Question 1

Traditionally, price was never a major determinant of buyer choice.

Accepted Answer

Price has always been a major determinant of buyer choice, with many buyers preferring lower prices and seeking the best value for their money. This has been true throughout history and is still true today.

Question 2

Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products.

Accepted Answer

Studies have shown that while consumers may have a general sense of the price range for certain products, they often cannot recall specific prices accurately.

Question 3

________ price refers to what the consumers feel the product should cost.

Accepted Answer

Fair price refers to the price that consumers perceive as reasonable and justifiable for the value they receive from the product. This can be influenced by factors such as market competition, product quality, and perceived benefits. A fair price is often seen as a key factor in building customer loyalty and long-term relationships.

Question 4

When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) ________ price.

Accepted Answer

A reference price is a specific price that consumers have in mind and use as a basis for evaluating the fairness of a product’s observed price.

Question 5

Today, consumers are price takers and accept prices at face value or as given.

Accepted Answer

Consumers today have access to a wide range of information and tools that allow them to compare prices, seek discounts, and negotiate, making them more price-aware and less likely to accept prices at face value.

Question 6

A company decided to conduct a market survey for its new MP3 player that the company had priced at $150. In the survey, 95 percent of participants said that the maximum they would pay for the MP3 player is $100. This is an example of which of the following possible consumer reference prices?

Accepted Answer

This is an example of an upper-bound price, which refers to the maximum price that consumers are willing to pay for a product. In this case, the maximum price that 95% of participants in the survey were willing to pay was $100, which is lower than the actual price of the MP3 player at $150.

Question 7

When Abe goes shopping, he comes across a T-shirt that is priced at $35. Although he wants to buy it, judging from the material used, he feels that the T-shirt should only cost $20. What reference price is Abe using here?

Accepted Answer

The answer of When Abe goes shopping, he comes across...

Question 8

Which of the following is NOT one of the possible consumer reference prices?

Accepted Answer

The actual future price is not a consumer reference price since it cannot be predicted or referenced in advance. The other options are possible consumer reference prices, with typical price referring to the average or common price of a product, last price paid referring to the most recent price paid, expected future price referring to a prediction of the future price, and upper-bound price referring to the highest price a consumer is willing to pay.

Question 9

The reservation price, the maximum that most consumers will pay for a given product, is known as the ________ price.

Accepted Answer

The reservation price is the upper-bound or maximum price that most consumers will pay for a given product. Therefore, the best choice is C - upper-bound. The other options do not accurately describe the concept of reservation price.

Question 10

Price is one of the two elements of the marketing mix that produces revenue.

Accepted Answer

The answer of Price is one of the two elements...

Question 11

Customers usually have a lower price threshold below which prices signal inferior or unacceptable quality, as well as an upper price threshold above which prices are prohibitive and the product appears not worth the money.

Accepted Answer

This is a common observation in consumer behavior research. Customers tend to have a range of acceptable prices for a product or service, and prices outside of this range are considered either too low (and therefore of low quality) or too high (and not worth the money).

Question 12

While shopping at the mall, Jane was asked by one of the sales representatives at the cosmetics counter to try out a new lipstick that her company was test marketing. The company representative asks her how much she would be willing to pay for the lipstick. After trying it out, Jane is of the opinion that $5 is just the right price for it. What type of a reference price is Jane using?

Accepted Answer

Jane is using a fair price as her reference price, as she is evaluating the value of the lipstick based on her perception of what a reasonable price should be. The other options (usual discounted price, maximum retail price, last price paid, historical competitor price) do not fit the scenario described in the question.

Question 13

What are the different possible consumer reference prices?

Accepted Answer

The answer of What are the different possible consumer reference...

Question 14

Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of pricing is the company depending on?

Accepted Answer

The company is depending on image pricing, where they are pricing the product higher due to the perceived value and prestige associated with the brand, rather than the actual production cost of the product.

Question 15

Many consumers use price as an indicator of quality and value.

Accepted Answer

Many consumers assume that higher priced products are of better quality and offer greater value. However, this is not always the case and other factors such as brand reputation, product features, and customer reviews should also be considered.

Question 16

Pricing cues such as sale signs and prices that end in 9 are more influential when ________.

Accepted Answer

The answer of Pricing cues such as sale signs and...

Question 17

A company has developed the prototype of a mobile phone that it plans to launch in the next few months. The phone comes equipped with the most advanced technological features. As part of its test marketing efforts, the company allows customers to examine and use the prototype and also gathers feedback regarding product features and price. The results of this test marketing effort show that customers are willing to pay at least $500, considering the phone's various features. As such, the company has discovered customers' ________.

Accepted Answer

The test marketing effort has revealed that customers are willing to pay at least $500 for the phone, which represents the lower-bound price. This means that customers are not willing to pay less than $500 for the phone, but they may be willing to pay more. The answer choices "last paid price," "expected future price," "upper-bound price," and "typical price" are not relevant to the information provided in the scenario.

Question 18

Pricing cues such as sale signs and prices that end in 9 are more influential when consumers are experienced in the category.

Accepted Answer

Pricing cues such as sale signs and prices that end in 9 are typically more influential on less experienced consumers, as they rely more on these cues to make judgments about the value and quality of products. Experienced consumers are more likely to rely on their knowledge and past experiences.

Question 19

The minimum price that most consumers would pay for a given product is known as the ________ price.

Accepted Answer

The "lower-bound" price refers to the minimum price that most consumers are willing to pay for a product, below which they may perceive the product as low quality or not worth purchasing.

Question 20

When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference.

Accepted Answer

This statement is true. Consumers use reference prices to evaluate whether a product's price is fair, reasonable, or a good deal. Reference prices can be based on the consumer's memory of past prices, advertised sale prices, or the price of a similar product from a competitor.

Quiz 16: Developing Pricing Strategies and Programs