Ch11 Smartbook

Which of the following is an example of deceptive pricing?

A bait an switch to lure customers into the store to sell them a higher priced product.

Demand-oriented pricing approaches weigh which factors most heavily?

Expected customer tastes and preferences

Legal and regulatory issues and consumer demand are pricing ________ that limit what a company can charge for its products.

constraints

By focusing on target profit pricing or target return pricing, a firm is using a ________ pricing approach.

profit-oriented

A price reduction offered to channel members for featuring the manufacturer's product in their advertising or selling activities is called a(n) ______ allowance.

promotional

Price elasticity of demand is expressed as percentage change in ________ divided by the percentage change in ________.

quantity demanded; price

The firm's goal in offering a trade discount is to

reward wholesalers and retailers for marketing functions.

When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ________ pricing strategy.

skimming

To determine ______ for a product, you must consider limitations based on customers, actual costs, and profits.

the price

Price times quantity sold is

total revenue.

For _______ discounts, reductions off the list price are offered to resellers in the marketing channel on the basis of where they are in the channel and the marketing activities they are expected to perform in the future.

trade

The ratio of perceived benefits to price is a product's

value

When using competition-oriented pricing approaches, price setters stress

what "the market" is doing.

Price deals that mislead consumers fall into the category of ______ pricing

Deceptive

A portion of a ________ curve is shown here.

Demand

_______ discounts are also known as functional discounts.

Trade

Generally, the greater the ________ for a product, the higher the price that can be set.

demand

The money or other consideration (including other products and services) exchanged for the ownership or use of a product is known as

price.

Total revenue minus total cost is known as

profit.

The Internet has resulted in which two of the following that affect the competitive environment for pricing?

Consumers' access to pricing information from many competitors Companies' ability to change prices frequently

______ -oriented approaches to pricing start with production and manufacturing costs and then add enough to cover direct, expenses, overhead, and profit (one word).

Cost

______ -oriented approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision.

Demand

Which of the following are pricing practices that are legally restricted?

Price fixing Predatory pricing

Break-even analysis analyzes the relationship between which two at various levels of output?

Total cost Total revenue

Price fixing, price discrimination, and predatory pricing are

legally prohibited.

Customers are encouraged to buy a larger number of a single product when a firm offers

quantity discounts.

Total ______ is equal to the unit price for a product times the quantity of it sold. (one word)

revenue

Match the following pricing approaches with the focal points of its strategy.

Cost-oriented: Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit. Competition-oriented: Choice, Price setter stresses what "the market" is doing is determining a price. Price setter stresses what "the market" is doing is determining a price. Demand-oriented: Choice, Factors underlying customer tastes and preferences are weighed most heavily. Factors underlying customer tastes and preferences are weighed most heavily. Profit-oriented: Choice, The price setter balances both revenues and costs to set a price. The price setter balances both revenues and costs to set a price.

Match the following pricing approaches with the correct example.

Cost-oriented: Target priced its new patio furniture sets by adding 15 percent to the invoice price it paid for those products. Competition-oriented: Intel slashed its prices to be more similar to those of AMD, a rival computer chip maker. Demand-oriented: A new energy efficient light bulb was introduced at $3.00 (about three times the price of a conventional bulb) and will last 6,000 hours (about four times the conventional bulb). Profit-oriented: The owner of a vacuum cleaner store sets a target of a 20 percent return on sales.

Select all of the following that are common approaches to setting an approximate price level for a product.

Demand-oriented Cost-oriented Competition-oriented

A firm may set goals for its business in terms of profit, sales, or unit volume. These are types of pricing ______

Objectives

Match the following pricing issues that have legal implications to the correct description.

Price fixing: Conspiracy among firms to set prices Price discrimination: Charging different prices to different buyers for goods of like grade and quality Deceptive pricing: Price deals that mislead consumers Predatory pricing: Charging a very low price for a product with the intent of driving competitors out of business

Cost-oriented approaches to pricing considers which of the following in the setting of a product's price?

Profit Overhead Manufacturing costs

Which of the following are reductions in unit costs for a large order?

Quantity discounts

Which of the following are profit-oriented approaches to setting a price?

Target return pricing Target profit pricing

Which of the following are essential to consider when setting a price?

What are customers willing to pay? What will pay for all associated costs, including marketing? What will provide a profit to the company?

The demand curve is

a graph relating quantity sold and price.

Demand-oriented, cost-oriented, and profit-oriented approaches can be used to set a(n) ________ price level for a product.

approximate

Break-even analysis analyzes the relationship between total revenue and total cost to determine profitability

at various levels of output.

A pricing constraint firms face is the price that its _________ are currently charging and likely to charge in the future.

competitors

The demand for a product class, a product, or a brand, or the newness of a product can act as pricing ________ to limit a firm's options.

constraints

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are known as

cost-oriented.

When the New York Mets set higher ticket prices for games versus the popular New York Yankees than for those versus the Pittsburgh Pirates, its pricing is constrained by

demand.

Price ______ of demand is a measure of how sensitive consumer demand and the firm's revenues are to changes in the product's price. (one word)

elasticity or elasticity of demand

On a demand curve, one of the axes represents the price of a product while the other represents the

maximum units sold.

A marketing manager considers pricing objectives and constraints to

narrow the range of choices among the variety of pricing strategies.

If total cost is greater than total revenue, then profit is

negative.

Marketing managers may identify profit, market share, social responsibility, or even survival as pricing

objectives.

Pricing ________ frequently reflect corporate goals, while pricing ________ often relate to conditions existing in the marketplace.

objectives; constraints

A ________ policy is also known as fixed pricing.

one-price

Setting a price with no variation for product buyers is called a ________ policy.

one-price

Value is defined as

perceived benefits divided by price.

When using ______ pricing, a firm sets a very low price for one or more of its products with the specific intent to drive its competition out of business.

predatory

Proving the practice of ________ 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

The money or other considerations exchanged for the ownership or use of a product or service is its ______

price

Instead of offering a ________ allowance to retailers, some manufacturing companies like P&G have chosen to use an everyday low pricing (EDLP) strategy.

promotional

When a manufacturer offers a grocery retailer an extra amount of free product for including this product in weekly advertising and in-store sales, this is considered a ________ allowance.

promotional

In ________, prices are lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices.

skimming pricing

Competition-oriented approaches to pricing

stress what "the market" is doing.