Question 1

A "no haggle" pricing policy is a type of _______________ pricing strategy.
A)maximizing profits
B)sales orientation
C)target return
D)status quo
E)customer-oriented

Accepted Answer

A "no haggle" pricing policy is a customer-oriented pricing strategy because it puts the customer's needs and preferences first by offering a clear and transparent pricing structure that doesn't require negotiation or haggling. This can help build trust with customers and improve their overall satisfaction with the buying experience.

Question 2

A demand curve shows the relationship between ___________________ in a period of time.
A)income and demand
B)demand and cost
C)price and elasticity
D)profit and price
E)price and demand

Accepted Answer

A demand curve shows the relationship between the price of a good or service and the amount of that good or service that consumers are willing and able to buy in a given period of time.

Question 3

A change in ______________ would probably cause a change in the demand curve for a product.
A)advertising expenditures
B)the economy
C)competitors' prices
D)the price of related goods
E)all of these

Accepted Answer

All of these factors can potentially affect the demand curve for a product. Advertising expenditures can increase consumer awareness and interest in a product, leading to a shift in the demand curve. Changes in the economy, such as a recession or growth, can affect consumers' purchasing power and preferences. Competitors' prices can impact the perceived value of a product, potentially causing a shift in demand. The price of related goods, such as substitutes or complements, can also influence the demand for a product. Therefore, all of these factors can cause a change in the demand curve for a product.

Question 4

A customer orientation toward pricing explicitly invokes the concept of:
A)knowing the dimensions of the target market.
B)positioning.
C)the income effect.
D)value.
E)None of these.

Accepted Answer

A customer orientation toward pricing means that the company's pricing strategy is based on creating value for the customer. Therefore, the concept of value is explicitly invoked in such a pricing strategy. Knowing the dimensions of the target market, positioning, and the income effect are all important considerations in pricing decisions, but they are not specific to a customer-oriented approach.

Question 5

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection.Ryan told the manager to always match the gasoline prices of the other store.Ryan is using a _____________________ pricing strategy.
A)maximizing profits
B)target profit
C)target return
D)status quo
E)sales

Accepted Answer

Ryan is using a status quo pricing strategy, meaning he is matching the gasoline prices of the other store rather than attempting to maximize profits, achieve a specific target profit or return, or increase sales.

Question 6

Sharon knew that her established customers liked her product much better than the competitors.She was planning to expand into new markets,and she was considering pricing.She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product.Sharon was considering:
A)a top of market strategy.
B)the value of quality.
C)advantageous pricing.
D)premium pricing.
E)differential pricing.

Accepted Answer

Sharon's consideration of a higher price than competitors to demonstrate a high-quality product is indicative of premium pricing. This strategy is often used when a brand wants to establish itself as offering a higher quality or luxury product, and is willing to charge a premium for it.

Question 7

According to a typical demand curve,the higher the price:
A)the greater the income effect.
B)the lower the quantity consumers will buy.
C)the lower the output of producers.
D)the greater the production costs.
E)the lower the cross-price elasticity.

Accepted Answer

According to the law of demand, as the price of a good or service increases, the quantity demanded decreases. Therefore, as the price on a typical demand curve increases, the quantity consumers will buy decreases.

Question 8

A demand curve is built assuming that:
A)income is derived from demand.
B)price remains the same,and fixed costs change.
C)everything but price and demand remains the same.
D)a change in quantity demanded causes a change in price.
E)the firm does not advertise.

Accepted Answer

A demand curve is built assuming that everything but price and demand remains the same. This means that factors such as income, fixed costs, quantity demanded, and advertising all stay constant, while only the price and the corresponding quantity demanded are varied to create the curve.

Question 9

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.
A)competitors
B)channel members
C)cost
D)customers
E)company objectives

Accepted Answer

Traditional demand curve economic theory focuses on understanding customers' behavior and how they respond to changes in price. Therefore, marketers use it to understand the customer aspect of the five Cs of pricing.

Question 10

When Ursula decides how to price new products in her gift store,she measures the value of her product offerings against those of the other stores in her area.Ursula uses a __________________ pricing strategy.
A)maximizing profits
B)target profit
C)target return
D)competitor-oriented
E)sales oriented

Accepted Answer

Ursula is using a competitor-oriented pricing strategy, as she is measuring the value of her products against those of other stores in her area.

Question 11

Customers purchase prestige products or services for the status of owning the products,not just for the functionality.These products may not follow a typical demand curve if:
A)people don't know the price.
B)raising the price makes more people want to own one.
C)similar products become less expensive.
D)the marketer can demonstrate that functionality is more important than prestige.
E)value is removed from the equation.

Accepted Answer

When it comes to prestige products, the demand curve can be upward sloping, which means that when the price increases, the demand for the product may also increase. This is because owning the product becomes even more exclusive and desirable for customers.

Question 12

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy,especially if the strategy:
A)leads the marketer to being the low-cost seller.
B)is supported by consistent advertising and distribution strategies.
C)challenges consumers to discard their perceptions of value.
D)is consistent with a competitive target return strategy.
E)all of these.

Accepted Answer

Setting prices based on customer perceptions of value requires consistent advertising and distribution strategies to ensure that customers understand the value proposition being offered. This strategy is not necessarily focused on being the low-cost seller, challenging customers to discard their perceptions of value, or achieving a specific target return on investment.

Question 13

When firms set prices similar to those of competitors,they are following a strategy of:
A)me-too pricing.
B)copycat pricing.
C)competitive parity.
D)market-broadening pricing.
E)industry-standard pricing.

Accepted Answer

Competitive parity refers to the strategy of setting prices at the same level as competitors. This is done to avoid losing customers to lower-priced competitors or overpricing and losing customers to higher-priced competitors.

Question 14

Health clubs often use a low,introductory offer price to get people to join their club.These low prices represent a ______________ pricing strategy.
A)maximizing profits
B)target profit
C)target return
D)status quo
E)sales orientation

Accepted Answer

The low introductory offer price is a sales orientation pricing strategy, aimed at encouraging potential customers to try out the health club and hopefully become regular members. This strategy prioritizes sales volume over immediate profits.

Question 15

Many years ago Honda's Accord and Ford's Taurus were the top two selling cars in the United States.As the year was coming to an end,Ford cut the price of the Taurus,hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a ___________________ pricing strategy.
A)maximizing profits
B)target profit
C)sales orientation
D)status quo
E)target return

Accepted Answer

Ford's pricing strategy of cutting the price of the Taurus in order to outsell the Accord and claim the title of best-selling car indicates a sales orientation approach. The goal was to increase sales volume and market share, rather than maximizing profits or setting a specific profit target. While a target return approach would also focus on increasing sales, it would involve setting a specific return goal to achieve. The status quo approach would involve maintaining current prices and pricing strategies, rather than making a deliberate price cut to increase sales.

Question 16

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on:
A)a demand curve.
B)the law of averages.
C)multiple regression analyses.
D)target return strategies.
E)a sales orientation.

Accepted Answer

Marketers use a demand curve to analyze the relationship between the price of a product and the quantity of the product demanded by customers. By understanding the demand curve, marketers can estimate the number of units that will be sold at any given price and adjust pricing accordingly.

Question 17

There is an old saying,"If you have to ask the price of a yacht,you cannot afford it." Products like yachts are most likely to be associated with:
A)cross-shopping.
B)competitive parity pricing.
C)target return value.
D)prestige pricing.
E)break-even point pricing.

Accepted Answer

Yachts are luxury products that are typically associated with prestige pricing, whereby the price is set higher than competitors to reflect the high-end nature of the product and appeal to consumers who desire exclusivity and status.

Question 18

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that:
A)rarely is the lowest-price offering the dominant brand in a market.
B)prestige products need to be competitively priced.
C)companies can gain market share by offering low-quality products at a high price.
D)total value equals total cost minus variable costs leading to price escalation.
E)price wars are the way to become the dominant brand.

Accepted Answer

While having a competitive price is important, simply having the lowest price does not necessarily mean a brand will become dominant in the market. Consumers may not perceive the lowest-priced product as the best quality or may be willing to pay a higher price for a brand they trust or perceive as higher quality. Therefore, Julia should focus on offering competitive pricing while also building a strong brand reputation through product quality and marketing efforts.

Question 19

Julia's is an upscale women's clothing store.Prices are based on customers' beliefs about the value of the clothing.The store focuses on a limited target market and provides excellent customer service.Julia's is using a ________________ pricing strategy.
A)customer-oriented
B)target profit
C)target return
D)status quo
E)maximizing profits

Accepted Answer

The store's pricing strategy is customer-oriented as it considers customers' beliefs about the value of the clothing and also provides excellent customer service, indicating that the store is focused on meeting the needs and preferences of its targeted customers. The other pricing strategies listed (target profit, target return, status quo, maximizing profits) do not necessarily prioritize meeting customer needs and preferences.

Question 20

In many high-end resort markets,Westin hotels compete directly with Crown Plaza hotels.Each firm weighs the comparative advantages and disadvantages of their offerings to determine whether to price above,equal to,or below the other hotel.In these markets,the hotels are using a _______________ pricing strategy.
A)maximizing profits
B)target profit
C)target return
D)competitive parity
E)sales oriented

Accepted Answer

The hotels are using a competitive parity pricing strategy, where they price their offerings equal to their main competitor (Crown Plaza hotels) in order to stay competitive and maintain market share.

Quiz 13: Pricing Concepts for Establishing Value

A "no haggle" pricing policy is a type of _______________ pricing strategy.

A demand curve shows the relationship between ___________________ in a period of time.

A change in ______________ would probably cause a change in the demand curve for a product.

A customer orientation toward pricing explicitly invokes the concept of:

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection.Ryan told the manager to always match the gasoline prices of the other store.Ryan is using a _____________________ pricing strategy.

According to a typical demand curve,the higher the price:

A demand curve is built assuming that:

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.

When Ursula decides how to price new products in her gift store,she measures the value of her product offerings against those of the other stores in her area.Ursula uses a __________________ pricing strategy.

Customers purchase prestige products or services for the status of owning the products,not just for the functionality.These products may not follow a typical demand curve if:

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy,especially if the strategy:

When firms set prices similar to those of competitors,they are following a strategy of:

Health clubs often use a low,introductory offer price to get people to join their club.These low prices represent a ______________ pricing strategy.

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on:

There is an old saying,"If you have to ask the price of a yacht,you cannot afford it." Products like yachts are most likely to be associated with:

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that:

Julia's is an upscale women's clothing store.Prices are based on customers' beliefs about the value of the clothing.The store focuses on a limited target market and provides excellent customer service.Julia's is using a ________________ pricing strategy.