Question 1

__________________ is (are)considered by the customer when making a purchasing decision.

Accepted Answer

Customers consider time invested in the purchasing process, costs incurred in acquiring the product or service, and opportunity costs of choosing one offering over another when making a purchasing decision. Therefore, option E is the correct answer.

Question 2

When a company purposefully makes pricing decisions to undercut one or more competitors and gain sales and net market share they are demonstrating a ___________________.

Accepted Answer

A price war is a situation where a company lowers its prices to undercut competitors and gain sales and market share. This can lead to a cycle of price reductions by competitors, ultimately resulting in lowered profits for all involved.

Question 3

Mark runs a driving range in New York City.He has noticed that within a 15-minute walk you can get to three competitors.Mark decides to look at his competitors pricing and then determine his best pricing strategy based on all of the information.Mark is utilizing ___________________.

Accepted Answer

Mark is utilizing competitor-based pricing, which involves analyzing the prices of competitors to determine one's own pricing strategy.

Question 4

A strategy of _______________ addresses the objective of entering a market at a relatively high price point.

Accepted Answer

Price skimming involves entering a market at a high price point to generate maximum revenue from the most interested customers, who are willing to pay a premium for the product. This strategy is often used for new and innovative products with high demand and limited competition.

Question 5

Pricing objectives very frequently are designed for profit maximization, which necessitates a ________________________ pricing strategy.

Accepted Answer

Profit maximization is often achieved through a target ROI (return on investment) pricing strategy, in which prices are set at a level that will allow the company to achieve its desired return on investment. This approach takes into consideration both the cost of producing and selling the product, as well as the target profit margin.

Question 6

Amelie is the marketing manager at a café in Charleston, South Carolina.The chef/owner is about to introduce a new dish and Amelie is planning on pricing the dish low to begin, but slowly raising the price over time.Amelie is utilizing _______________.

Accepted Answer

Amelie is utilizing penetration pricing, which involves setting a low price to enter the market and gradually increasing the price over time. This strategy is commonly used for introducing new products or services to gain market share quickly.

Question 7

Jean Claude has just completed a new line of designer handbags.He wants the price to communicate to the customer that the handbags are high quality, so he sets it high.He knows that after this season, the price will lower.Jean Claude is using _______________.

Accepted Answer

Jean Claude is using price skimming, which involves setting a high initial price to communicate quality and exclusivity, and gradually lowering the price over time as demand slows and competitors enter the market.

Question 8

When a firm's objective is to gain as much market share as possible, a likely pricing strategy is _________________, sometimes also referred to as pricing for maximum marketing share.

Accepted Answer

Penetration pricing is a common pricing strategy used by firms to gain market share, where they set a low price initially to attract customers and capture market share. This pricing strategy is often used to enter new markets or to increase market share in existing markets.

Question 9

_______________________ could lead the marketing manager to decide to price at some market average price, or perhaps above or below it in the context of penetration or skimming objectives.

Accepted Answer

Competitor based pricing involves pricing a product based on the prices of competitors' products in the same market. This approach could lead the marketing manager to price at some market average price, or perhaps above or below it depending on their specific penetration or skimming objectives.

Question 10

Michael Porter has consistently advocated that firms that are able to compete based on some extraordinary efficiency in one or more internal processes bring to the market a competitive advantage based on _________________.

Accepted Answer

Michael Porter has consistently advocated for cost leadership as a competitive advantage for firms that are able to compete based on some extraordinary efficiency in one or more internal processes. This means that the firm is able to produce goods or services at a lower cost than its competitors, which can translate into higher profits or lower prices for customers.

Question 11

Gaining a thorough understanding of competitors' marketing practices is a key element of successful marketing planning and execution; utilizing that information to determine your pricing is an example of ___________________.

Accepted Answer

Competitor based pricing involves setting prices based on the prices of similar products or services offered by competitors in the market. By gaining a thorough understanding of competitors' marketing practices, businesses can determine the optimal price point to compete effectively.

Question 12

Be careful with a __________________ strategy.Because price is a cue for developing customer perceptions of product quality, the value proposition may be reduced if a low price belies the product's actual quality attributes.

Accepted Answer

Penetration pricing emphasizes on low price for a short period of time to penetrate the market quickly. However, if the price is too low, it may lead customers to question the quality of the product. Hence, companies need to be careful with penetration pricing strategy by ensuring that the price is not too low that it affects the perceived value of the product.

Question 13

The measure of customers' price sensitivity estimated by dividing relative changes in quantity sold by relative changes in price-becomes central to whether a product can even be viably introduced within the context of a firm's financial objectives

Accepted Answer

The measure described in the statement is the definition of price elasticity of demand, which is the degree to which customers' demand for a product is affected by changes in the product's price. Therefore, the correct answer is A) Price elasticity of demand.

Question 14

When using _______________ a bottom line profit is established first and then pricing is set to achieve the target.

Accepted Answer

Target ROI (return on investment) is a pricing strategy where a business sets a profit target and then calculates the price necessary to achieve that target, taking into account both the costs of producing goods or services and the expected demand for them. This strategy ensures that the business will earn a desired profit margin on each sale.

Question 15

In proposing _______________, the marketing manager usually is convinced that a strong price-quality relationship exists for the product.

Accepted Answer

A strategy of price skimming addresses the objective of entering a market at a relatively high price point. In proposing price skimming, the marketing manager usually is convinced that a strong price-quality relationship exists for the product.

Question 16

A company's core cost advantages translate directly to an edge over its competitors based on much more flexibility in its __________________ as well as its ability to translate some of the cost savings to the bottom line.

Accepted Answer

Core cost advantages refer to the ability of a company to produce goods or services at a lower cost than its competitors. This provides a basis for cost leadership, which is the ability of a company to offer its products or services at a lower price than its competitors, while maintaining similar quality and profitability. This cost advantage provides more flexibility in pricing strategies and enables the company to translate some of the cost savings to the bottom line, leading to higher profitability.

Question 17

Juan is researching new cars.He would like to buy a car that is both good quality and a good price.After much consideration, Juan purchases a car from a manufacturer where the initial price paid is high, but the cars are known to have much lower maintenance costs.The pricing strategy employed by the dealership where Juan bought his car is _____________________.

Accepted Answer

Value pricing considers the whole deliverable and its possible sources of differential advantage-image, service, product quality, personnel, innovation, and many others-the whole gamut of elements that create customer benefit. For instance, Toyotas and Hondas cost more to purchase initially than other comparable vehicles, but they last longer, require fewer repairs, are more fuel-efficient, and hold their resale value much better; overall, they have a lower lifetime cost of ownership.

Question 18

________________ is the percentage of total category sales accounted for by a firm.

Accepted Answer

Market share is specifically defined as the percentage of total category sales that a particular firm or brand owns. Value Ratio and Cost are not relevant measurements for market share.

Question 19

__________________ overtly attempts to consider the role of price as it reflects the bundle of benefits sought by the customer.

Accepted Answer

Value pricing overtly attempts to consider the role of price as it reflects the bundle of benefits sought by the customer. It is based on the concept of providing maximum value to customers at the lowest possible cost. This approach involves setting prices based on the benefits the customer perceives from the product or service rather than on the costs incurred to produce it.

Question 20

______________ is a critical component that plays into a customer's assessment of the value afforded by a firm and its offerings.

Accepted Answer

Pricing objectives are but one component leading to an overall value proposition. However, a product's price tends to be so visible and definitive that customers often have trouble moving past price to consider other critical benefits the product affords.

Quiz 14: Managing Pricing Decisions

__________________ is (are) considered by the customer when making a purchasing decision.