Question 1

Companies pursue survival as their major objective if they are plagued with ________.

Accepted Answer

Overcapacity refers to a situation in which a company's production capacity is greater than the demand for its products. This can lead to intense price competition and lower profit margins, which can threaten a company's survival. Therefore, companies may pursue survival as their major objective if they are plagued with overcapacity.

Question 2

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

Accepted Answer

Pricing cues such as sale signs and prices that end in 9 are designed to create a perception of a good deal. This perception is often more influential when consumers have poor price knowledge and cannot accurately judge the true value of the product.

Question 3

The concept of the lowest ________ means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining,operating,and servicing the product over its lifetime.

Accepted Answer

The concept of the lowest total cost of ownership means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining, operating, and servicing the product over its lifetime. This approach considers not just the initial purchase price but also the cost of maintenance, repairs, and other expenses associated with owning the product. By emphasizing the long-term value of the product, sellers can justify a higher price and potentially attract customers who are willing to pay more for a better overall experience.

Question 4

Today,________ is partially reversing the fixed pricing trend.

Accepted Answer

The answer of Today,________ is partially reversing the fixed pricing...

Question 5

Executives often complain that pricing is a big headache.Common mistakes include: price is not revised often enough to capitalize on market changes;price is set ________ of the rest of the marketing mix rather than an intrinsic element of a market-positioning strategy.

Accepted Answer

The sentence is contrasting price being set independently of the rest of the marketing mix with it being an intrinsic element of a market-positioning strategy. Therefore, the best choice is D, independently.

Question 6

Traditionally,________ has operated as the major determinant of buyer choice.

Accepted Answer

Price has traditionally been the major determinant of buyer choice as it directly affects the affordability of a product for a consumer. Consumers tend to compare the prices of various competing products before making a purchase decision. Higher prices may deter some buyers while lower prices may attract them. Hence, price plays a crucial role in the buying decision of a consumer.

Question 7

To maximize market share,a firm may use _____________ pricing,which is based on the theory that as sales volume increases,unit costs will decrease.

Accepted Answer

Market-penetration pricing is based on the idea that as sales volume increases, unit costs will decrease. This allows the company to offer a lower price, which can help to increase overall market share. By pricing their products or services low, firms can attract price-sensitive customers who might otherwise buy from competitors. Over time, as sales volume increases, the firm can achieve economies of scale, which leads to lower costs and potentially higher profits.

Question 8

Purchase decisions are based on how consumers perceive prices and what they consider to be the ________ price-not the marketer's stated price.

Accepted Answer

The answer of Purchase decisions are based on how consumers...

Question 9

The first step in estimating demand is to understand what affects price sensitivity.Generally speaking,customers are most price sensitive to products that cost a lot or are ________.

Accepted Answer

The answer of The first step in estimating demand is...

Question 10

The last price paid,competitors' prices,and the expected future price all serve as customer ________.

Accepted Answer

Customer reference prices are influenced by the last price paid, competitors' prices, and the expected future price. These factors serve as a point of reference for customers when evaluating the fairness of the price being offered by a company.

Question 11

A firm must set a price for the first time when it develops a new product,when it introduces its regular product into a new distribution channel or geographical area,and when it ________.

Accepted Answer

The answer of A firm must set a price for...

Question 12

The definition of ________ prices is: In considering an observed price,consumers often compare it to an internal memory reference price or an external frame of reference (such as a posted "regular retail price").

Accepted Answer

The definition describes reference prices, which are internal or external frames of reference used by consumers for comparison. Historical prices refer to past prices, promotional prices are temporary or discounted prices, and everyday low prices refer to consistent low prices instead of sales or promotions. None of these options fully align with the definition given.

Question 13

Consumers ________ low-cost products or items they buy infrequently.

Accepted Answer

The answer of Consumers ________ low-cost products or items they...

Question 14

________ communicates to the market the company's intended value positioning of its product or brand.

Accepted Answer

The answer of ________ communicates to the market the company's...

Question 15

A firm must consider many factors in setting its pricing policy.We list these as a six-step process.Which of the following is NOT one of these steps?

Accepted Answer

While researching reference prices in the target market may be helpful in setting prices, it is not listed as one of the six steps in the pricing policy process. The six steps are: determining demand, selecting the pricing objective, estimating costs, analyzing competitor's prices, selecting a pricing method, and selecting the final price.

Question 16

Many consumers use price as an indicator of ________.Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars.

Accepted Answer

The answer of Many consumers use price as an indicator...

Question 17

If demand hardly changes with a small change in price,we say that the demand is ________.

Accepted Answer

When demand hardly changes with a small change in price, it is said to be inelastic. This means that consumers are not very sensitive to changes in price and will continue to purchase a similar amount regardless of the price increase. Inelastic demand is usually seen with essential goods such as food and medicine, where consumers will continue to purchase these goods even if the price increases slightly.

Question 18

In market-penetration pricing,the company's objective is to ________,believing that higher sales volume will lead to lower unit costs and higher long-run profits.

Accepted Answer

In market-penetration pricing, the objective is to maximize market share by setting a low price, which is expected to attract a large number of customers. The company aims to sell more units, which can lead to lower unit costs through economies of scale. By gaining a larger market share, the company can establish itself as a leader in the industry and create higher long-run profits.

Question 19

Market-skimming prices make sense under the following conditions EXCEPT ________.

Accepted Answer

Market-skimming prices are usually used for products containing new technology or unique features that can justify a high price. "Me-too" products do not have these distinguishing characteristics, so a high price would not make sense.

Question 20

A firm first decides where it wants to position its market offering.A company can pursue any of five major objectives through pricing.Which of the following is NOT one of these objectives?

Accepted Answer

The answer of A firm first decides where it wants...

Quiz 14: Developing Pricing Strategies and Programs