Question 1

Firm A has set very low prices for its products in an attempt to drive its competitor,Firm B,out of business.This is known as monopolistic pricing.

Accepted Answer

This is not an example of monopolistic pricing, but rather predatory pricing. Monopolistic pricing refers to a situation where a firm sets prices that are higher than the marginal cost of production in order to maximize profits in a market where it has some degree of market power. Predatory pricing is when a firm sets very low prices with the intent of driving its competitors out of business, and then raising prices once it has established a monopoly position.

Question 2

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. Product, promotion, and place all contribute to revenue indirectly, but price is the only element that determines the actual amount of money that the customer pays for the product or service.

Question 3

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n)_______ orientation to pricing.
A) industry
B) sales
C) competitor
D) production
E) customer

Accepted Answer

A customer orientation to pricing means that the firm is focused on the value that their products or services can provide to their customers. This takes into account the unique needs and preferences of the target market and can lead to higher prices as customers may be willing to pay more for perceived value.

Question 4

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

Choosing the lowest-price offering may attract some buyers, but it rarely leads to a dominant market share. Consumers often correlate higher prices with better quality, which can lead to a perception that a lower-priced product is of lower quality. Instead, Julia should consider other factors, such as product quality, marketing, and customer service, to gain a competitive advantage and increase market share.

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 aims to generate a specific return on investment. In this case, the goal is to achieve a 20 percent return on investment for all industrial building supplies sold. A target profit pricing strategy aims to achieve a specific profit level, while a sales orientation pricing strategy focuses on maximizing sales volume. The status quo and competitive parity pricing strategies are more concerned with maintaining a consistent price level in relation to competitors.

Question 6

Many years ago Honda's Accord and Ford's Taurus were the two top-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's goal was to outsell the Accord and claim to be the best-selling car in America, indicating a sales orientation pricing strategy.

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. However, it does not include the price of alternative products and services, as that is a separate consideration for the consumer to make.

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

The described strategy is known as the profit maximization strategy, which involves measuring all factors related to sales and profits at different price levels to choose the price level that will produce the highest return. Therefore, the best choice is E, maximizing profits.

Question 9

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 10

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 11

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens.To do this,she will likely use a market penetration pricing strategy.

Accepted Answer

Market penetration pricing strategy involves setting a low initial price for a new product in order to quickly gain a large market share. This is a common tactic for businesses looking to establish themselves in a competitive marketplace.

Question 12

Proving that a company has engaged in the deceptive bait and switch practice is easy.

Accepted Answer

Proving that a company has engaged in deceptive bait and switch practices can be difficult and requires evidence and legal action. It involves showing that the company advertised a product or service at a certain price or with certain features, then induced the consumer to switch to another product or service that was less desirable or more expensive.

Question 13

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?
A) because most managers feel it is the least important element of the marketing mix
B) because it is the least understood element of the marketing mix
C) because it has to be based on the promotion budget for the product
D) because it is difficult to calculate markups for products
E) because managers don't understand the relationship between benefits and costs

Accepted Answer

Price is often the most challenging of the four Ps to manage because it is the least understood element of the marketing mix. The price must be carefully set in order to balance the need to make a profit with the need to be competitive and offer value to customers. Factors such as costs, competition, and customer demand must all be taken into account when setting the price. Additionally, pricing decisions must be regularly reviewed and adjusted to reflect changes in the market and to ensure that the price continues to meet the needs of the business and its customers.

Question 14

For market penetration pricing to work,the product or service must be perceived as breaking new ground in some way.

Accepted Answer

The answer of For market penetration pricing to work,the product...

Question 15

According to your text,research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions?
A) Promotion
B) Place
C) Product
D) Perception
E) Price

Accepted Answer

Research has consistently shown that consumers usually rank price as one of the most important factors in their purchase decisions. While other factors such as product quality and brand reputation may also play a role, price is generally considered a crucial consideration for consumers when making purchase decisions.

Question 16

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 use of a low introductory offer price is a sales orientation pricing strategy aimed at attracting new customers to the health club. This approach is not about maximizing profits, achieving a target profit, target return, or maintaining the status quo.

Question 17

When Sony released its PlayStation 3 game machines,it charged a high price,attracting the most avid game players.This was a market penetration pricing strategy.

Accepted Answer

Market penetration pricing strategy involves setting a low price to attract a large number of customers quickly, not a high price.

Question 18

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) substitution

Accepted Answer

Price is not just the amount of money a consumer is willing to pay, but also the overall sacrifice they are willing to make to acquire a specific product or service. This can include time, effort, and any other non-monetary costs associated with the purchase.

Question 19

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 firm's pricing strategy 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, even at the expense of short-term profits. This aligns with a sales-oriented objective, which focuses on increasing sales and market share, rather than profitability.

Question 20

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 Cs of pricing.

Quiz 14: Pricing Concepts for Establishing Value

Firm A has set very low prices for its products in an attempt to drive its competitor,Firm B,out of business.This is known as monopolistic pricing.

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

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n) _______ orientation to pricing.

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

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.

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.

Historically,prices were

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.

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens.To do this,she will likely use a market penetration pricing strategy.

Proving that a company has engaged in the deceptive bait and switch practice is easy.

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?

For market penetration pricing to work,the product or service must be perceived as breaking new ground in some way.

According to your text,research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions?

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

When Sony released its PlayStation 3 game machines,it charged a high price,attracting the most avid game players.This was a market penetration pricing strategy.

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

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