Question 1

Which of the following is crucial to a company's image when a competitor undertakes a price change?

Accepted Answer

The timing of the response is crucial as it can affect a company's image. If a company waits too long to respond, it may appear slow or unresponsive to its customers. On the other hand, if a company responds too quickly, it may appear reactive and may not have had enough time to consider the implications of the price change. It is important for a company to evaluate the situation carefully and respond in a timely and strategic manner.

Question 2

Competitor-orientated pricing is risky where a firm's cost position is stronger than its competitors.

Accepted Answer

Competitor-orientated pricing involves setting prices based on the prices of competitors. This strategy can be risky because it does not take into account a firm's cost position. If a firm has a stronger cost position compared to its competitors, it may be able to offer lower prices while still maintaining profitability. In this case, competitor-orientated pricing would undervalue the firm's products or services and lead to lower profits. Therefore, it is important for firms to consider both their cost position and their competitors' prices when setting prices.

Question 3

Price decreases are likely when there is _______.

Accepted Answer

The answer of Price decreases are likely when there is...

Question 4

Penetration pricing strategies are more likely in which of the following situations:

Accepted Answer

Penetration pricing strategies are more likely in all of the above situations. When a company uses a penetration pricing strategy, it typically involves setting a low price initially to enter the market and capture market share quickly. This may allow the company to dominate the market, establish a position in the market, and create a barrier to entry for competitors. However, it is important to note that this strategy may not always result in immediate profits but rather a long-term gain.

Question 5

Which of the following statements is true?

Accepted Answer

The more value that a product gives compared to the competition, the higher the price that can be charged. This is because customers are willing to pay more for a product that offers them greater benefits and value. Companies that can differentiate their products from competitors and provide higher value can command a premium price.

Question 6

By producing a range of brands at different price points, companies can cover the varying price _______ of consumers and encourage them to trade up to the more expensive, higher-margin brands.

Accepted Answer

Price sensitivities refer to a consumer's sensitivity to the price of a product. By producing brands at different price points, companies can cater to consumers with different sensitivities and encourage them to trade up to more expensive brands.

Question 7

Greater price competition is due to the use of technology helping to drive down costs and greater levels of globalization and retail competition is helping to depress price levels.

Accepted Answer

The use of technology allows for more efficient and cost-effective production and distribution, which can lead to lower prices for consumers. Globalization and increased competition in the retail industry also puts pressure on companies to keep prices low in order to attract customers.

Question 8

It may be necessary to ignore a competitor's price rise when there is(are) _______.

Accepted Answer

Ignoring a competitor's price rise might be necessary when there is excess supply. In such a situation, following a competitor's price increase could lead to losing market share, as customers have plenty of alternative options to choose from.

Question 9

In order to secure distribution channels when a product is being launched, organizations must ensure that retailers obtain which of the following?

Accepted Answer

Good margins are crucial for retailers to be incentivized to distribute a new product. If the margins are not sufficient, the retailer may not be willing to take on the risk and cost associated with selling the product. Reduced costs, good value to the customer, and reduced variable costs may be beneficial for retailers, but they are not essential for securing distribution channels.

Question 10

Which of the following influences price levels?

Accepted Answer

All of the mentioned factors can influence price levels. Competitive marketing strategies involve pricing tactics to stay competitive in the market, new product launch strategies determine the pricing of new products, and positioning strategies determine the perceived value of the product, which can affect the pricing strategy as well. Hence, all the above factors can influence price levels.

Question 11

When estimating a competitor's reaction to a price change which of the following should be assessed?

Accepted Answer

Assessing a competitor's reaction to a price change should take into account all the options listed in the question - their strategic objectives, past history, and self-interest. By analyzing these factors, it is possible to predict how the competitor will respond to the price change and to make informed decisions regarding the pricing strategy. Consideration of only one or two of these factors may not provide a complete picture of the competitor's potential reaction.

Question 12

How can discount terms be made more attractive?

Accepted Answer

Lowering the qualifying levels for discounts can make them more attractive to customers. Increasing the number of discounts or decreasing the percentage may not necessarily make the terms more attractive.

Question 13

Where product profiles consisting of product features and price are described to consumers and respondents are asked to name their preferred profile, this is called which of the following?

Accepted Answer

The given scenario describes a trade off analysis in which respondents are asked to choose their preferred product profile based on the provided features and price. Option A (product profiling) is not a commonly used term, and option B (experimentation) refers to a broader concept of conducting controlled tests or trials to gather data. Option D (price profiling) is not a recognized research method in marketing. Therefore, option C (trade off analysis) is the best choice.

Question 14

Price increases are likely when _______.

Accepted Answer

When a company follows a harvest objective, it means that it is trying to maximize profits in the short term before eventually phasing out the product or service. This strategy often involves reducing marketing and R&D costs and increasing prices. Therefore, price increases are likely when a harvest objective is being followed.

Question 15

Marketing-orientated companies need to take account of where the price of a new product fits into its existing _______ line.

Accepted Answer

The price of a new product needs to be considered in the context of the company's existing product line to ensure it aligns with the pricing strategy and does not cannibalize sales from other products in the line. Choice A (brand) and C (company) are too broad and do not specifically address the pricing of a new product within an existing line. Choice D (competitive) is relevant but not as directly related to the company's own product line.

Question 16

Trade-off analysis (otherwise known as conjoint analysis) measures the trade-off between price and other product features so that their effects on product preference can be established.

Accepted Answer

Trade-off analysis, also known as conjoint analysis, is a research technique that measures the trade-off between different product attributes, including price, to determine their impact on consumer preference. The analysis aims to identify how much value consumers place on different product features and how much they are willing to sacrifice in terms of one feature to gain another. Therefore, the statement is true.

Question 17

"Fighter brands" are which of the following?

Accepted Answer

Fighter brands refer to brands launched by companies to directly compete against cut-price competitors and to defend their premium-priced brand. Option A is incorrect because a brand's success in the maturity phase does not make it a fighter brand. Option C refers to challenger brands, not fighter brands, which are launched to compete against the dominant brand leader. Option D is incorrect because fighter brands do exist, as explained in option B.

Question 18

When products are sold through intermediaries such as distributors or retailers, which of the following must be reflected in the list price to the customer?

Accepted Answer

The list price to the customer must reflect the margins of intermediaries such as distributors or retailers, as these entities add their markup to cover their costs and earn a profit.

Question 19

Competitor-oriented pricing may take any of three forms, namely, where firms follow the prices charged by leading competitors, where producers take the going rate price or where contracts are awarded through a competitive bidding process.

Accepted Answer

Competitor-oriented pricing can take any of the three mentioned forms, as stated in the statement, which is true.

Question 20

It may be necessary to follow a competitor's price rise when there is(are) _______.

Accepted Answer

When there is excess demand, meaning customers are willing to pay the higher price for the product, it may be necessary to follow a competitor's price rise in order to maintain market share and not lose customers to the competitor.

Quiz 8: Value Through Pricing