Question 1

Organizational buyers tend to associate high price with high quality.

Accepted Answer

False

Question 2

Differentiation value is the value associated with product features that are unique and different from competitors

Accepted Answer

Differentiation value refers to the unique features or benefits of a product that set it apart from competitors, making it more attractive to consumers.

Question 3

Low switching costs allow a buyer to focus on minimizing the cost of a particular transaction.

Accepted Answer

Low switching costs make it easier and less expensive for buyers to change suppliers, allowing them to prioritize cost savings in individual transactions.

Question 4

Closed bidding is particularly appropriate when specific requirements are hard to rigidly define or when the products and services of competing suppliers vary substantially.

Accepted Answer

Closed bidding is more suitable when requirements are well-defined and products or services are similar, allowing for straightforward comparison of bids.

Question 5

A penetration pricing policy is optimal if there is a relatively low repurchase rate for durable goods.

Accepted Answer

Penetration pricing is optimal when there is a high repurchase rate or when the goal is to quickly gain market share, not when repurchase rates are low.

Question 6

Developing a bidding strategy is the important first step in planning for competitive bidding.

Accepted Answer

The answer of Developing a bidding strategy is the important...

Question 7

Because making competitive bids is costly and time-consuming, firms should choose potential bid opportunities with care.

Accepted Answer

Careful selection of bid opportunities helps firms allocate resources efficiently, focusing on projects with higher chances of success and better alignment with their capabilities and strategic goals.

Question 8

Success in penetrating a buying organization with one item often means success for other items in the product line.

Accepted Answer

When a company successfully sells one product to a buying organization, it can establish trust and credibility, making it easier to introduce and sell additional products from the same product line.

Question 9

Total revenue will decrease if the price is decreased and demand is price elastic.

Accepted Answer

If demand is price elastic, a decrease in price will lead to a proportionally larger increase in quantity demanded, resulting in an increase in total revenue.

Question 10

The goals of a cost classification system are to properly classify cost data in to fixed and variable components and to properly link costs to the activities causing them.

Accepted Answer

A cost classification system aims to categorize costs as fixed or variable and associate them with the activities that generate them, aiding in accurate cost management and decision-making.

Question 11

Buyers tend to be price sensitive when they can switch from one supplier to another without incurring additional costs.

Accepted Answer

When buyers can switch suppliers easily and without additional costs, they are more likely to be sensitive to price changes, as they can choose the supplier offering the best price.

Question 12

Business marketers should base their pricing decisions primarily on cost and competitive considerations.

Accepted Answer

Business marketers should consider customer value, market demand, and perceived benefits in addition to costs and competition when making pricing decisions.

Question 13

Price elasticity of demand is not the same at all prices.

Accepted Answer

Price elasticity of demand varies at different price levels due to changes in consumer sensitivity to price changes, income effects, and availability of substitutes.

Question 14

Raw materials are an example of indirect traceable costs.

Accepted Answer

Raw materials are considered direct costs because they can be directly traced to the production of specific goods or services. Indirect costs, on the other hand, cannot be directly traced to a single product or service.

Question 15

The value customers assign to a firm's offering can vary by market segment because of how the product will be used.

Accepted Answer

Different market segments may have varying needs, preferences, and usage scenarios, leading to different perceived values for the same product.

Question 16

According to the Robinson-Patman Act, price differentials are permitted, but they must be based on cost differences or the need to meet competition.

Accepted Answer

The Robinson-Patman Act allows price differentials if they are justified by cost differences or are necessary to meet competition, to prevent unfair competition and price discrimination.

Question 17

Recent research indicates that highly satisfied customers are just as sensitive to price changes as customers with low to moderate levels of satisfaction.

Accepted Answer

Highly satisfied customers are generally less sensitive to price changes because their satisfaction often leads to increased loyalty and perceived value, making them more willing to tolerate price increases.

Question 18

If the business marketer's product input plays an insignificant role in the final product's total cost, demand is likely elastic.

Accepted Answer

The answer of If the business marketer's product input plays...

Question 19

To sustain profitability, price reductions should be avoided by strategists in hypercompetitive environments.

Accepted Answer

Price reductions can be a strategic tool in hypercompetitive environments to gain market share, drive out competitors, or respond to market demands, potentially sustaining profitability in the long term.

Question 20

The importance of the business marketer's product as an input into the total cost of the end product influences demand elasticity. If the business marketer's product has an insignificant effect on cost, demand is likely to be inelastic.

Accepted Answer

If the business marketer's product has an insignificant effect on the total cost of the end product, changes in its price are less likely to affect the overall cost significantly, leading to inelastic demand.

Quiz 12: Pricing Strategy for Business Markets