Question 1

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.
A) divergently
B) too high
C) intrinsically
D) independently
E) concurrently

Accepted Answer

The sentence is stating that pricing should not be set independently of the rest of the marketing mix. Therefore, the option that best fits the sentence is "independently" (choice D).

Question 2

Many consumers use price as an indicator of ________.Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars.
A) status
B) quality
C) ability
D) capability
E) size

Accepted Answer

Price is often used by consumers as an indicator of quality, especially for products where the quality is not immediately apparent, such as perfumes and luxury cars.

Question 3

Market-skimming prices make sense under the following conditions EXCEPT ________.
A) the high price communicates high value
B) the high initial price blocks competition from entering the market
C) the unit costs of producing a small number of units are not too high
D) the product is a "me-too" and contains no new technology or points of difference
E) a sufficient number of buyers have a high current demand

Accepted Answer

Market-skimming pricing is used when a product has unique characteristics that appeal to certain customers who are willing to pay a premium price. However, if the product is a "me-too" with no new technology or unique features, market-skimming pricing would not make sense, regardless of other conditions.

Question 4

Purchase decisions are based on how consumers perceive prices and what they consider to be the ________ price-not the marketer's stated price.
A) current actual
B) last purchased price
C) current sale price
D) referent price
E) none of the above

Accepted Answer

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

Question 5

If demand hardly changes with a small change in price,we say that the demand is ________.
A) equal
B) marginal
C) inelastic
D) elastic
E) none of the above

Accepted Answer

When demand hardly changes with a small change in price, it indicates that the demand is inelastic. This means that consumers are not very responsive to changes in price and will continue to buy the same amount of the good or service regardless of a small price increase or decrease. In contrast, if a small change in price leads to a significant change in demand, the demand is considered elastic. Therefore, option C is the best choice.

Question 6

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
A) Determining demand
B) Selecting the pricing objective
C) Researching reference prices in the target market
D) Selecting the final price
E) Selecting a pricing method

Accepted Answer

Although researching reference prices in the target market can be helpful in determining an appropriate price range, it is not a required or universal step in the pricing process. The other steps listed (determining demand, selecting the pricing objective, selecting the final price, selecting a pricing method) are all commonly recognized as key components of setting a pricing policy.

Question 7

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
A) Predatory pricing
B) Survival
C) Maximum current profit
D) Maximum market share
E) Product-quality leadership

Accepted Answer

Predatory pricing is not a legitimate pricing objective; it is an anti-competitive strategy intended to eliminate competitors, often considered illegal in many jurisdictions. The other options are recognized pricing objectives.

Question 8

Pricing cues such as sale signs and prices that end in 9 become more influential when ________.
A) consumer price knowledge is poor
B) items are purchased frequently
C) items have been on the market a long time
D) prices are consistent year-round
E) they are employed frequently

Accepted Answer

Pricing cues such as sale signs and prices that end in 9 have been found to be more effective when consumers have poor knowledge about the actual price of the product. When consumers are uncertain about the true value of a product, these pricing cues may influence their decision-making process.

Question 9

Traditionally,________ has operated as the major determinant of buyer choice.
A) promotion
B) packaging
C) placement
D) distribution
E) price

Accepted Answer

Price has traditionally been the major determinant of buyer choice as it directly affects the affordability and perceived value for money of the product or service. The other factors listed (promotion, packaging, placement, and distribution) are important in influencing buyer choice but do not have the same direct impact as price.

Question 10

Companies pursue survival as their major objective if they are plagued with ________.
A) legal prosecution
B) weak competition
C) static consumer wants
D) shareholder activism
E) overcapacity

Accepted Answer

When companies are faced with overcapacity, which means they have more production capacity than demand for their products, they often pursue survival as their major objective. This is because they are struggling to generate enough revenue to cover their fixed costs, such as rent and salaries, and to remain profitable. In such circumstances, companies may need to cut costs, downsize their operations, or find new sources of revenue to stay afloat. Legal prosecution, weak competition, static consumer wants, and shareholder activism may also pose challenges for companies, but they are not necessarily indicative of a company pursuing survival as its primary objective.

Question 11

The last price paid,competitors' prices,and the expected future price all serve as customer ________.
A) given prices
B) odd prices
C) reference prices
D) price-quality inferences
E) market skimmings

Accepted Answer

Reference prices are the prices that customers use as a basis for comparison when determining whether a current price is reasonable or not. The last price paid, competitors' prices, and expected future price all serve as reference prices. Given prices are set by the seller, odd prices refer to non-rounded numbers, price-quality inferences are judgments that consumers make about a product based on its price, and market skimming is a pricing strategy that involves setting a high price for a new product to maximize revenue from the market's least price-sensitive customers.

Question 12

To maximize market share,a firm may use _____________ pricing,which is based on the theory that as sales volume increases,unit costs will decrease.
A) market-penetration
B) market-skimming
C) value pricing
D) demand pricing
E) price bands

Accepted Answer

Market-penetration pricing is specifically aimed at attracting new customers and gaining market share. This is achieved by setting a lower price for a product or service compared to competitors in the industry. As sales volume increases with lower prices, the firm will benefit from economies of scale and unit costs will decrease. This allows the firm to maintain a competitive price while still earning a profit. Therefore, market-penetration pricing is the best choice for maximizing market share based on the given explanation.

Question 13

________ communicates to the market the company's intended value positioning of its product or brand.
A) Packaging
B) Price
C) Place
D) Promotion
E) Product features

Accepted Answer

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

Question 14

Today,________ is partially reversing the fixed pricing trend.
A) volume discounting
B) big-box retailing
C) the Internet
D) high-margin niching
E) all of the above

Accepted Answer

The Internet allows for dynamic pricing models, where prices can be adjusted in real-time based on demand, competition, and other factors, thus reversing the fixed pricing trend.

Question 15

Consumers ________ low-cost products or items they buy infrequently.
A) prefer the lowest total cost of ownership of
B) remember prices of
C) are ambivalent to prices of
D) are more price sensitive to
E) are less price sensitive to

Accepted Answer

Consumers are less price sensitive to low-cost products or items they buy infrequently.

Question 16

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").
A) historical
B) reference
C) promotional
D) everyday low price
E) none of the above

Accepted Answer

The definition describes reference prices, which are used as a comparison point for consumers when evaluating the observed price. Historical prices refer to past prices, promotional prices are temporary and often associated with sales or discounts, and everyday low prices are consistently low prices offered by retailers. Therefore, the best choice is reference prices (option B).

Question 17

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.
A) prestige pricing
B) total cost of ownership
C) convenience pricing
D) key price points
E) none of the above

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 emphasizes the long-term benefits of a product or service, rather than just the initial price.

Question 18

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 ________.
A) needs to increase bottom-line results
B) raises prices due to cost escalation
C) rolls out an improved product
D) enters bids on new contract work
E) changes styles

Accepted Answer

When a firm enters bids on new contract work, it must set a price for the first time for that specific contract, similar to setting a price for a new product or new market entry.

Question 19

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.
A) block competitive launches
B) maximize their market share
C) minimize their market share
D) maximize volume
E) none of the above

Accepted Answer

Market-penetration pricing is a pricing strategy in which the company sets a low price for its product to penetrate the market and gain a higher market share. The objective of this pricing strategy is to maximize the company's market share, attracting more customers who will switch from competitors to the company's product. By doing so, the company aims to increase its sales volume, leading to lower unit costs and higher long-run profits. Therefore, choice B, "maximize their market share," is the best answer for this question.

Question 20

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 ________.
A) priced low to begin with
B) low cost
C) bought frequently
D) bought infrequently
E) none of the above

Accepted Answer

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

Quiz 14: Developing Pricing Strategies and Programs

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.

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

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

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

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

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

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

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

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

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

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

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

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

Today,________ is partially reversing the fixed pricing trend.

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

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") .

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.

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 ________.

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.

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 ________.