Deck 14: The Communications Mix: Advertising

Question 1

The basic theory of economics, as stated in the text, is that the economy responds to the customer.

Answer 1

True

Question 2

One reason that price is important to marketing is that it is the only revenue producing part of the marketing mix.

Answer 2

True

Question 3

Cost-based pricing involves adding a target margin to the cost of marketing a product or service.

Answer 3

False

Question 4

Two common ways of pricing are cost based pricing and value based pricing.

Question 5

The use of coupons and certain discounts for controlled availability is a great way to maximize one's revenue.

Question 6

Revenue management, if used effectively, allows a hotel to manage its limited inventory better in order to maximize revenues.

Question 7

Aiming mostly for the low-price triangle (discounting) is the more profitable way to make money because of the high quantity of good that can be sold at this price.

Question 8

Restaurants have traditionally used cost-based pricing, but slowly the industry has begun to use alternate forms of pricing.

Question 9

The way in which a corporation sets prices is heavily influenced by competitions, costs, demand supply, channels of distribution and the customer.

Question 10

Two common approaches to pricing products and services are cost-based pricing and value-based pricing.

Question 11

Competitive pricing is also known as match pricing.

Question 12

The pricing strategy is the part of the marketing strategy that allows the consumer to provide a certain price for a specific product that they want to purchase.

Question 13

If a company fluctuates its prices often, customers will not mind much because they are loyal to the product regardless of the price.

Question 14

A large number of hotels today operate without some form of a revenue management system.

Question 15

The marketing strategy is the way a company creates value through the configuration and coordination of its multi-market activities.

Question 16

According to Peter Drucker, the three deadly sins of pricing are: the worship of high profit margins, mispricing a new product by charging what the market will bear and cost-driven pricing.

Question 17

One way to change price is by changing the time and place of transfer of ownership.

Question 18

The drivers of profit, as outlined in the text, are sales revenue and costs.

Question 19

"Cost plus pricing" allows for flexibility in pricing and takes the customers' perception of product value into consideration.

Question 20

The only sound way to price is to start out with what the market is willing to pay.

Question 21

Which is not a primary way to build fences?

A) Controlled Availability
B) Transaction Characteristics
C) Seller Characteristics
D) Method of Booking

Question 22

Price lining, which clumps prices together so that a perception of substantially increased quality is created, is called .

A) Geographical pricing
B) Emotional pricing
C) Psychological pricing
D) None of the above

Question 23

What are the two common approaches to pricing products and services:

A) Cost-based pricing and value-based pricing
B) Brand awareness pricing and value-based pricing
C) Cost-based pricing and brand awareness pricing
D) All of the above
E) None of the above

Question 24

A customer buys a product or service only if its value is greater than the price.

A) Market
B) Tangible
C) Perceived
D) None of the above

Question 25

Which of the following are three components of value?

A) Functional, temporal, emotional
B) Temporal, social, financial
C) Social, financial, experiential
D) All of the above
E) None of the above

Question 26

The goal of price skimming is to capture margins at the expense of sales volume.

A) Low; low
B) High; low
C) Low; high
D) High; high

Question 27

What is Kneel Management?

A) Management that watches the competitor's price change and copies it
B) Management that increases prices as the demand increases
C) Management that provides a more inexpensive substitution product for consumers, hoping to gain revenue from the more price-conscious buyers
D) Management that listens to the customers and decides the price of its product based on what they want to pay

Question 28

The point of is the point where the number of respondents who feel the product or service is too cheap is equal to the number of respondents who feel it is not cheap.

A) Comparative analysis
B) Marginal cheapness
C) No return
D) All of the above
E) None of the above

Question 29

The role of pricing must be first and foremost based.

A) Profit
B) Market
C) Manufacturer
D) Customer

Question 30

What is the primary goal of match pricing?

A) To maintain a standard price to prevent inflation
B) To decrease costs and expenses along the price mix
C) To keep up with prices at market value
D) To directly match competitors' prices.

Question 31

The idea of Penetration Pricing deals with:

A) A marketing approach that generates a general response from all markets
B) The idea of a strategy aimed at generating sales volume with the possibility of high margins
C) Attracting buyers who will not consider price important
D) Setting prices high enough to be seen as a luxury item and a willingness to sacrifice potential clients for the higher-end market segment

Question 32

What is the Reference Price?

A) The average price for the product
B) The main price other similar prices are compared to
C) The maximum price you are willing to pay for a good/service
D) Wal-Mart's price for the product

Question 33

Prices should be established with the term customer, not the term margin in mind.

A) Short; short
B) Long; short
C) Long; long
D) Short; long

Question 34

Which of the following requires managers to keep in touch with the needs and preferences of customers?

A) Skim pricing
B) Value-based pricing
C) Cost-based pricing
D) Match pricing

Question 35

What is one of the key benefits of Cost-Based Pricing?

A) It allows companies to eliminate the target margin to the costs of producing a product or service
B) It gives the customer a set price for a certain product or service
C) It helps maximize total potential revenue
D) It satisfy diverse product strategies such as market penetration

Question 36

A company can achieve price customization through:

A) Definite decisions
B) Value pricing
C) Customer pricing
D) Building fences

Question 37

Which is not a way to change prices?

A) Change the quantity of goods and services to be paid by the buyer
B) Change the time and place of payment
C) Change the availability of products to create a sense of notion to the buyer
D) Change the acceptable form of payment
E) Change the time and place of transfer of ownership

Question 38

Which of the following is designed to capture high margins at the expense of high sales volume?

A) Cost-based pricing
B) Match pricing
C) Value-based pricing
D) Skim pricing

Question 39

Which of the following forces managers to review the objective they have when marketing their product or service?

A) Value-based pricing
B) Skim pricing
C) Match pricing
D) Cost-based pricing

Question 40

Satisfying no goal other than achieving the target margin to the extent the target margin is chosen arbitrarily is a quality of:

A) Skim pricing
B) Cost-based pricing
C) Match pricing
D) Value-based pricing

Question 41

How does the demand of price elasticity affect pricing?

A) Allows the customer to dictate ultimate pricing
B) Allows competitors to estimate prices according to demand
C) Provides competitive prices and products
D) All of the above

Question 42

A version of psychological pricing where the numbers end in $.99 is called:

A) the penny discount pricing
B) undercut pricing
C) price-lining
D) odd number pricing

Question 43

British Airways' ability to price tickets according to the services offered is a clear example of:

A) Undercut pricing
B) Price lining
C) Velben effects
D) Value added service pricing

Question 44

Prospect theory argues that when people make decisions, they do so by examining options relative to:

A) Their own reference point
B) A positive value
C) Economic theory
D) A negative value

Question 45

Explain the concept of value pricing. Is it something the hospitality industry should be concerned with? Why or why not? What is the other type of pricing methodology it is often concerned with?

Question 46

Which of the following is a factor that impacts financial value?

A) Switching cost effect
B) Unique value effect
C) Price comparison effect
D) Both A & B
E) All of the above.

Question 47

The textbook lists seven different ways to change prices. List four of the seven and give examples, either from the textbook or from your own experience.

Question 48

If the product or service does what it is designed to do, customers will pay more for it. This is an example of
value.

A) Functional
B) Temporal
C) Trust
D) Emotional
E) Financial

Question 49

The graphs of price-stress analysis presented in the chapter are examples of:

A) Prospect theory
B) Economic theory
C) Contribution margin pricing
D) Price sensitivity measurement

Question 50

Bob Crandall formerly of American Airlines is quoted as saying: "If I have 2000 customers on a given route and 400 different prices, I am obviously short 1600 prices." Explain this statement. Be sure to use illustrations if necessary.

Question 51

Price skimming by definition means:

A) The practice of initial reduced prices
B) The practice of initial high prices
C) The practice of initial competitive prices
D) The practice of initial low prices

Question 52

is a process that puts a price value on a product as determined by the perception of the target market.

A) Prospect theory
B) Contribution margin pricing
C) Price sensitivity measurement
D) Economic theory

Question 53

You have recently been put in charge of the reservation department of a major hotel. Your goal is to maximize revenue for the hotel. What do you do?

Question 54

The goal of penetration pricing is to:

A) Generate sales volume even at the expense of high margins
B) Generate sales by decreasing estimated product value
C) Generate revenue by pricing at a moderate price which the market allows
D) None of the above

Question 55

Explain what price is from the customer's viewpoint and the marketer's, what it represents, and why it is important to marketers.