Question 1

If the demand curve for a product slopes downward and to the right,it indicates that more of the product is demanded as its price is lowered.

Accepted Answer

This is the law of demand, which states that all other factors being equal, the quantity demanded of a good or service is inversely proportional to its price. In other words, as the price of a good decreases, the demand for that good will increase, and vice versa. The downward-sloping demand curve reflects this relationship between price and quantity demanded.

Question 2

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

Accepted Answer

During the growth stage, sales begin to increase rapidly, and as production efficiency improves, economies of scale allow manufacturers to lower production costs. This often results in price stabilization as companies try to maintain their market share and compete with other products in the market.

Question 3

An effective distribution network can sometimes overcome other minor flaws in the marketing mix.

Accepted Answer

An effective distribution network can help overcome deficiencies in other areas of the marketing mix, such as pricing or promotion. By ensuring that the product is easily accessible to customers in the right places, a strong distribution strategy can improve overall sales and customer satisfaction.

Question 4

For convenience,pricing objectives can be divided into three categories.They are:
A)refundable,competitive,and attainable.
B)perceived,actual,and situational.
C)differentiated,niche,and undifferentiated.
D)profit oriented,sales oriented,and status quo.

Accepted Answer

The three categories mentioned in option D - profit oriented, sales oriented, and status quo - are the widely recognized pricing objectives in marketing. Profit-oriented pricing objectives focus on maximizing profits and can involve strategies like cost-plus pricing or value-based pricing. Sales-oriented pricing objectives, on the other hand, aim to increase sales volume and may involve lower prices or promotional discounts. Status quo pricing objectives aim to maintain market share or image and keep prices consistent with competitors' prices.

Question 5

Price matching is one of the ways to counter a competitor's prices.

Accepted Answer

Price matching involves offering to match or beat a competitor's price in order to remain competitive and retain customers.

Question 6

Large customers insist on cash rebates if the guarantee of stores' profit margins are not met.

Accepted Answer

Large customers typically negotiate agreements with stores that include guarantees on profit margins. If these guarantees are not met, the customers may request cash rebates as a form of compensation.

Question 7

Which of the following trends in the consumer market has increased the difficulty of setting the right price for a product?
A)The unwillingness of many firms to maintain or regain their market share by cutting prices
B)The decreased availability of bargain-priced private and generic product brands
C)The careful evaluation of each product's price against its value by potential buyers
D)The inability of consumers to do comparison shopping

Accepted Answer

The careful evaluation of each product's price against its value by potential buyers has increased the difficulty of setting the right price for a product as consumers are scrutinizing the value they are receiving for the price they are paying. This leads to a need to ensure the price reflects the perceived value of the product. The other options either do not impact the pricing strategy or may make it easier to set a price.

Question 8

The best way for manufacturers to control prices is by using an exclusive distribution system.

Accepted Answer

An exclusive distribution system can help control prices by limiting the number of sellers, but it is not necessarily the best or only way to control prices. Other strategies, such as price fixing, minimum advertised pricing, or vertical integration, can also be effective.

Question 9

Britney is fifteen years old and wants to begin her own business selling cupcakes to coffee shops and restaurants.She is having a tough time deciding whether she should express her market share in terms of the revenue generated or the number of cupcakes sold.Regardless of what she chooses,which of the following types of pricing objectives is Britney considering?
A)Status quo pricing
B)Profit oriented
C)Target return on investment
D)Sales oriented

Accepted Answer

Britney is considering the number of cupcakes sold or the revenue generated as a way to measure her success, indicating a sales-oriented pricing objective. The other options, status quo pricing, profit orientation, and target return on investment, do not apply to this scenario.

Question 10

Adequate distribution for a new product can often be attained by giving dealers a large trade allowance.

Accepted Answer

Offering a large trade allowance can incentivize dealers to stock and promote a new product, thus improving its distribution.

Question 11

Price is not used for trade promotions as it garners a negative opinion for the brand.

Accepted Answer

Price promotions can be effective in short-term sales but often lead to customers perceiving the brand as low quality and cheap. Therefore, brands tend to focus on other types of trade promotions such as contests, sampling, and displays.

Question 12

According to garment makers,the demands of large customers are nearly wiping out profits for all but the very large suppliers.

Accepted Answer

The statement says that only very large suppliers are able to survive due to the demands of large customers, implying that smaller suppliers are facing a decrease in profits or potential loss. Therefore, option A is correct.

Question 13

Stocking well-known branded items at high prices in order to sell store brands at discounted prices is called selling against the brand.

Accepted Answer

Selling against the brand is a common retail strategy where the store stocks well-known branded items but charges high prices for them. This makes their own store brand, which is sold at a lower price, more attractive to customers.

Question 14

Liquiction Pool and Patio Inc.is a company known for its quality pool installations,excellent customer service,and reasonable prices.Given the demand,Liquiction could price its products higher,but it prefers to price its products such that it will earn a reasonable level of profits.Liquiction seems to base its pricing policy on:
A)profit maximization.
B)earning satisfactory profits.
C)creating retained earnings.
D)maintaining a status quo pricing.

Accepted Answer

Liquiction's pricing policy is based on earning satisfactory profits, which means pricing its products to earn a reasonable level of profits rather than maximizing profits or maintaining a status quo pricing. This approach allows the company to balance customer satisfaction with profitability.

Question 15

A shopping bot is a private electronic network that links a company with its suppliers and customers.

Accepted Answer

A shopping bot is a type of software application that helps users shop online by searching for available products and comparing prices across different websites. It is not a private electronic network that links a company with its suppliers and customers.

Question 16

Competition remains constant during a product's life cycle.

Accepted Answer

Competition can vary during a product's life cycle. At the introduction stage, competition may be relatively low as the product is new and unique. As the product reaches maturity, the competition may increase as more companies enter the market with similar offerings. Towards the end of the product's life cycle, competition may decrease as the market size and demand decrease, and fewer competitors remain in the market.

Question 17

The demand curve for a product shows the change in the product's supply with changes in its price.

Accepted Answer

The demand curve for a product shows the relationship between the quantity of the product that consumers are willing to buy and its price, not the change in supply.

Question 18

Manufacturers find that their large customers always force sellers to do illegal price discrimination.

Accepted Answer

Price discrimination is not inherently illegal; it becomes illegal when it violates antitrust laws, such as the Robinson-Patman Act, which prohibits certain forms of price discrimination that harm competition. Not all price discrimination is illegal, and not all large customers force sellers into illegal practices.

Question 19

Department stores seldom make demands on their suppliers to cover the heavy discounts and markdowns on their own selling floors.

Accepted Answer

Department stores often negotiate with their suppliers to compensate for the heavy discounts and markdowns on their own selling floors, which can result in the suppliers taking on some of the cost burden.

Question 20

Prices always steadily decline for a product in the decline stage of the product life cycle.

Accepted Answer

When only one firm is left in the market,prices begin to stabilize,but they may eventually rise dramatically if the product survives and moves into the specialty goods category,as horse-drawn carriages and vinyl records have.

Quiz 20: Pricing Concepts