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 the most challenging of the four Ps to manage, partly because it is often treated as an afterthought in developing marketing strategies.

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 the bill and expect perfect lawns are not price-sensitive and value the high-quality service provided by Gerald. Thus, they prioritize high value over low prices.

Question 3

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 strategy is designed to increase sales volume by offering low prices or other attractive promotions to bring in customers. The goal is to attract new customers and retain existing ones by offering a good value for their money. The low, introductory offer price is an example of this strategy, as it entices customers to sign up for a membership at a lower cost than they might otherwise pay. By doing so, the health club is hoping to gain customers who will be willing to pay the regular price for a membership once the introductory period is over.

Question 4

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 considered as one of the Cs of pricing.

Question 5

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's constant flow of business suggests that he has priced his products well, which has allowed him to compete in the market despite facing competition from firms with better machinery. This indicates that he has found a sweet spot in the market where he can attract customers with a good balance of quality and price.

Question 6

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 described strategy is known as a maximizing profits strategy. It involves analyzing all factors that can impact sales and profits and identifying the price level that will yield the highest return. This approach aims to optimize profits rather than simply maintaining the status quo or focusing solely on sales or target goals. Therefore, the best choice is E - maximizing profits.

Question 7

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. Knowing the competition's pricing strategies is crucial in pricing their own handcrafted office furniture competitively. The other choices, such as the message and media for the advertising campaign, designs for products that haven't been manufactured, the number of new employees needed, and the sustainability of raw materials, may be important but are not directly related to pricing their products.

Question 8

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

If firms price their products too low, it may signal poor quality to consumers. Pricing products too low can create an impression that the product is of inferior quality or a knock-off brand. This may lead to consumers avoiding the product altogether, resulting in lost sales.

Question 9

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

Consumers evaluate the overall sacrifice, which includes monetary cost, time, effort, and other factors, to determine the value of a product.

Question 10

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) product development.

Accepted Answer

Gary's pricing strategy is focused on increasing the dealership's local market share, which is a measure of the number of sales they are making relative to their competitors. Therefore, the goal is to increase sales, as this is the primary factor that will increase market share.

Question 11

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

A target return pricing strategy focuses on setting prices that will generate a specific return on investment or profit. In this case, Naomi has set the goal of a 20 percent return on investment for all industrial building supplies sold, indicating the use of a target return pricing strategy. A sales orientation pricing strategy would be focused on maximizing sales volume, while a target profit strategy would set prices to achieve a specific profit margin. Status quo and competitive parity pricing strategies are focused on maintaining prices relative to competitors or the current market, rather than setting prices based on specific financial goals.

Question 12

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 price as an indicator of quality. This is a common heuristic for making decisions about wine when one is not an expert. However, it is important to note that price is not always a reliable indicator of quality, as there are many factors that can influence the cost of a bottle of wine, including marketing, packaging, and production costs.

Question 13

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 bundle of benefits the product or service delivers is the determining factor for whether high or low prices deliver high value to customers. Customers are willing to pay more for products or services that deliver a greater bundle of benefits. Therefore, marketers should focus on creating high value through delivering a bundle of benefits that customers are willing to pay a premium for.

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

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 is a pricing strategy that aims to set prices based on a desired return on investment or profit margin. Therefore, Tess is using this strategy to increase profits, which is the primary objective of her firm.

Question 16

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 17

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 component of the marketing mix that directly affects revenue generation. The other components, such as product, promotion, and place, can indirectly affect revenue by influencing consumer demand, but only price can directly affect the amount of revenue a company generates.

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

Keystoning involves setting the retail price at double the wholesale cost, which does not take into account consumer price sensitivity or demand elasticity.

Question 19

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 pricing means doubling the wholesale price to determine the retail price. Given that the maximum retail price should be $200, the maximum wholesale price can be $100. Therefore, the best choice is B) $100.

Question 20

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. However, it does not include the price of alternative products and services, as this is a factor that the consumer may consider when making a purchasing decision but is not part of the actual price of the product or service being offered.

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

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

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

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 _________________ 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.

If firms price their products too low,it may

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

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

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.

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

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

Historically,prices were

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

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

Using "keystoning" as a pricing strategy

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

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