Question 1

Chet knows the pro shops selling his golf photography will "keystone" his products.He also knows sales will decline significantly if the retail price is greater than $200.The maximum wholesale price Chet can charge is:
A)$200.
B)$100.
C)$50.
D)$10.
E)It cannot be determined from this information.

Accepted Answer

"Keystone" means doubling the wholesale price to get the retail price. Since sales will decline significantly if the retail price is greater than $200, the maximum wholesale price Chet can charge is $100 ($100 doubled is $200). Therefore, the best choice is B.

Question 2

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

The strategy described in the question is that of maximizing profits, where all factors are measured to predict the level of sales and profits at different price levels to choose the one that produces the highest return. This involves analyzing the cost of production, demand, competition, and other factors to set the price that maximizes profits. Therefore, option E is the best choice.

Question 3

Dean runs a woodworking business specializing in kitchen cabinets.He knows there are other firms with top-of-the-line machinery that make better quality cabinets,but he does well and has a constant flow of business.Dean obviously has:
A)figured out how to produce cheap products.
B)priced his products well.
C)reduced his variable costs by investing in fixed costs.
D)avoided monopolistic competition,and is instead in a market with pure competition.
E)learned how to use status quo pricing.

Accepted Answer

Dean has priced his products well, which has allowed him to maintain a constant flow of business even though he may not have the best quality cabinets. This suggests that customers are willing to pay for his cabinets at the price point he has set, indicating good pricing strategy.

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, who does not know much about wine, is likely to use the price of the wine as an indicator of quality. This is a common misconception, as the price of wine does not always correspond to its quality. However, many people believe that the more expensive a wine is, the better it tastes. Therefore, Margaret may choose a more expensive wine as a gift for the host, thinking that it is of higher quality.

Question 5

Consumers judge the benefits the product delivers against the ______________ necessary to obtain it.
A)monetary cost
B)profit
C)variable cost
D)total return
E)sacrifice

Accepted Answer

The answer of Consumers judge the benefits the product delivers...

Question 6

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 treated as an afterthought in developing marketing strategies because it can be a complex variable to balance with other elements of the marketing mix.

Question 7

Marketers can deliver high value through high or low prices,depending on:
A)profit contribution per unit.
B)the bundle of benefits the product or service delivers.
C)monopolistic competition.
D)target return pricing that is greater than variable cost per unit.
E)the income effect.

Accepted Answer

The value of a product or service is not solely determined by its price. Marketers can provide high value through a bundle of benefits offered by the product or service. Thus, the best choice is B.

Question 8

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)all of these.

Accepted Answer

Price is the only element of the marketing mix that directly generates revenue for a company. While the other elements can indirectly impact revenue, price is the primary factor in determining a company's sales and profits. The other options listed are not directly related to the unique role of price in the marketing mix.

Question 9

If firms price their products too low,it may:
A)result in lower costs.
B)create a premium pricing effect.
C)increase contribution per unit.
D)result in inelastic demand.
E)signal poor quality.

Accepted Answer

Pricing products too low may signal poor quality to consumers, as they may associate low prices with low quality. This can result in decreased demand and ultimately harm the firm's profitability.

Question 10

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 in the scenario are not focused on low prices but rather on the perceived value they receive from Gerald's lawn care service. They are willing to pay a higher price for the assurance that they will receive a perfect lawn. Therefore, they want high value.

Question 11

What could go wrong if a firm's pricing strategy were NOT aligned with company objectives?
A)The message and media in a promotional campaign could be inconsistent with the pricing strategy.
B)Company growth objectives might not be supported.
C)The channels selected might not be appropriate for the pricing levels established.
D)Customers might be confused and select a competitor's product.
E)All of these

Accepted Answer

If a firm's pricing strategy is not aligned with company objectives, it can lead to inconsistent messaging and media in promotional campaigns (A), lack of support for company growth objectives (B), inappropriate channels for pricing levels (C), and customer confusion leading them to select a competitor's product (D). Therefore, all of these options could go wrong if the pricing strategy is not aligned with company objectives.

Question 12

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's pricing strategy is based on achieving a specific return on investment, which aligns with a target return pricing strategy. The other options do not reference a specific ROI goal, but rather focus on other factors such as sales, profit, maintaining the status quo, or keeping prices in line with competitors.

Question 13

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 one of the primary factors considered when determining pricing strategies.

Question 14

Brian knows his firm's pricing strategy needs to be consistent with the company's overall objectives.As marketing manager,Brian will base his pricing strategy on whether the company's objective is to:
A)increase profits.
B)increase sales.
C)decrease competition.
D)build customer satisfaction.
E)any of these.

Accepted Answer

A pricing strategy can be based on any of these objectives or a combination of them depending on the company's overall goals and market conditions. Ultimately, the pricing strategy should support the company's objectives by driving revenue, profitability, market share, or customer loyalty.

Question 15

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)all of these.

Accepted Answer

Target return pricing strategy aims to set prices at a level that will achieve a specific return on investment or profitability target. Therefore, it suggests that Tess's firm's primary objective is to increase profits.

Question 16

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 17

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 objective is to maximize market share, which is a sales-oriented goal.

Question 18

Using "keystoning" as a pricing strategy:
A)creates undue complexity for retailers.
B)avoids having to participate in pure competition.
C)ignores consumers' sensitivity to changes in prices.
D)allows marketers to estimate the substitution effect.
E)maximizes the difference between total cost and total variable cost.

Accepted Answer

The answer of Using "keystoning" as a pricing strategy:
A)creates undue...

Question 19

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

The primary goal given by Gary's boss is to increase their local market share, which is a measure of sales in relation to the total market demand. Therefore, Gary's pricing strategy should focus on increasing sales in order to achieve the goal of increasing market share.

Question 20

Patricia and D'Wayne were working on pricing their line of handcrafted office furniture.D'Wayne said,"I think we've got all the main components that affect us and our products,but let's go over the list once again.We've got the stores that will carry our products,our firm's objectives,how customers will respond,and the costs." Which of the following is missing from Patricia and D'Wayne's list of the components?
A)The message and media for the advertising campaign.
B)The competition's pricing strategies.
C)The designs for products that haven't yet been manufactured.
D)The number of new employees they'll need if the products take off.
E)Whether or not their suppliers use sustainable raw materials.

Accepted Answer

The competition's pricing strategies are missing from the list of components that affect pricing for their handcrafted office furniture.

Quiz 13: Pricing Concepts for Establishing Value

Chet knows the pro shops selling his golf photography will "keystone" his products.He also knows sales will decline significantly if the retail price is greater than $200.The maximum wholesale price Chet can charge is:

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.

Dean runs a woodworking business specializing in kitchen cabinets.He knows there are other firms with top-of-the-line machinery that make better quality cabinets,but he does well and has a constant flow of business.Dean obviously has:

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:

Consumers judge the benefits the product delivers against the ______________ necessary to obtain it.

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

Marketers can deliver high value through high or low prices,depending on:

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

If firms price their products too low,it may:

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:

What could go wrong if a firm's pricing strategy were NOT aligned with company objectives?

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?

Brian knows his firm's pricing strategy needs to be consistent with the company's overall objectives.As marketing manager,Brian will base his pricing strategy on whether the company's objective is to:

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:

Using "keystoning" as a pricing strategy:

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: