Question 1

Price is often the most challenging of the four Ps to manage, partly because it is often ______________ in developing marketing strategies.
A) the least important aspect
B) treated as an afterthought
C) calculated by senior consultants
D) difficult to calculate markups
E) the subject of cross-shopping differentiation

Accepted Answer

Price is often not given sufficient attention during the development of marketing strategies and is frequently considered as an afterthought. This makes it a challenging aspect to manage.

Question 2

Gerald has a number of customers for his lawn care service who never question his bill but expect their lawns to be perfect. These customers do not want low prices, they want
A) a sales orientation.
B) fixed costs.
C) cross-price discounts.
D) a target return.
E) high value.

Accepted Answer

The customers who never question Gerald's bill but expect perfect lawns indicate that they value high quality and are willing to pay for it. Therefore, the best choice is E - high value.

Question 3

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.

Question 4

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 is not knowledgeable about wine, so the easiest way for her to choose a good bottle would be to assume that the higher the price, the better quality the wine. While this is not always true, it is a common assumption and can be a decent guideline for a novice wine buyer.

Question 5

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, which sets prices based on the specific goal of achieving a certain ROI percentage. In this case, the goal is a 20 percent return on investment for all industrial building supplies sold.

Question 6

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 part of the five Cs of pricing.

Question 7

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. The price of alternative products and services is not necessarily a factor in determining the full price, as it is up to the consumer to decide whether or not they are willing to pay more for a certain product or service.

Question 8

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

This is referring to a maximizing profits pricing strategy, where all factors affecting sales and profits are taken into account to determine the price point that will result in the highest return.

Question 9

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

Adopting a low pricing strategy doesn't always guarantee market leadership because there are several other factors that influence market share. Factors such as brand loyalty, quality, and reputation can also play a significant role in a consumer’s decision to purchase a particular product. So, Julia should consider other marketing strategies, such as product quality, innovation, and distribution, to gain market share.

Question 10

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) variable cost

Accepted Answer

Price is not just the amount of money but the overall sacrifice that a consumer is willing to make to acquire a specific product or service. This sacrifice could include time, effort, or any other resources expended in obtaining the product or service. Therefore, option B is the best choice.

Question 11

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

Accepted Answer

Earl perceived price as the overall sacrifice, while most consumers recognize price as the monetary payment made to acquire a good or service.

Question 12

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 pricing 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

Bernard's effort to maximize market share even at the expense of profits in the short run indicates a sales-oriented objective, which emphasizes increasing sales and market share as the primary goals.

Question 13

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

Target return pricing strategy involves setting prices based on a desired target return on investment (ROI). This means that the primary objective of this strategy is to increase profits for the company. Therefore, choice A is the correct answer. Choices B, C, D, and E are not the primary objectives of target return pricing strategy.

Question 14

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 15

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

The low, introductory offer price is aimed at generating sales by attracting potential customers to join the club. This represents a sales orientation pricing strategy, where the focus is on gaining market share and increasing sales, rather than maximizing profits or achieving a specific target profit or return. Therefore, option E is the best choice.

Question 16

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 using a competitor-oriented pricing strategy, which means she is measuring the value of her products against those of the other stores in her area. This strategy is focused on staying competitive with other businesses in the market.

Question 17

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 her competitors to demonstrate that her product is of higher quality. This is an example of premium pricing. Option A (top of market strategy) is not a specific pricing strategy and is not relevant in this scenario. Option B (value of quality) is a concept that is important to Sharon's pricing decision, but it is not a specific pricing strategy. Option C (advantageous pricing) and option E (differential pricing) do not fit Sharon's situation as she is not trying to undercut her competitors or charge different prices to different customers.

Question 18

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 a company. Product, promotion, and place are all important factors in the marketing mix, but they do not directly result in revenue.

Question 19

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.
A) maximizing profits
B) target profit
C) target return
D) status quo
E) sales

Accepted Answer

Ryan is using a status quo pricing strategy, which means he is matching the prices of a competitor instead of trying to undercut them or maximize profits.

Question 20

Many years ago Honda's Accord and Ford's Taurus were the top two 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 was using a sales orientation pricing strategy, which focuses on maximizing sales volume rather than maximizing profits or achieving a specific target return. By cutting the price of the Taurus, Ford hoped to increase sales and outsell the Accord to achieve the title of best-selling car in America.

Quiz 14: Pricing Concepts for Establishing Value

Price is often the most challenging of the four Ps to manage, partly because it is often ______________ in developing marketing strategies.

Gerald has a number of customers for his lawn care service who never question his bill but expect their lawns to be perfect. These customers do not want low prices, they want

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.

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

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.

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

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

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.

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

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

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

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

Historically, prices were

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

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.

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

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.