Question 1

All of the following are included in the five Cs of pricing except
A) customers.
B) channel members.
C) cost.
D) collaboration.
E) company objectives.

Accepted Answer

The five Cs of pricing include customers, cost, company objectives, channel members, and competition. Collaboration is not a part of the five Cs.

Question 2

When CarMax promises a "no-haggle" pricing structure,it exhibits _________ because it provides additional value to potential used car buyers by making the process simple and easy.
A) a customer orientation
B) a status-quo pricing structure
C) competitive parity
D) a competitor orientation
E) consumer parity

Accepted Answer

CarMax's "no-haggle" pricing structure demonstrates a customer orientation as the company is focused on providing a simpler and more convenient experience for potential used car buyers. This customer-centric approach adds value for customers by making the process easier and more transparent.

Question 3

Consumers generally believe that __________ is one of the most important factors in their purchase decisions.
A) promotion
B) place
C) product
D) perception
E) price

Accepted Answer

Research and studies have shown that price is one of the most important factors influencing consumers' purchase decisions. Consumers often compare prices across different brands and products before making a decision. Additionally, promotions, place, product, and perception can also play a role, but price consistently ranks as a top factor.

Question 4

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 5

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 because she is measuring her prices against those of other stores in her area.

Question 6

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage.Earl perceived price as _______ for a good or service,while most consumers recognize price as the _______ made to acquire a good or service.
A) the money paid; overall sacrifice
B) a variable cost; fixed cost
C) a fixed cost; variable payment
D) the overall sacrifice; monetary payment
E) the break-even amount; total cost

Accepted Answer

Earl's behavior illustrates that he views price primarily as the monetary amount paid for a good, whereas the general consumer perspective is that price represents the total sacrifice (including time, effort, and money) made to obtain a product.

Question 7

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 was using a sales orientation pricing strategy by lowering the price of the Taurus in hopes of increasing sales and claiming the title of best-selling car in America. A maximizing profits strategy would focus on setting prices at the highest level possible to maximize profits, while a target profit strategy would set prices to achieve a specific profit goal. A status quo strategy would maintain current prices without any changes, and a target return strategy would set prices to achieve a specific return on investment.

Question 8

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 9

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

A low-price strategy may attract price-sensitive consumers, but it often does not result in becoming the leading brand in a market. Consumers may associate a low price with low quality, and there may be limitations on how low a firm can price its products while still maintaining profitable operations. Therefore, Julia should consider other factors such as product quality, brand image, and marketing efforts to gain market share.

Question 10

All of the following are included in the full price of a product or service 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 price of alternative products and services is not included in the full price of a product or service as it is not a direct cost of purchasing the product/service. It is a consideration for the consumer to make when deciding whether to purchase the product/service at the given price or to look for a cheaper or more suitable alternative.

Question 11

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 12

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 focus on maximizing market share, even at the expense of profits in the short run, indicates a sales-oriented objective for the company. This type of objective prioritizes increasing sales revenue over immediate profitability.

Question 13

When Delta increases its average fares,American Airlines and United often follow with similar increases.This is an example of
A) competitor orientation.
B) customer orientation.
C) status quo pricing.
D) customer orientation .
E) adding value.

Accepted Answer

This is an example of status quo pricing, where competitors in the industry follow each other in adjusting their prices without necessarily considering customer demand or adding value. The focus is more on maintaining relative pricing levels rather than differentiation.

Question 14

Sharon knew that her established customers liked her product much better than her competitor's.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 plan of charging a higher price than competitors to demonstrate her product's high-quality is an example of premium pricing. This strategy is effective for businesses that have established a reputation for offering superior quality products, and Sharon's established customers already prefer her product over the competitor's. By charging a higher price, Sharon can also increase profit margins and invest in further improving the quality of her product.

Question 15

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 return. The low introductory offer price is aimed at attracting new customers and increasing the club's membership base. By offering a low price, the club may be able to generate interest and persuade potential customers to sign up, ultimately leading to increased revenue over time.

Question 16

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

Tess is using a target return pricing strategy, which means she is setting prices to achieve a specific level of profit. This indicates that her firm's primary objective is to increase profits.

Question 17

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 involves maximizing profits, which is the goal of the maximizing profits 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, where the goal is to generate a specific return on investment for the products sold. In this case, the target return is 20 percent. Other pricing strategies, such as sales orientation, target profit, status quo, and competitive parity, do not necessarily focus on generating a specific return on investment.

Question 19

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 for the company. The other elements of the marketing mix (product, promotion, and place) may ultimately lead to revenue generation, but the price is the direct driver of revenue.

Question 20

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 requires a thorough understanding of the market, competition, and consumer behavior. Setting the right price involves balancing the cost of production, distribution, and promotion with consumer demand and perceptions of value. This requires a deep understanding of the market and consumer behavior, and therefore it is often the least understood element of the marketing mix.

Quiz 14: Pricing Concepts for Establishing Value

All of the following are included in the five Cs of pricing except

When CarMax promises a "no-haggle" pricing structure,it exhibits _________ because it provides additional value to potential used car buyers by making the process simple and easy.

Consumers generally believe that __________ is one of the most important factors in their purchase decisions.

Historically,prices were

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.

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage.Earl perceived price as _ for a good or service,while most consumers recognize price as the _ made to acquire a good or service.

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

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

All of the following are included in the full price of a product or service except

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.

When Delta increases its average fares,American Airlines and United often follow with similar increases.This is an example of

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

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 _______ 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.

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.

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

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