Question 1

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 sales orientation pricing strategy is focused on increasing sales volume rather than maximizing profits or achieving a specific target profit or return. The use of low introductory offers is a common tactic in this strategy to attract price-sensitive customers and encourage them to join the club.

Question 2

Julia's is an upscale women's clothing store.Prices are based on customers' beliefs about the value of the clothing.The store focuses on a limited target market and provides excellent customer service.Julia's is using a __________ pricing strategy.
A) customer-oriented
B) target profit
C) target return
D) status quo
E) maximizing profits

Accepted Answer

Julia's is using a customer-oriented pricing strategy as they focus on the customers' beliefs about the value of the clothing and provide excellent customer service.

Question 3

Sharon knew that her established customers preferred her product to competitors' offerings.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's strategy of charging a higher price to demonstrate that hers is a high-quality product is indicative of premium pricing. This pricing strategy is often used to create an image of exclusivity and luxury, which can serve to attract customers who are willing to pay more for perceived quality.

Question 4

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, as he is simply matching the prices of the other convenience store rather than trying to raise or lower his prices to maximize profits, reach a target profit or return, or increase sales. The goal of the status quo pricing strategy is to maintain market share and avoid losing customers to competitors with lower prices.

Question 5

A "no haggle" pricing policy is a type of __________ pricing strategy.
A) maximizing profits
B) sales orientation
C) target return
D) status quo
E) customer-oriented

Accepted Answer

A "no haggle" pricing policy is a customer-oriented pricing strategy, as it is meant to simplify the purchasing process for customers and ensure transparency in pricing. This approach is intended to build trust and loyalty with customers by eliminating the need for negotiation and enhancing the overall shopping experience.

Question 6

Traditional demand curve economic theory is used by marketers to understand __________ in the five Cs of pricing.
A) competitors
B) channel members
C) cost
D) customers
E) company objectives

Accepted Answer

Traditional demand curve economic theory is focused on understanding customer behavior in response to changes in price. Therefore, it is used by marketers to understand the demand for their products/services and the optimal price point that will achieve their business objectives while still meeting customer needs.

Question 7

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on:
A) a demand curve.
B) the law of averages.
C) multiple regression analyses.
D) target return strategies.
E) a sales orientation.

Accepted Answer

To analyze how many units will be sold at any given price point, marketers use a demand curve. It shows the relationship between the quantity of a product that consumers are willing to purchase and the price of that product. By understanding the demand curve, marketers can determine the optimal price point for their product that will maximize sales and profits. The other options listed are not directly related to analyzing demand and pricing.

Question 8

When firms set prices similar to those of competitors,they are following a strategy of:
A) me-too pricing.
B) copycat pricing.
C) competitive parity.
D) market-broadening pricing.
E) industry-standard pricing.

Accepted Answer

Competitive parity means setting prices in line with the competition.

Question 9

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

A sales-oriented objective focuses on increasing market share, even at the expense of short-term profits, which aligns with Bernard's task of examining pricing to maximize market share. Industry-oriented objectives prioritize achieving a dominant position within a particular industry, competitor-oriented objectives focus on outperforming competitors, innovation-oriented objectives prioritize developing new products or technologies, and customer-oriented objectives prioritize meeting customer needs and preferences.

Question 10

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy,especially if the strategy:
A) leads the marketer to being the low-cost seller.
B) is supported by consistent advertising and distribution strategies.
C) challenges consumers to discard their perceptions of value.
D) is consistent with a competitive target return strategy.
E) all of these.

Accepted Answer

A strategy based on customer perceptions of value is most effective when supported by consistent advertising and distribution strategies, as this reinforces the perceived value and helps maintain the desired brand image.

Question 11

A demand curve shows the relationship between __________ in a period of time.
A) income and demand
B) demand and cost
C) price and elasticity
D) profit and price
E) price and demand

Accepted Answer

A demand curve shows the relationship between price and quantity demanded in a given period of time. It illustrates the quantity of a good or service that consumers are willing to buy at different prices. As the price of a good or service increases, the quantity demanded generally decreases, creating a downward-sloping demand curve.

Question 12

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

Rarely is the lowest-price offering the dominant brand in a market. Instead, customers often associate higher prices with higher quality, and a low-price strategy may not be sustainable in the long run. Instead, Julia should focus on providing unique value to customers through product features, quality, and customer service while still maintaining a competitive price. This will help her brand gain market share based on its overall value proposition rather than just price.

Question 13

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 where she is comparing her prices to those of her competitors in the same area to remain competitive.

Question 14

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 15

A demand curve is built assuming that:
A) income is derived from demand.
B) price remains the same,and fixed costs change.
C) everything but price and demand remains the same.
D) a change in quantity demanded causes a change in price.
E) the firm does not advertise.

Accepted Answer

A demand curve is built assuming that everything but price and demand remains the same. This means that factors such as income, advertising, and fixed costs are held constant in order to isolate the relationship between price and quantity demanded.

Question 16

In many high-end resort markets,Westin hotels compete directly with Crown Plaza hotels.Each firm weighs the comparative advantages and disadvantages of their offerings to determine whether to price above,equal to,or below the other hotel.In these markets,the hotels are using a __________ pricing strategy.
A) maximizing profits
B) target profit
C) target return
D) competitive parity
E) sales oriented

Accepted Answer

Competitive parity pricing strategy involves setting prices based on competitors' prices. In this case, both Westin and Crown Plaza are considering each other's prices to determine their own pricing strategy, making it a competitive parity strategy.

Question 17

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 focused on increasing sales volume and outselling the competition, indicating a sales orientation pricing strategy.

Question 18

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 means she has set a specific goal for the ROI (return on investment) that she expects for each product sold. In this case, the goal is to generate a minimum of 20 percent ROI for all industrial building supplies. This approach is focused on achieving a specific desired level of profit rather than setting prices based on the market or competition (competitive parity) or simply maintaining existing prices (status quo). It is also different from a target profit strategy, which involves setting a specific profit margin rather than ROI. A sales orientation strategy would focus on maximizing sales rather than setting specific profit or ROI goals for each product.

Question 19

A customer orientation toward pricing explicitly invokes the concept of:
A) knowing the dimensions of the target market.
B) positioning.
C) the income effect.
D) value.
E) None of these.

Accepted Answer

A customer orientation toward pricing is focused on creating value for the customer. Therefore, understanding the customer's perception of value is key in determining the appropriate price.

Question 20

Gary is the marketing manager for an automobile dealership.His boss tells him the firm's primary goal is to increase their local market share from 15 to 30 percent.Gary's pricing strategy will focus on:
A) increasing profits.
B) increasing sales.
C) decreasing competition.
D) building customer satisfaction.
E) all of these.

Accepted Answer

Gary's pricing strategy is aimed at increasing the dealership's market share, which can only be achieved through increased sales. Although increasing profits and building customer satisfaction are desirable outcomes, they are not the primary focus in this scenario. Decreasing competition may be a secondary effect of increasing market share, but it is not the main goal. Therefore, option B is the best choice.

Quiz 13: Pricing Concepts for Establishing Value

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

Julia's is an upscale women's clothing store.Prices are based on customers' beliefs about the value of the clothing.The store focuses on a limited target market and provides excellent customer service.Julia's is using a __________ pricing strategy.

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 "no haggle" pricing policy is a type of __________ pricing strategy.

Traditional demand curve economic theory is used by marketers to understand __________ in the five Cs of pricing.

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on:

When firms set prices similar to those of competitors,they are following a strategy of:

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy,especially if the strategy:

A demand curve shows the relationship between __________ in a period of time.

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:

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 __________ 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 demand curve is built assuming that:

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 customer orientation toward pricing explicitly invokes the concept of:

Gary is the marketing manager for an automobile dealership.His boss tells him the firm's primary goal is to increase their local market share from 15 to 30 percent.Gary's pricing strategy will focus on: