means that the price of the product or service directly affects the amount of revenue the company will generate.

Question 18

Which of the following is not one of the five Cs of pricing?
A) customers
B) channel members
C) cost
D) collaboration
E) company objectives

Accepted Answer

The five Cs of pricing are customers, channel members, cost, competition and company objectives. Collaboration is not considered one of the five Cs of pricing.

Question 19

Historically,prices were
A) the center of attention in almost all marketing strategies.
B) analyzed and changed constantly.
C) calculated to minimize contribution per unit.
D) allowed to vary seasonally as cross-shopping tendencies fluctuated.
E) rarely changed except in response to radical shifts in market conditions.

Accepted Answer

Historically, prices were rarely changed except in response to radical shifts in market conditions. Pricing strategies were not as important as they are today, and companies focused more on production and distribution rather than setting and changing prices.

Question 20

Gary is the marketing manager for an automobile dealership.His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent.His firm is using a ________ orientation.
A) profit
B) sales
C) competitive
D) customer satisfaction
E) product development

Accepted Answer

The firm's primary goal of increasing its local market share from 15 to 30 percent indicates a focus on boosting sales volume, which aligns with a sales orientation. This approach emphasizes selling more of the company's products, regardless of the demand or customer's actual needs.

Quiz 14: Pricing Concepts for Establishing Value

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell.Naomi is using a _______ pricing strategy.

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host.Since she does not know much about wine,she will likely use the price of the wines as

When Ursula decides how to price new products in her gift store,she measures the value of her product offerings against those of the other stores in her area.Ursula uses a _______ pricing strategy.

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n) _______ orientation to pricing.

Health clubs often use a low,introductory offer price to get people to join their club.These low prices represent a _______ pricing strategy.

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels,so that the price level that produces the highest return can be chosen.

Tess is the marketing manager for a fast-food restaurant chain.She uses a target return pricing strategy because her firm's primary objective is to

Price is the _____________ a consumer is willing to make to acquire a specific product or service.

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage.Earl perceived price as _ for a good or service,while most consumers recognize price as the _ made to acquire a good or service.

The full price of a product or service includes all of the following except

According to your text,research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions?

Unlike product,promotion,or place,price is the only part of the marketing mix

Which of the following is not one of the five Cs of pricing?

Historically,prices were

Gary is the marketing manager for an automobile dealership.His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent.His firm is using a ________ orientation.