CAPSTONE - Chapter 11 SMB

True or false: A variable pricing strategy makes planning and forecasting infinitely easier than the alternative approach of a one-price strategy.

False

True or false: Among the marketing mix variables, price is the easiest and quickest to alter, so sometimes firms over-rely on price changes to stimulate additional sales or gain market share.

True

Select all the nonprice approaches to mitigating the pressure to maintain price margins.

altering or reducing discounts unbundling services increasing minimum order quantities

Which four are tactical pricing approaches?

auction pricing EDLP and high/low pricing odd/even pricing one-price and variable pricing

Which pricing strategy identifies all costs associated with an offering in order to come up with what the average cost of a single unit?

average-cost pricing

Which of the following are examples of pricing objectives? Select all that apply.

benchmark the competition market share maximization market entry at the highest possible initial price communicate positioning through price

Which pricing strategy might lead the marketing manager to decide to price at some market average price?

competitor-based pricing

Which type of pricing builds a price by adding a standardized markup on top of costs for an offering?

cost-plus pricing

Which pricing tactic entails relatively low, constant prices and minimal spending on promotional efforts?

everyday low pricing

Trade discounts are also called Blank______ discounts.

functional

Match the pricing objective with its associated pricing strategy.

market share maximization penetration pricing market entry at the highest possible initial price price skimming profit maximization target ROI benchmark the competition competitor-based pricing communicate positioning through price value pricing

Cost-plus pricing/markup on cost, markup on sales price, average-cost pricing, and target return pricing are all Blank______.

methods for setting the optimal price

When a firm's objective is to gain as much market share as possible, it uses Blank______.

penetration pricing

Proving the practice of Blank______ is difficult because it must be shown that there was an explicit attempt to destroy a competitor with the use of a low price.

predatory pricing

Select from the following five tactical pricing approaches.

prestige pricing reference pricing captive pricing price bundling product line pricing

In which pricing strategy are customers given the opportunity to purchase a package deal at a reduced price from what the individual components of the package would cost separately?

price bundling

When a seller offers different prices to different customers without a substantive basis so that competition is reduced, the seller is engaged in Blank______.

price discrimination

Smith Co. has entered the market with a new type of sound system to rival that of Bose. It is able to charge a high price for this system, which clarifies all the sounds in the the newest video games. Smith Co.'s strategy is best defined as Blank______.

price skimming

When a product enters a market at a relatively high price point, which pricing strategy is being used?

price skimming

The practice of companies colluding with each other to set prices at a mutually beneficial high level is called Blank______.

price-fixing

When the marketing manager develops a rational pricing strategy across a complete line of related items, the marketing manager is using Blank______.

product line pricing

In a target return on investment strategy, a bottom-line Blank______ is established first, and then pricing is set to achieve the target.

profit

Cumulative and noncumulative are the two general kinds of Blank______ discounts.

quantity

Discounts that are taken off an invoice price based on different levels of product purchased are called Blank______ discounts.

quantity

In Blank______, it can be useful for customers to have some type of comparative price when considering a product purchase.

reference pricing

Discounts that reward the purchaser for shifting part of the inventory storage function away from the manufacturer are called Blank______ discounts.

seasonal

Which pricing strategy is designed for profit maximization?

target return on investment (ROI) pricing

It is necessary to calculate total fixed costs and develop a demand forecast in order to use Blank______.

target return pricing

Which of the following are approaches for setting the exact price? Select all that apply.

target return pricing average-cost pricing markup on sales price cost-plus pricing/markup on cost

The ratio of the bundle of benefits a customer receives from an offering compared to the costs incurred by the customer in acquiring that bundle of benefits is referred to as Blank______.

value

When a firm's pricing overtly attempts to consider the role of price as it reflects the bundle of benefits sought by the customer, what pricing strategy is the firm using?

value pricing

Unlike in the United States where the price marked on a good is the price that is paid, many other countries, allow—even encourage—customers to haggle about prices. This approach is referred to as Blank______.

variable pricing