Question 1

A firm's profit objective is often measured in terms of ROI.The acronym ROI stands for
A) risk opportunity investment.
B) revised organizational incentives.
C) return on investment.
D) regulated organizational investments.
E) replenishment of organizational inventories.

Accepted Answer

ROI stands for Return on Investment, which is a profitability ratio calculated as net profit divided by the investment's cost. It measures how much profit a company generates for every dollar of investment.

Question 2

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,is common in many firms because the targets can be set and performance measured quickly.
A) managing for long-run profits
B) target return
C) break-even strategy
D) maximizing current profit
E) minimizing risk

Accepted Answer

Maximizing current profit is a short-term objective that focuses on achieving high profits in the current period. It is a common objective in many firms because it allows for quick measurement of performance and targets can be set easily.

Question 3

Which of the following statements regarding pricing objectives is most accurate?
A) Pricing objectives should never change.
B) Pricing objectives may change depending on the success of a company's products.
C) Pricing objectives may change depending upon the cost of advertising.
D) Pricing objectives are established exclusively by the marketing department.
E) Pricing objectives are extremely sensitive to even the slightest change in the local economy.

Accepted Answer

Pricing objectives may change depending on various factors such as competition, consumer demand, the success of a company's products, and market conditions. Companies may need to reevaluate their pricing objectives to remain competitive and maximize profits. Pricing objectives should not be static and need to be flexible to adapt to changing circumstances.

Question 4

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
A) accumulating profits.
B) reinvesting profits.
C) redistributing profits.
D) maximizing gross margin.
E) achieving a target return.

Accepted Answer

The third profit-oriented objective is achieving a target return, which implies a specific level of profit that the firm wants to achieve. This objective suggests that the firm should set prices based on the desired target return, taking into account the costs and competitive environment.

Question 5

Assuming there is no change in a product's price or the quantity demanded,if a business owner wants to increase her advertising expenses to $500 monthly,this would cause total costs to __________ and the break-even quantity to __________.
A) decrease; stay the same
B) increase; increase
C) decrease; increase
D) stay the same; increase
E) stay the same; decrease

Accepted Answer

The answer of Assuming there is no change in a...

Question 6

While pricing objectives frequently reflect corporate goals,pricing constraints often relate to
A) stockholder demands.
B) political ideology.
C) conditions existing in the marketplace.
D) an organization's code of ethics.
E) the financial realities within the organization itself.

Accepted Answer

Pricing constraints are the limitations or factors that affect an organization's ability to set its prices. These constraints may include conditions existing in the marketplace, such as the level of competition, customer demand, and economic conditions. Thus, option C is the correct answer. Option A is incorrect because stockholder demands may influence pricing objectives, but they are not pricing constraints. Option B and D are irrelevant to pricing constraints, while option E is too broad, as financial realities may or may not relate to pricing constraints.

Question 7

Which of the following statements regarding sales goals is most accurate?
A) For marketing managers, sales revenue or unit sales can be easily translated into meaningful targets for a product line or brand.
B) Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line.
C) Very often, cutting prices results in a decrease in market share.
D) Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with few competitors.
E) An advantage of increasing unit volume sales is that it always results in an increase in profits.

Accepted Answer

Sales revenue or unit sales are the most common and easily measurable targets for marketing managers to set sales goals for a product line or brand. This helps in measuring the effectiveness of marketing strategies and identifying areas that need improvement.

Question 8

All of the following are examples of pricing objectives except which?
A) market share
B) survival
C) unit sales
D) social responsibility
E) competitors' prices

Accepted Answer

Competitors' prices are not a pricing objective; they are a factor considered when setting prices. Pricing objectives are goals that guide how a company sets its prices, such as increasing market share, ensuring survival, maximizing unit sales, or fulfilling social responsibility.

Question 9

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.
A) increase the commitment to social responsibility
B) increase dollar sales revenue
C) decrease unit volume while maintaining price
D) increase research and development funding for new product line extensions
E) continue with previous policies that seem to be working

Accepted Answer

Increasing dollar sales revenue will lead to higher market share and profit, as the firm will be selling more products and generating more revenue. This can be done through strategies such as increasing advertising or expanding into new markets. The other options, such as decreasing unit volume or increasing social responsibility, may not necessarily lead to increased market share and profit.

Question 10

Market share is the ratio of the __________ to those of the industry,including the firm itself.
A) target return on sales
B) marginal profit of the firm
C) firm's sales revenues or unit sales
D) marketing expenses of the firm
E) profits of the firm

Accepted Answer

Market share is calculated by dividing the firm's sales revenues or unit sales by the total sales revenues or unit sales of the industry, including the firm itself. This gives an indication of the firm's position in the market relative to its competitors.

Question 11

Managing for long-run profits as a pricing objective implies that a company will
A) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
B) maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.
C) invest excess cash in bonds and certificates of deposit in order to counteract any inflationary economic changes in the future.
D) reinvest all profits into market research or product research rather than returned to shareholders.
E) drop all products, product lines, or divisions that cannot maintain their pricing goals.

Accepted Answer

Managing for long-run profits as a pricing objective implies that a company is willing to sacrifice immediate profits by investing in market penetration and gaining a higher market share. This strategy aims to generate long-term profits and sustainability for the company.

Question 12

Pricing objectives involve
A) reconciling the prices charged by an organization to the values set forth in its business mission.
B) taking specific steps to capitalize on an organization's internal strengths as they apply to price.
C) specifying the role of price in an organization's marketing and strategic plans.
D) taking specific steps to compensate for an organization's weaknesses as they apply to price.
E) subjectively setting intrinsic values to all products and services offered by an organization.

Accepted Answer

Pricing objectives involve specifying the role of price in an organization's marketing and strategic plans. The objectives are set to align the pricing strategy with the overall goals of the business, such as maximizing profits, increasing market share, or maintaining a premium image. The pricing objectives help in determining the right price for the product or service and in evaluating the effectiveness of the pricing strategy.

Question 13

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
A) target return on sales.
B) industry profit.
C) unit volume.
D) market share.
E) profit.

Accepted Answer

Market share is defined as the ratio of the firm's sales revenues or unit sales to those of the industry. It indicates the percentage of the total market that a company is capturing. Companies often strive to increase their market share as it can lead to increased profits and a dominant position in the industry.

Question 14

A target return profit objective implies that a company chooses to
A) set targets whose performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.

Accepted Answer

Three different objectives relate to a firm's profit,which include: (1)managing for long-run profits,when a company gives up immediate profit in exchange for achieving a higher market share;(2)maximizing current profit,such as for a quarter or year,because the targets can be set and performance measured quickly;and (3)achieving a target return,which occurs when a firm sets a profit goal (such as 20 percent for pretax ROI),usually determined by its board of directors.

Question 15

Three pricing objectives relate to a firm's profit.In one known as __________,a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.
A) maximizing current profit
B) target return
C) break-even strategy
D) minimizing risk
E) managing for long-run profits

Accepted Answer

The pricing objective that involves a company giving up immediate profit in order to achieve a higher market share is known as managing for long-run profits. This objective aims for long-term success and sustainability by building brand loyalty and customer retention, ultimately leading to increased profits in the future.

Question 16

Specifying the role of price in an organization's marketing and strategic plans is referred to as
A) choosing a pricing plan.
B) defining a profit mission.
C) developing pricing constraints.
D) setting pricing objectives.
E) determining the list or quoted price.

Accepted Answer

Setting pricing objectives involves specifying the role of price in an organization's marketing and strategic plans. It involves determining the desired level of profitability, market share, customer perception, and competitive positioning that are linked with pricing decisions.

Question 17

Three different objectives relate to a firm's profit,which have different implications for pricing strategy.The three profit-oriented objectives include __________,managing current profit,and achieving a target return.
A) accumulating profits
B) managing for long-run profits
C) reinvesting profits
D) redistributing profits
E) maximizing gross margin

Accepted Answer

Managing for long-run profits involves setting prices to achieve a balance between current profits and long-term customer loyalty and market share. This pricing strategy involves considering the impact of pricing on customer satisfaction and repeat business, as well as the potential for generating revenue through upselling and cross-selling. Accumulating profits, reinvesting profits, maximizing gross margin, and redistributing profits may also be important objectives for a firm, but they do not necessarily have different implications for pricing strategy.

Question 18

A maximizing current profit objective implies that a company chooses to
A) set targets for which performance can be measured quickly.
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C) set a profit goal that is often determined by its board of directors.
D) reduce investment in any further market or product research.
E) set prices based on return on sales.

Accepted Answer

Three different objectives relate to a firm's profit,which include: (1)managing for long-run profits,when a company gives up immediate profit in exchange for achieving a higher market share;(2)maximizing current profit,such as for a quarter or year,because the targets can be set and performance measured quickly;and (3)achieving a target return,which occurs when a firm sets a profit goal (such as 20 percent for pretax ROI),usually determined by its board of directors.

Question 19

You are president of a small electric appliance manufacturer.You want to reduce your break-even quantity.All things being equal,you can do this by
A) increasing the quantity sold, while keeping price unchanged.
B) reducing marginal revenue.
C) reducing unit variable cost.
D) increasing fixed cost.
E) increasing total cost.

Accepted Answer

Reducing unit variable cost will directly reduce the break-even quantity. This can be done through various measures such as negotiating with suppliers for better prices or improving production efficiency to reduce the cost of raw materials and labor. Increasing fixed costs or total costs will only increase the break-even quantity, while increasing quantity sold while keeping price unchanged may not always be feasible or realistic. Reducing marginal revenue is also not a viable option as it will decrease profits and potentially push the break-even quantity even higher.

Question 20

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,occurs when a firm sets a profit goal,usually determined by its board of directors.
A) maximizing current profit
B) managing for long-run profits
C) target return
D) break-even strategy
E) minimizing risk

Accepted Answer

The objective described is known as target return, where a firm sets a profit goal determined by its board of directors. Maximizing current profit and managing for long-run profits are different objectives, while break-even strategy and minimizing risk are not specifically related to profit goals.

Quiz 11: Pricing Products and Services

A firm's profit objective is often measured in terms of ROI.The acronym ROI stands for

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,is common in many firms because the targets can be set and performance measured quickly.

Which of the following statements regarding pricing objectives is most accurate?

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

Assuming there is no change in a product's price or the quantity demanded,if a business owner wants to increase her advertising expenses to $500 monthly,this would cause total costs to and the break-even quantity to .

While pricing objectives frequently reflect corporate goals,pricing constraints often relate to

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

All of the following are examples of pricing objectives except which?

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.

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

Managing for long-run profits as a pricing objective implies that a company will

Pricing objectives involve

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

A target return profit objective implies that a company chooses to

Three pricing objectives relate to a firm's profit.In one known as __________,a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Three different objectives relate to a firm's profit,which have different implications for pricing strategy.The three profit-oriented objectives include __________,managing current profit,and achieving a target return.

A maximizing current profit objective implies that a company chooses to

You are president of a small electric appliance manufacturer.You want to reduce your break-even quantity.All things being equal,you can do this by

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,occurs when a firm sets a profit goal,usually determined by its board of directors.