Question 1

A target return pricing objective has administrative advantages in a large company where there are many divisions to compare.

Accepted Answer

A target return objective has administrative advantages in a large company where performance can be compared against the target.

Question 2

A sales-oriented pricing objective seeks some level of unit sales, dollar sales, or share of market-without referring to profit.

Accepted Answer

A sales-oriented pricing objective seeks some level of unit sales, dollar sales, or share of market without referring to profit.

Question 3

Sales-oriented pricing objectives are sensible because sales growth almost guarantees higher profits.

Accepted Answer

Sales growth doesn't necessarily mean big profits.

Question 4

The target return figure is zero for an organization that sets a price level that will just recover costs.

Accepted Answer

Many private and public nonprofit organizations set a price level that will just recover costs making the target return figure zero.

Question 5

A firm should not simply assume that its profits will grow if its sales grow.

Accepted Answer

Sales growth doesn't necessarily mean big profits.

Question 6

A profit maximization pricing objective may lead to relatively low prices, especially if demand is very elastic.

Accepted Answer

Low prices may expand the size of the market and result in greater sales and profits.

Question 7

Almost every business transaction in our modern economy involves an exchange of money.

Accepted Answer

Almost every business transaction in our modern economy involves an exchange of money, the price, for something.

Question 8

A target return objective and a profit maximization objective are both profit-oriented objectives.

Accepted Answer

A target return objective sets a specific level of profit as an objective, and a profit maximization objective seeks to get as much profit as possible. Hence both are profit-oriented objectives.

Question 9

Pricing objectives need not be explicitly stated.

Accepted Answer

Pricing objectives should be explicitly stated because they have a direct effect on pricing policies as well as the methods used to set prices.

Question 10

Profit maximization objectives lead to high prices and monopolies-and are generally not in the public interest.

Accepted Answer

Profit maximization objectives can be socially responsible, and pricing to achieve profit maximization doesn't always lead to high prices.

Question 11

Managers satisfied with their current market share and profits are most likely to adopt sales growth oriented objectives.

Accepted Answer

Managers satisfied with their current market share and profits sometimes adopt status quo objectives.

Question 12

Sales-oriented pricing objectives-such as maintaining or increasing market share-are unpopular because it is so difficult to measure results.

Accepted Answer

It is usually easier to measure a firm's market share than to determine if profits are being maximized.

Question 13

A marketing manager who sets prices to achieve a given level of market share is using a profit-oriented pricing objective.

Accepted Answer

Some organizations set prices to increase market share using a sales-oriented objective.

Question 14

Pricing objectives and policies should flow from company-level objectives.

Accepted Answer

Pricing objectives should flow from, and fit in with, company-level and marketing objectives.

Question 15

"Meeting competition" is a sales oriented pricing objective.

Accepted Answer

With status quo pricing objectives, managers want to stabilize prices, or meet competition, or even avoid competition.

Question 16

A target return pricing objective seeks to obtain a specific level of profit-often stated as a percentage of sales or return on investment.

Accepted Answer

A target return objective sets a specific level of profit as an objective that is stated as a percentage of sales or of capital investment.

Question 17

Sales-oriented pricing objectives don't refer to profit.

Accepted Answer