Question 1

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

Accepted Answer

Profit-oriented objectives include profit maximization,satisfactory profits,and target return on investment.Sales-oriented pricing objectives are based either on market share or on dollar or unit sales.Status quo pricing seeks to maintain existing prices or to meet the competition's prices.

Question 2

Thompson Pool and Patio is known for quality pool installations,excellent customer service,and reasonable prices.If you want to have a Thompson pool,you will have to wait about six months due to demand for their product.While Thompson could probably price its product higher,given the demand,they don't.Instead,the company sets its price so that it will earn a reasonable level of profits.Thompson seems to base its pricing policy on:
A) profit maximization.
B) earning satisfactory profits.
C) creating retained earnings.
D) making the most money as possible.
E) decreasing consumer demand.

Accepted Answer

The objective of satisfactory profits is characterized by seeking a level of profits that is satisfactory to management and owner(s).

Question 3

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.
A) profit maximization
B) market share pricing
C) demand-oriented pricing
D) sales maximization
E) status quo pricing

Accepted Answer

Profit maximization is a type of profit-oriented pricing objective and means setting prices so that total revenue is as large as possible relative to total costs.

Question 4

As a short-term pricing objective,_____ can be effectively used on a temporary basis to sell off excessive inventory.
A) profit maximization
B) profit-oriented pricing
C) status quo pricing
D) sales maximization
E) market share pricing

Accepted Answer

Sales maximization pricing is a short-term price reduction to increase sales.

Question 5

_____ is equal to net profit after taxes divided by total assets.
A) Return on investment
B) Economic order quantity
C) Target-on-sales
D) Retained earnings
E) Efficiency maximization

Accepted Answer

This is the definition of return on investment (ROI).

Question 6

When the local Shell station raises or lowers its prices on its gasoline,the Marathon station across the street makes the same changes in its pricing.This is an example of _____ pricing.
A) status quo
B) target return
C) market share
D) predatory
E) cost-plus

Accepted Answer

Status quo pricing is best described as meeting the competition.

Question 7

Britney is fifteen years old and wants to open her own business selling cupcakes to local coffee shops and restaurants.She is having a tough time deciding whether to base her pricing objectives on market share,dollar sales,or unit sales.Regardless of which she chooses,her pricing objective can be categorized as:
A) status quo.
B) profit oriented.
C) need oriented.
D) cost oriented.
E) sales oriented.

Accepted Answer

Sales-oriented pricing objectives are based on either market share or dollar or unit sales.

Question 8

At a price of $1,192,057,the Bugatti Veyron may be the most expensive street-legal car on the market today.Obviously,Bugatti is NOT using a(n)_____ pricing objective in setting the price for this car.
A) inelastic or supply-oriented
B) market share or sales maximization
C) profit maximization or target return on investment
D) status quo or satisfactory profits
E) demand-oriented or supply-oriented

Accepted Answer

A lower price allows a company to maximize sales and build market share,but Bugatti's high price is geared towards the other options.

Question 9

A company using market share pricing has a _____ pricing objective.
A) profit-oriented
B) sales-oriented
C) demand-oriented
D) supply-oriented
E) status quo

Accepted Answer

Sales-oriented pricing objectives are based either on market share or on dollar or unit sales.

Question 10

Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in the Cleveland,Ohio,area.Last year,it managed to exceed its target return on investment (ROI)for the current fiscal year.The following results were found on its financial statements: 
What was the actual ROI for Peirre's Ice Cream Company?
A) 6.67 percent
B) 10 percent
C) 22 percent
D) 28 percent
E) 100 percent

Accepted Answer

ROI is net profits after taxes divided by total assets: $50,000 ¸ 500,000 = 10 percent.

Question 11

_____ is a company's product sales as a percentage of total sales for that industry.
A) Return on investment
B) Profit share
C) Revenue share
D) Market share
E) Contribution

Accepted Answer

This is the definition of market share,and sales can be reported in dollars or in units of product.

Question 12

At the end of the summer,the Bloomin' Garden Center reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?
A) Supply oriented
B) Sales maximization
C) Target return on investment
D) Satisfactory profit
E) Profit maximization

Accepted Answer

Sales maximization ignores profit and competition for the purpose of raising cash.

Question 13

When Insight Research Associates quotes a marketing research project,management will first estimate the cost to conduct the research and produce and deliver the final client report.The next step in determining the price is to add 30 percent to that cost estimate.This becomes the price estimate given to the potential research client.This suggests that Insight Research Associates uses a(n)_____ pricing objective.
A) profit-oriented
B) market share maximization
C) status quo
D) sales maximization
E) supply-demand equalization

Accepted Answer

Target return on investment is one of the most common types of profit-oriented pricing objectives.

Question 14

Dixie Furniture Company has recently moved to a new,larger location.At this new location,it has been unable to attract sufficient customers.Its owner did not have the cash to pay the current loan installment due on the building and inventory,so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment.His pricing objective can be classified as:
A) market share maximization.
B) satisfactory profits.
C) asset maximization.
D) sales maximization.
E) target ROI.

Accepted Answer

The strategy described will maximize sales dollars but will not maximize or improve any of the other objectives in the long term.

Question 15

Which of the following statements describes an advantage of status quo pricing?
A) Status quo pricing is derived from actual costs of manufacturing.
B) Status quo pricing maintains the organization's differential advantage.
C) Status quo pricing is active, not reactive.
D) Status quo pricing causes price wars.
E) Status quo pricing requires little planning.

Accepted Answer

Status quo pricing requires little planning because it involves just copying the competitions' pricing policies.

Question 16

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.
A) head-on
B) target return on investment
C) status quo
D) market share
E) demand-oriented

Accepted Answer

This defines status quo pricing.

Question 17

Which of the following is not a real trend that has affected the consumer market?
A) The increased availability of bargain-priced private and generic brands has put downward pressure on overall prices.
B) Buyers evaluate the price of new products against the value of existing products.
C) Many firms are trying to maintain or regain their market share by raising prices.
D) The Internet has made comparison shopping easier.
E) The United States was in a recession from late 2007 until 2009.

Accepted Answer

Many firms are trying to maintain or regain their market share by cutting prices.

Question 18

When Apple,Inc.originally introduced its iPhone,it was priced at what many believed to be about as high as the market would allow.Within weeks,Apple lowered the price of the iPhone.It appears that Apple entered the market with a _____ approach to pricing the iPhone.
A) market share pricing
B) profit maximization
C) demand-oriented
D) sales maximization
E) status quo pricing

Accepted Answer

Profit maximization means setting prices so that total revenue is as large as possible relative to total costs.

Question 19

The quantity of a product that will be sold in the market at various prices for a specified period is called:
A) market share.
B) demand.
C) supply.
D) value.
E) revenue.

Accepted Answer

This is the definition of demand.

Question 20

Although many factors can influence price,the primary determinants are:
A) costs of manufacturing and distribution
B) the demand for the good and the cost to the seller
C) demand by the consumer and perceived quality
D) distribution and promotion strategies
E) stage of the product life cycle and costs to the consumer

Accepted Answer

The price that managers set for each product depends mostly on two factors: the demand for the good or service and the cost to the seller for that good or service.

Quiz 37: Pricing Concepts

For convenience,pricing objectives can be divided into three categories.They are:

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

As a short-term pricing objective,_____ can be effectively used on a temporary basis to sell off excessive inventory.

_____ is equal to net profit after taxes divided by total assets.

When the local Shell station raises or lowers its prices on its gasoline,the Marathon station across the street makes the same changes in its pricing.This is an example of _____ pricing.

At a price of $1,192,057,the Bugatti Veyron may be the most expensive street-legal car on the market today.Obviously,Bugatti is NOT using a(n) _____ pricing objective in setting the price for this car.

A company using market share pricing has a _____ pricing objective.

_____ is a company's product sales as a percentage of total sales for that industry.

At the end of the summer,the Bloomin' Garden Center reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?

Which of the following statements describes an advantage of status quo pricing?

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.

Which of the following is not a real trend that has affected the consumer market?

When Apple,Inc.originally introduced its iPhone,it was priced at what many believed to be about as high as the market would allow.Within weeks,Apple lowered the price of the iPhone.It appears that Apple entered the market with a _____ approach to pricing the iPhone.

The quantity of a product that will be sold in the market at various prices for a specified period is called:

Although many factors can influence price,the primary determinants are: