Question 1

For businesses,consumer penalties are part of doing business in a highly competitive marketplace.

Accepted Answer

Consumer penalties, such as fines or refunds, may be incurred by businesses if they fail to meet customer expectations or comply with regulations. However, businesses factor in the potential for these penalties as a cost of doing business and invest in strategies to mitigate them, in order to remain competitive in their respective markets.

Question 2

Diffusion Research Company specializes in conducting market research for various firms.When it receives proposal for a new research,its management first estimates the cost of conducting the research and delivering the final research report.The management,then,attempts to reduce the costs through efficient operations.It also tries to maximize revenue by satisfying its customers' requirements.In this case,Diffusion Research Company uses a _____ pricing objective.

Accepted Answer

Diffusion Research Company aims to reduce costs and maximize revenue, which are characteristic of a profit-oriented pricing objective.

Question 3

Profit-oriented pricing objectives include:

Accepted Answer

Target return on investment is a profit-oriented pricing objective that aims to achieve a certain level of profit based on the company's investment. It is a common objective for businesses to ensure that they are receiving a satisfactory return on their investment. Target market share focuses on the company's desired level of the market it wants to capture, which may not necessarily result in profits. Meeting competitors' prices or status quo pricing may not necessarily result in desired profits for the company.

Question 4

Consumers are more likely to perceive the value of a product to be less than its cost if:

Accepted Answer

If consumers feel that the price of a product is too high, they may perceive it to be of lesser value than its cost. This can be due to various factors such as competition, previous pricing, and their personal perception of the product's value.

Question 5

A rebate is a discount to wholesalers and retailers for performing channel functions.

Accepted Answer

The answer of A rebate is a discount to wholesalers...

Question 6

At a price of $2,000 per unit,the demand for Ranger 60 mountain bikes from Cloyd's Inc.is 300 units,which is same as the number of bikes manufactured every year.If the marketing managers at Cloyd's Inc.decide to sell each bike at a price lower than $2,000 per unit,_____.

Accepted Answer

If Cloyd's Inc. sells each bike at a price lower than $2,000 per unit, the demand for Ranger 60 mountain bikes will increase. This is because the demand is inversely related to the price. As the price decreases, the demand for the bikes will increase, and there will be more buyers than the number of bikes manufactured every year. This will create a shortage of bikes, as the demand will exceed the supply.

Question 7

_____ is the quantity of a product that will be offered to the market by a supplier at various prices for a specified period.

Accepted Answer

Supply is the quantity of a product that will be offered to the market by a supplier at various prices for a specified period. Demand refers to the quantity of a product that consumers are willing to purchase at various prices. Market share and product share refer to the percentage of sales that a particular company or product has in relation to the total market or a specific product category, respectively, and do not directly relate to the quantity of product offered at different prices.

Question 8

Fresnas Designs Inc.is a company known for its quality interior decorations,customized service,and affordable prices.Given the high demand in the market for its service,the management of Fresnas Designs Inc.could price its products higher,but it prefers to price its products such that it will earn a reasonable revenue.In this case,the management of Fresnas Designs Inc.bases its pricing policy on:

Accepted Answer

The management of Fresnas Designs Inc. prefers to price its products to earn a reasonable revenue, which indicates that they are focused on earning satisfactory profits. This pricing strategy is aligned with the objective of maximizing profits and ensuring sustainable business growth. Therefore, option B is the correct answer. Options A, C, and D are not appropriate as they do not reflect the pricing strategy described in the scenario.

Question 9

At a local supermarket,Linda saw a box of plant fertilizer that was retailed at $25 but was marked down to $20.99.Given this information,$20.99 is the:

Accepted Answer

$20.99 is the price of the box of plant fertilizer.

Question 10

Psychological pricing is marketing two or more products in a single package for a special price.

Accepted Answer

The answer of Psychological pricing is marketing two or more...

Question 11

To consumers,value is based upon:

Accepted Answer

Value for consumers is based on their perceived satisfaction with the product or service. It is not necessarily tied to the absolute monetary value of price, ability to get discounts, or the steadiness of price over time. Ultimately, consumers determine the value of a product or service based on how well it meets their needs and expectations.

Question 12

Stone Restaurant,a newly opened restaurant,was unable to attract a lot of customers.Since the owner of the restaurant had to pay the loan amount that he had taken to start the restaurant,he decided to implement a strategy that would help him attract more customers.He offered about 20 percent discount on all the dishes on the menu on weekends.This strategy,he thought,would help him earn enough to be able to make the loan payment.In this case,the owner's pricing objective can be classified as:

Accepted Answer

The owner's pricing objective is to increase sales by offering a weekend discount. Therefore, the objective can be classified as sales maximization, which aims to increase the volume of sales. This objective may not necessarily increase profits or market share, but it can help the owner generate enough revenue to pay off the loan.

Question 13

For convenience,pricing objectives can be divided into three categories,which are:

Accepted Answer

The three categories of pricing objectives mentioned in option D are widely accepted in the field of marketing and are commonly used by businesses to achieve their pricing goals. Profit-oriented objectives aim to maximize profits, sales-oriented objectives focus on increasing sales volume, and status quo objectives aim to maintain current market share and prices.

Question 14

Britney,a teenager,startsher own business of selling cupcakes to coffee shops and restaurants.She strives to increaseeither the market share in terms of the revenue generated or the number of cupcakes sold.This is an example of _____.

Accepted Answer

Britney's goal to increase market share or the number of cupcakes sold aligns with a sales-oriented pricing objective, which focuses on increasing sales volume rather than maximizing profit.

Question 15

At Fournotts,a retail corporation,Riya saw a box of collector's edition comic books.Each book was priced at $28.50,but a customer who bought five of the books was required to pay only $19.99 for each book.Riya bought one book and her friend bought five books.In this case,Fournotts' revenue from this purchase is _____.

Accepted Answer

Riya bought one book at $28.50, so Fournotts' revenue from her purchase is $28.50. 
Riya's friend bought five books at $19.99 each, so the total revenue from their purchase is 5 x $19.99 = $99.95. 
Therefore, Fournotts' total revenue from both purchases is $28.50 + $99.95 = $128.45. Therefore, option D is the correct answer.

Question 16

Inelastic demand is a situation in which:

Accepted Answer

Inelastic demand means that consumers are not very responsive to changes in the price of a product. This can happen with essential goods, such as food or medications, where consumers will continue to buy them even if the price goes up because they need them regardless of the cost. Inelastic demand can also be the case with luxury goods that have a high cultural or social value that makes the consumer willing to pay a premium price for them.

Question 17

Unlike a firm that strives for market share,a firm with the objective of maximizing sales:

Accepted Answer

A firm with the objective of maximizing sales does not prioritize profits, competition or the marketing environment as long as sales are increasing. The focus is solely on increasing sales volume. This is different from a firm that strives for market share, which takes into consideration profitability and the competitive environment.

Question 18

To increase the popularity of its new range of smartphones,GizmoPro Inc.,a mobile phone manufacturer,offered several other products for free to customers who bought the smartphones.However,the management of GizmoPro Inc.soon found this to be an unsustainable practice.The company then decided to offer discounts on the products instead of giving them for free.These actions of the management of GizmoPro Inc.are aimed at:

Accepted Answer

The management of GizmoPro Inc. switched from giving free products to offering discounts as the earlier practice was not sustainable. This implies that they were losing money on the free products, which meant a decrease in profits. Thus, the company's actions were aimed at profit maximization.

Question 19

Return on investment (ROI)for a firm:

Accepted Answer

ROI measures how effectively a company generates profits with the assets it has available. It is calculated by dividing net profits by total assets. It is not affected by taxes payable or market performance and does not involve multiplying assets with net profits after taxes. Therefore, the best choice is C.

Question 20

Identify a true statement about status quo pricing.

Accepted Answer

Status quo pricing involves maintaining current prices or matching competitors' prices, which can lead to a pricing disaster if it doesn't account for changes in costs or market demand.

Quiz 19: Pricing Concepts