b2b ch 12 multiple choice

Which of the following statements concerning target costing is(are) accurate? a. Japanese managers who pioneered the approach view target costing as a profit-management tool. b. The approach is designed to reach market segments comprised of buyers who consistently select the lowest-priced alternative. c. Target costing tends to move product developers toward products that include only the bare essentials. d. All of the above. e. None of the above.

a

_____ features a design-to-cost philosophy that begins by examining market conditions. a. Target costing b. ABC costing c. Value-based segmentation d. Total cost costing e. Penetration pricing

a

_____ involves a formal invitation to potential suppliers to submit written, sealed bids. a. Closed bidding b. Open bidding c. On-line bidding d. E-commerce e. Comparative bidding

a

During the innovative firm's monopoly period, a _____ is optimal if the demand curve is stable over time (no diffusion) and production costs decline with accumulated volume. a. life cycle costing pricing policy b. skimming policy c. penetration policy d. time segmentation policy e. bid price policy

b

General plant overhead is an example of _____ costs. a. direct traceable b. indirect traceable c. general d. attributable

b

In hypercompetitive environments, a. leading-edge firms are reluctant to lower prices because they enjoy attractive margins. b. successful firms sustain quality but drive to the next lower price point to enjoy a burst of volume and an expansion of market share. c. successful firms are reluctant to disrupt the equilibrium of the market. d. successful firms look for the first opportunity to raise prices. e. both (a) and (c).

b

The competitive bidding approach that may include deliberations with suppliers throughout the bidding process is referred to as: a. closed bidding. b. open bidding. c. contractual bidding. d. institutional bidding.

b

Those costs, fixed or variable, that can be traced to a product, customer, or sales territory (for example, general plant overhead may be indirectly assigned to a product) are called: a. direct traceable costs. b. indirect traceable costs. c. assignable costs. d. general costs. e. administrative overhead.

b

____ are those attributes that are not typically required but that can ultimately lead to a supplier being selected by a customer over other qualified suppliers. a. Core benefits b. Add-on benefits c. Supplier personality traits d. Customer values e. Elasticities of demand

b

____ costs include financing, storage, and inspection costs. a. Acquisition b. Possession c. Usage d. None of the above

b

A skimming strategy is appropriate when: a. there is high price elasticity of demand. b. strong threat of imminent competition. c. the firm has a distinctly new product in a monopoly period. d. All of the above. e. Only (b) and (c).

c

Before preparing a bid for any potential contract, the industrial firm should first: a. estimate the profitability of the potential contract. b. assess the probability of winning the contract. c. carefully define their objectives. d. conduct a preliminary analysis of their expected costs in performing the potential contract. e. evaluate the strength of potential competing bidders.

c

During the innovative firm's monopoly period, a _____ is optimal if there is a relatively high repeat purchase rate for nondurable goods or if a durable good's demand is characterized by diffusion. a. life cycle costing pricing policy b. skimming policy c. penetration policy d. time segmentation policy e. bid price policy

c

From an organizational buyer's perspective, the cost of an industrial good: a. is equal to the seller's price. b. is equal to the seller's price plus order processing costs. c. includes not only the seller's price, but also transportation, installation, order handling, and inventory carrying costs. d. includes the seller's price adjusted for quantity discounts that may be received in the future.

c

If the business marketer's product input assumes an insignificant role in the final product's total cost, demand is likely: a. elastic. b. price sensitive. c. inelastic. d. small.

c

Pine River Equipment has developed a distinctly new product that offers considerable promise. By exploiting the experience effect, management believes that there are opportunities for a substantial reduction in production costs as volume expands. While the market is quite large, there is a strong threat of imminent competition. The firm should likely use: a. product differentiation. b. a skimming approach to pricing. c. a penetration approach to pricing. d. a bid price policy. e. a life cycle costing pricing policy.

c

The degree of latitude that an industrial firm has in setting prices above those offered by competitors is dependent upon: a. the firm's objectives. b. the cost of producing the product. c. the level of differentiation that the product enjoys in the perceptions of organizational buyers. d. the size of the firm's promotional budget. e. both (a) and (b)

c

The policy of using a skimming pricing approach when a product is introduced, followed by penetration pricing as the product matures, is referred to by Joel Dean as: a. product differentiation. b. market segmentation. c. time segmentation. d. price administration. e. life cycle pricing.

c

____ represents a business customer's overall assessment of the utility of a relationship with a supplier based on the benefits received and sacrifices made. a. Core benefits b. Add-on benefits c. Customer value d. Relationship commitment e. Total cost analysis

c

_____ are those that support a number of activities that cannot be objectively assigned to a product on the basis of a direct physical relationship. a. Indirect traceable costs b. Attributable costs c. General costs d. none of the above.

c

_____ refers to the rate of percentage change in quantity demanded attributable to change in price. a. Cost/benefit analysis b. Customer demand c. Price elasticity of demand d. Perceived value e. Competitive edge

c

Concerning pricing and the competitive environment, which of the following statements is(are) accurate? a. Competition establishes an upper limit on price. b. Late entrants to the market often enjoy potential cost advantages over the pioneering firm. c. Competitors will be more sensitive toward price reductions that threaten market segments that they deem important. d. all of the above e. (a) and (b) only

d

Examples of pricing objectives include: a. channel relationships. b. achieving a market-share goal. c. achieving a target return on investment. d. all of the above. e. (b) and (c) only.

d

Examples of typical add-on benefits include: a. joint working relationships. b. commitment. c. supplier flexibility. d. All of the above. e. Only (a) and (b).

d

Motorola introduced a new personal communicator priced at a significant premium over competing models. Initially, Motorola will concentrate on the business user but the firm plans to reduce the price later and capture a share of the consumer market. This policy of beginning with a high price and then moving to a lower price is referred to as: a. product differentiation. b. market segmentation. c. price administration. d. time segmentation. e. life cycle pricing.

d

Pertinent considerations for pricing industrial products or services include: a. competition. b. demand determinants. c. cost determinants. d. all of the above. e. (b) and (c) only.

d

Since higher costs are incurred in providing higher levels of performance on one or more of the attributes, the strategists should assess the: a. relative importance of the attributes to different market segments. b. strength of the firm's offering on each of the importance attributes vis-a-vis competitors. c. costs associated with the experience effect. d. (a) and (b) only. e. (b) and (c) only.

d

Successful pricing strategies are: a. value based. b. proactive. c. profit-driven. d. all of the above. e. only a and c.

d

The business marketer will find that total revenue will ____ if the price is decreased and demand is price inelastic. a. rise a little b. rise sharply c. remain the same d. fall

d

The successful implementation of value-based strategies requires close coordination between the _____ and _____ units in the firm. a. product b. sales c. service d. all of the above. e. (b) and (c) only

d

Which of the following are reasons why followers into a market often find lower costs than the pioneer firm? a. The use of more current production technologies. b. Experience of suppliers leads to cost reductions. c. Learning from the pioneer's mistakes. d. All of the above. e. Only (b) and (c).

d

Which of the following are useful to business marketers trying to gauge competitive responses to pricing? a. Examining the cost structure and strategy of direct competitors. b. Examination of annual reports and other public records. c. Identifying which markets competitors deem as important. d. All of the above. e. Only (a) and (c).

d

Which of the following statements regarding competitive threats is incorrect? a. Matching a price cut will be an ineffective strategy if the competitor simply reestablished the differential by a further price reduction. b. A single response is rarely enough to stop price moves by competitors that are struggling to establish a market position. c. If a price response is required, the strategist should focus the firm's competitive retaliation on those actions that are most cost-effective for the firm. d. All of the above.

d

A penetration policy is appropriate when there is: a. a strong threat of imminent competition. b. inelastic demand. c. an opportunity for a substantial reduction in production costs as volume expands. d. all of the above e. (a) and (c) only

e

If competitors are likely to continue to pursue price cutting, the best strategy for the defender is to: a. allow the competitor to win where it is least damaging to profitability. b. create barriers that make it more difficult for competitors to reach less price-sensitive customer segments. c. center reactive price cuts on a particular geographic region. d. all of the above. e. (a) and (b) only.

e

The buyer's price sensitivity increases to the degree that: a. buyers can switch from one supplier to another without incurring additional costs. b. organizational buyers can easily shop around and assess the relative performance and price of alternatives. c. the product represents one for which it is difficult to make price comparisons. d. all of the above. e. (a) and (b) only.

e

The price elasticity of demand: a. is not the same at all prices. b. varies by industrial market segment. c. is relatively easy to measure in the industrial market. d. all of the above e. (a) and (b) only

e

Which of the following are questions that must be addressed when determining responses to a competitor's threat? a. If you respond, is the competitor willing and able to lower their price again? b. Is our position in other markets at risk if the competitor gains market share? c. Is there a response that would cost you more than the preventable sales loss? d. All of the above. e. Only (a) and (b).

e