Question 1

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

Accepted Answer

Market share is the specific ratio of a company's sales to the overall industry's sales, which measures the company's relative market power.

Question 2

Which of the following statements regarding a market share pricing objective is most accurate?

Accepted Answer

While increased market share is a goal for some firms, it is often seen as a means to other objectives, such as increased sales or profits. The other statements are inaccurate. A market share objective may not always be difficult for product managers, increased prices may actually decrease consumer confidence, and market share may be impacted by competitors' actions. Additionally, there is no correlation between a market share objective and industry sales rising.

Question 3

Given that a firm's profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.

Accepted Answer

Increasing dollar sales revenue is important because it directly contributes to higher profit margins and increased market share. This can be done by increasing advertising and promotional activities, improving customer relationships, expanding the product line, or entering new markets. The other options may not necessarily lead to increases in market share and profit.

Question 4

Market share is the ratio of the __________ to those of the industry, including the firm itself.

Accepted Answer

Market share is the percentage of total industry sales or unit sales that a company has. Therefore, it is the ratio of the firm's sales revenues or unit sales to those of the industry. Choice A (target return on sales), choice B (marginal profit of the firm), choice D (marketing expenses of the firm), and choice E (profits of the firm) are not directly related to market share.

Question 5

All of the following are examples of pricing constraints except

Accepted Answer

Social responsibility is not a pricing constraint.

Question 6

Which term describes factors that limit the range of prices a firm may set?

Accepted Answer

Pricing constraints are external factors that limit the pricing range of a firm. These may include competition, customer demand, and production costs. Price fixings refer to illegal collusion among firms to set prices, price elasticities refer to the responsiveness of demand to changes in price, pricing demands refer to customers' willingness to pay for a product or service, and pricing margins refer to the profit margin that a firm aims to achieve.

Question 7

Pricing constraints refers to

Accepted Answer

Pricing constraints refer to factors that limit the range of prices a firm may set, such as production and operating costs, customer demand, and competition. These constraints can make it difficult for a firm to achieve its desired pricing objectives.

Question 8

Companies often pursue a market share objective when

Accepted Answer

When industry sales are flat or declining, companies may pursue a market share objective as a way to increase their sales even if the overall industry is not growing. This allows them to maintain or increase their revenue despite the industry conditions.

Question 9

A firm may forgo higher profit on sales and follow which of the following pricing objectives because it wants to recognize its stakeholder obligations?

Accepted Answer

Following a social responsibility pricing objective means that the firm takes into account its wider obligations to stakeholders, including customers, employees, suppliers, and communities. It may forgo higher profits on sales in order to prioritize the well-being of these stakeholders, therefore this is the best choice.

Question 10

Which of the following statements regarding sales goals is most accurate?

Accepted Answer

Sales revenue or unit sales are commonly used targets for marketing managers as they are concrete and measurable.

Question 11

A negative aspect of selecting unit volume as a pricing objective is that

Accepted Answer

If price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits. This means that if a company focuses solely on volume objectives, they may sacrifice profits by reducing prices to attract more customers.

Question 12

Factors that limit the range of prices a firm may set are referred to as

Accepted Answer

Pricing constraints refer to external or internal factors that limit the range of prices a firm can set. These constraints can include the industry's competitive environment, cost of production, distribution channels, legal regulations, and customer demand. As such, a firm must consider these constraints when determining its pricing strategy to ensure that it can achieve maximum profits while remaining competitive in the marketplace.

Question 13

If the CEO of the Clorox Co. were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a __________ pricing objective.

Accepted Answer

The CEO's goal of controlling 60% of the bleach market within the next five years is a statement of market share, which is a market-based pricing objective.

Question 14

RadioShack, an electronics retail chain, couldn't compete with the prices offered by other retailers. The company enacted price-matching programs and promoted large discounts on its merchandise to raise cash and hopefully stave off bankruptcy. The best pricing objective at this point for RadioShack most likely was

Accepted Answer

At this point, the main goal for RadioShack should be survival, as they are struggling to compete with other retailers and are at risk of bankruptcy. Profit, market share, and unit volume would all be secondary goals if the company is not able to stay in business. Social responsibility may be important, but it is not the most pressing concern for the company in this situation.

Question 15

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and

Accepted Answer

Achieving a target return is the most appropriate choice as it implies a specific profit goal. Pricing strategy can be designed to achieve the desired target return on investment.

Question 16

Some specialty retailers pursue a __________ pricing objective to generate cash to ward off bankruptcy.

Accepted Answer

Pursuing a survival pricing objective aims to generate enough cash flow to keep the business afloat and avoid bankruptcy. This may involve selling products at a lower price point to increase sales volume and generate sufficient revenue to cover expenses and keep the business running.

Question 17

A target return profit objective implies that a company chooses to

Accepted Answer

A target return profit objective means that the company sets a profit goal that is often determined by its board of directors. This goal is usually for the long-term and not for quick or immediate profits. The company may choose to invest in research, development or marketing to achieve this objective.

Question 18

An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to

Accepted Answer

By dropping its price to match its competitor, the firm is attempting to maintain market share and prevent customers from switching to the cheaper competitor. The firm may also be hoping to attract new customers who were previously deterred by the higher price. While there may be some decrease in revenue, the overall goal is to maintain or increase the firm's market position and profitability in the long run.

Question 19

Unit volume as a pricing objective refers to

Accepted Answer

The answer of Unit volume as a pricing objective refers...

Question 20

Pricing constraints are

Accepted Answer

Pricing constraints are factors that limit the range of prices that a firm may set, such as competition, consumer demand, and production costs. These external factors affect the company's ability to charge a certain price for its products or services.

Quiz 13: Building the Price Foundation