Chapter 10 Marketing
Greg is the owner of a full-service car wash. For the month of December he paid $2,000 in rent, $700 in utilities, $2,950 in salaries, and $50 on advertising. A full service car wash costs $10.50. Unit variable costs per car wash are $2.50. How many full-service car washes does Greg need to sell to break-even each month? A. 713 B. 625 C. 476 D. 543 E. 619
A
A measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price is known as A. price elasticity of demand. B. break-even analysis. C. profit maximization. D. price elasticity of supply. E. marginal revenue.
a
As noted in your text, producers in which country were accused of dumping by selling silk at unreasonably low prices? A. China B. India C. Japan D. Brazil E. Morocco
a
Which of the following is NOT true regarding global pricing? A. Firms do not encounter any unique challenges when pricing products globally. B. Historically, companies have set prices for products sold internationally higher than the same products sold domestically. C. Technological advancements have made global pricing more transparent. D. Economic conditions over the past decade have impacted global pricing for products. E. Pricing is a critical component of a successful global marketing strategy.
a
Which of the following is a variable cost? A. delivery cost B. salaries C. advertising cost D. insurance E. rent
a
Yield management is a strategy for maximizing a firm's A. production. B. supply. C. operating costs. D. revenue. E. demand.
d
Fenton, a marketer for a major retailer, uses the Internet to aggressively review the prices of products sold by his competitors. Accordingly, he constantly updates his prices based on his findings and what changes he sees in consumer demand. What type of pricing strategy is Fenton most likely using? A. dynamic pricing. B. demand pricing. C. market pricing. D. flexible pricing. E. penetration pricing.
a
Sunny Pines campground, located in the Midwest, promotes the months of September and October as its value camping months. During this time, it offers reduced rates on camper rentals and campgrounds. It does this, in part, because the weather is not as favorable for camping at this time. The pricing tactic Sunny Pines is using to encourage camping during these months is most likely A. seasonal discounts. B. price bundling. C. prestige pricing. D. unbundling. E. odd pricing.
a
The Robinson-Patman Act was passed in 1936 and A. requires sellers to charge everyone the same price for a product. B. established the Federal Trade Commission. C. was designed to protect consumers from false advertising practices. D. established maximum rates for tariffs on imports and exports. E. made illegal the practice of price fixing.
a
The amount a product sells for above the total cost of the product itself is called A. profit margin. B. the break-even point. C. marginal revenue. D. marginal cost. E. the price elasticity of demand.
a
The illegal buying and selling of products outside of sanctioned channels is referred to as the A. black market. B. white market. C. gray market. D. blue market. E. red market.
a
The practice of charging different customers different prices for the same product is called A. price discrimination. B. predatory pricing. C. price fixing. D. deceptive pricing. E. price inflation.
a
What are two of the most common and effective strategies marketers can use for raising prices? A. unbundling and escalator clauses B. reference pricing and unbundling C. markup pricing and escalator clauses D. prestige pricing and dynamic pricing E. odd pricing and prestige pricing
a
What is marginal revenue? A. the change in total revenue that results from selling one additional product unit B. a percentage change in price that results from a change in quantity demanded C. the total change in revenue that results from a large change in product price D. the change in total revenue that results from producing one additional unit E. the total change in revenue that results from a small change in product price
a
When Apple released its first iPhone in 2007, it charged customers $599. Shortly thereafter, it reduced the price to $399 for the exact same device. Apple's decision to set a relatively high price for a period of time after the product launched and then decrease the price to a level that would be more sustainable over time reflects which pricing strategy? A. price skimming B. volume maximization C. survival pricing D. underpricing E. target pricing
a
Which of the following accurately describes break-even analysis? A. the process of calculating the sales volume needed to achieve a profit of zero B. the process of calculating the point at which fixed costs and variable costs are equal C. the process of calculating the difference between marginal revenue and marginal cost D. the process of calculating the percentage change in quantity demanded in response to a percentage change in price E. the process of calculating how many units of product must be sold to cover fixed costs
a
Which of the following provides the best source of information for marketers regarding how high they can price a product before customers stop considering the product a good value? A. salespeople B. sales forecasts C. historical pricing data D. advertising staff E. customer service personnel
a
A new Home Depot opened up down the street from Hank's Hardware and has drastically reduced prices on many of the same products that Hank sells, forcing him to go out of business. After Hank closed his store, he noticed that Home Depot began raising its prices to more normal levels. This is an example of A. price discrimination. B. predatory pricing. C. price fixing. D. deceptive pricing. E. price inflation.
b
A retailer inflated the price of its leather jackets so that when it put the jackets on sale, it appeared to customers that they were getting a better deal than they really were. This is an example of what pricing strategy? A. price discrimination B. deceptive pricing C. price fixing D. predatory pricing E. price inflation
b
According to your text, one of the most common mistakes in modern pricing is A. failing to correctly calculate the break-even point. B. charging someone less than they are willing to pay. C. covering fixed costs while ignoring variable costs. D. setting the price too high on an introductory product. E. pricing items based on consumers' reference prices.
b
According to your text, pricing resembles a game of A. checkers. B. chess. C. cards. D. blackjack. E. roulette.
b
Consumers will be more price sensitive when A. some or all of the purchase price is paid by others. B. the price they have to pay is more than they anticipated. C. the cost of not getting the expected benefits of a purchase is high. D. a product's price is within the range that they perceive as fair or reasonable. E. they perceive the price as a gain rather than a forgone loss.
b
Dumping occurs when A. prices for products are lowered to the point at which revenue just covers costs. B. a company sells its exports to another country at a lower price than it sells the same product in its domestic market. C. a product is exported to a foreign country because demand for the product domestically has waned. D. an abundance of inventory is sold off to discount retailers to recoup costs. E. a company charges less for a product than what customers are willing to pay. Dumping is a protectionist
b
For an airline, the price of economy-class seats on any given flight may fluctuate over time. For example, the airline may try to fill economy-class seats by lowering the price as the day of the flight draws closer, or try to fill business-class seats first by raising prices on economy tickets. This is an example of A. market pricing. B. dynamic pricing. C. price skimming. D. odd pricing. E. seasonal discounts.
b
In November the appliance store priced its front-loading washing machines at $899.00 and sold 50 units. In December they reduced the price to $799.00 and sold 53 units. Which of the following statements is accurate regarding this situation? A. Demand is elastic and total revenue fell from November to December. B. Demand is inelastic and total revenue fell from November to December. C. Demand is elastic and total revenue rose from November to December. D. Demand is inelastic and total revenue rose from November to December. E. Demand is neither elastic nor inelastic but revenue rose from November to December.
b
Joey set up a lawn-mowing business in his neighborhood. He currently has 7 customers that want their lawns mowed each week for which he charges $25.00 each. Joey spends $10.00 a week in gas and another $17.00 in yard waste bags and stickers. What is Joey's weekly revenue? A. $105.00 B. $175.00 C. $148.00 D. $88.00 E. $158.00
b
One of the most commonly used pricing tactics, markup pricing, is also referred to as A. profit margin pricing. B. cost-plus pricing. C. profit-plus pricing. D. dynamic pricing. E. standard pricing.
b
Prestige pricing involves A. adding a certain amount to the cost of each item in a product set. B. pricing a product higher than competitors to signal that it is of higher quality. C. separating out the individual goods that make up a product and pricing each one individually. D. pricing generic label goods at the same price as designer goods. E. constantly updating prices to reflect changes in supply or demand.
b
Taxes on imports and exports between countries are called A. embargoes. B. tariffs. C. market equalizers. D. allowances. E. sanctions.
b
Volume maximization is also referred to as A. price skimming. B. penetration pricing. C. profit maximization. D. survival pricing. E. target pricing.
b
What technological advancement created for mobile devices has unleashed a new era of pricing transparency for consumers? A. text messaging B. wireless apps C. GPS systems D. mobile banking E. SIM cards
b
When Sony launched its new PS4 gaming system, the product was sold as a package that included the game console, game controllers, wireless headset, and one video game. This is an example of A. underpricing. B. price bundling. C. yield management. D. price skimming. E. survival pricing.
b
Which of the following is NOT a fixed cost? A. rent B. material C. salaries D. insurance E. advertising costs
b
Which of the following statements regarding pricing is TRUE? A. Marketers should keep prices low during the introductory stage of the product life cycle. B. Pricing strategies should be reevaluated throughout the product life cycle. C. Choosing a price is a one-time decision that is made for each individual product. D. Initiating price increases is one of the least challenging aspects of pricing. E. A price-skimming strategy is often used during the growth and maturity stages of the product life cycle.
b
Your text notes that technology has helped to shift the balance of power from companies to customers. Which of the following exemplifies this statement? A. Companies can use social networking sites to help them better target their audiences. B. The Internet has made it possible for customers to comparison shop for products. C. Data gathered at the point-of-sale can be used by companies to target customers for new products. D. Automated production systems lead to more efficient and cost-effective manufacturing processes. E. The Internet allows companies to advertise on more than one platform.
b
A pricing strategy that involves constantly updating prices to reflect changes in supply, demand, or market conditions is called A. market pricing. B. demand pricing. C. dynamic pricing. D. flexible pricing. E. penetration pricing.
c
As a pricing tactic, markup pricing is A. difficult to implement. B. a good measure of price sensitivity. C. not very effective at maximizing profits. D. good at capturing the value consumers place on products. E. the most effective pricing tactic overall.
c
Bowman's shoe store just received a shipment of dress boots. The manufacturer's suggested retail price for the boots is $150.00, but Bowman's decides to price the boots at $149.95. What pricing tactic is Bowman's most likely using? A. prestige pricing B. perceived pricing C. odd pricing D. dynamic pricing E. yield pricing
c
Branded products sold through legal but unauthorized distribution channels is referred to as the A. black market. B. white market. C. gray market. D. blue market. E. red market.
c
Charging someone less than they are willing to pay is a practice referred to as A. dumping. B. survival pricing. C. minimal pricing. D. underpricing. E. price skimming.
d
If luxury brands such as Versace clothing, Lexus automobiles, and Dom Perignon champagne wanted to promote an image of superior quality and exclusivity to customers, they would most likely use which pricing tactic? A. luxury pricing B. cost-plus pricing C. prestige pricing D. dynamic pricing E. odd pricing
c
In the price-setting process, the next step after demand has been evaluated is to A. define the pricing objectives. B. analyze the competitive price environment. C. determine the costs. D. choose a price. E. evaluate the alternatives.
c
Joey set up a lawn-mowing business in his neighborhood. He currently has 7 customers that want their lawns mowed each week for which he charges them $25.00 each. Joey spends $10.00 a week in gas and another $17.00 in yard waste bags and stickers. What is Joey's weekly profit? A. $105.00 B. $175.00 C. $148.00 D. $88.00 E. $158.00
c
Located on a college campus, Ben's Burger Barn charges $4.99 for its burger basket. However, students receive a 10% discount off the price for showing their student ID. This is an example of A. price fixing. B. predatory pricing. C. price discrimination. D. deceptive pricing. E. price inflation.
c
The amount of something (money, time, or effort) that a buyer exchanges with a seller to obtain a product is referred to in marketing terms as A. renumeration. B. value. C. price. D. fee. E. worth.
c
The degree to which the price of a product affects consumers' purchasing behavior is referred to as A. price elasticity. B. dynamic pricing. C. price sensitivity. D. marginal pricing. E. price relevance.
c
The price strategy of unbundling involves A. adding a certain amount to the cost of each item in a product set. B. pricing products a few cents below the next dollar amount. C. separating out the individual goods that make up a product and pricing each one individually. D. placing two or more products together in a package and selling them at a single price. E. constantly updating prices to reflect changes in supply or demand.
c
The protectionist strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market is referred to as A. survival pricing. B. mass exporting. C. dumping. D. bundling. E. the gray market.
c
The three largest manufacturers of solenoid values for plumbing applications conspired together so that all three firms would charge the same price for its 3-way valve. This is an example of A. price discrimination. B. predatory pricing. C. price fixing. D. deceptive pricing. E. price inflation.
c
What can be said regarding the role of industry structure on setting price? A. In industry in which there are many buyers and sellers, the pricing impact of any single firm will be quite large. B. In an industry in which there are many buyers and sellers, firms will typically match the price of competitors. C. In an industry in which there are many buyers and sellers, the pricing impact of any single firm will be fairly small. D. In an industry in which a small number of firms compete, the pricing impact of any single firm will be fairly small. E. Marketers should make pricing decisions irrespective of whether there are many or few competitors in the industry.
c
Which of the following has allowed for easier import/export transactions between the United States, Mexico, and Canada? A. the gray market B. the black market C. the absence of tariffs D. the implementation of tariffs E. the implementation of embargoes
c
A pricing tactic in which a firm prices products a few cents below the next dollar amount is called A. even pricing. B. perceived pricing. C. deal pricing. D. odd pricing. E. bargain pricing.
d
A section in a contract that ensures that providers of goods and services do not encounter unreasonable financial hardship as a result of uncontrollable increases in the costs of or decreases in the availability of something required to deliver products to customers is referred to as a(n) A. protective clause. B. hardship clause. C. materials clause. D. escalator clause. E. control clause.
d
According to your text, which of the elements of the marketing mix is one of the most watched and regulated activities? A. place B. product C. promotion D. price E. profit
d
All of the following are advantages of using a price bundling strategy EXCEPT A. bundled packages can be sold for a higher price. B. it leads to reduced advertising costs. C. it can lead to higher profits for the firm. D. it benefits the consumer more than the firm. E. it leads to reduced selling costs.
d
Because it could be considered an attempt to create a monopoly, which pricing strategy is illegal under U.S. law but is difficult to prove? A. price discrimination. B. deceptive pricing. C. price fixing. D. predatory pricing. E. price inflation.
d
For the first quarter of the year, the price of the company's most popular e-reader was $129.00. The company sold 750,000 units at this price. For the second quarter, the company decided to reduce the price of the e-reader to $109.00. At this price point, the company sold 1.5 million units indicating that demand for the product is A. inelastic. B. unstable. C. stable. D. elastic. E. marginal.
d
Recent research indicates that approximately _______ of consumers search for and purchase a low-priced product using an in-store shopping app or online search engine. A. 5% B. 20% C. 75% D. 40% E. 90%
d
The first step in the price-setting process is to A. evaluate demand. B. determine the costs. C. analyze the competitive price environment. D. define the pricing objectives. E. compare alternatives.
d
Variable costs are defined as costs that A. vary depending on the type of material used in production. B. change only during economic downturns. C. remain constant even though the product offering varies. D. vary depending on the number of units produced or sold. E. vary depending on the advertising budget for the product.
d
Which of the following established the Federal Trade Commission, giving it the authority to enforce laws aimed at prohibiting unfair methods of competition? A. the Sherman Antitrust Act B. the Robinson-Patman Act C. the Clayton Antitrust Act D. the Federal Trade Commission Act E. The Wheeler-Lea Act
d
Which of the following statements regarding break-even analysis is TRUE? A. Break-even analysis does not measure the cost of sales. B. Break-even analysis is an accurate measure of fixed costs. C. Break-even analysis is an accurate measure of variable costs. D. Break-even analysis does not measure price sensitivity. E. Break-even analysis reflects how demand may be affected at different price levels.
d
Which of the following statements regarding the gray market is TRUE? A. The gray market is a benefit for manufacturers, but not for consumers. B. The gray market involves the illegal buying and selling of goods. C. The interconnected nature of world economies has made it easier for firms to track gray market exchanges. D. Gray market goods allow consumers to purchase items for less than they could normally. E. Gray market exchanges occur when the price of an item is the same in both countries where the exchange occurs.
d
A strategy in which two or more products are packaged together and sold at a single price is called price A. pushing. B. grouping. C. packaging. D. skimming. E. bundling.
e
All of the following are legal under the Robinson-Patman Act EXCEPT: A. charging different prices if it is part of a quantity discount program. B. promising to match competitor's prices if the consumer produces proof of the lower price. C. charging a different price for a product that has changed in quality. D. charging different prices as a result of a going-out-of-business sale. E. allowing a significant price reduction on an artificially high retail price.
e
Compare the following statements and select the one that is accurate regarding a profit maximization strategy. A. For a profit maximization strategy to work over the long term, the firm must have a significant cost or resource advantage over competitors. B. A profit maximization strategy sets prices low to encourage a greater volume of purchases and lower the level of involvement for the consumer. C. Profit maximization should not be used as a permanent pricing objective, but is effective in allowing a firm to endure a difficult time. D. A profit maximization strategy is best used when a product is in the growth and maturity stage of the product life cycle. E. Profit maximization assumes that customers value a product's differentiating attributes and are willing to pay a higher price to take advantage of those attributes.
e
Deceptive pricing involves A. charging different customers different prices for the same product. B. two or more companies colluding to set a product's price C. selling exports to another country at an unreasonably low price. D. adding hidden taxes to products that are imported or exported. E. intentionally misleading customers with price promotions.
e
If a resort wanted to promote visitors to come during its off-peak times, it would most likely choose which pricing tactic? A. odd pricing B. price bundling C. prestige pricing D. price skimming E. seasonal discounts
e
Justine went to the specialty grocery store by her office after work. When looking at the offerings at the meat counter, she was surprised to see ground beef selling for $4.49/lb. At her normal grocery store, she can get the same quality beef for $3.29/lb., a price Justine feels is reasonable. $3.29/lb. for ground beef is Justine's A. benchmark price. B. break-even point. C. dynamic price. D. reasonable price. E. reference price.
e
One of the most important concepts in marketing is the price elasticity of demand, which is the A. degree to which the price of a product affects consumers' purchasing behavior. B. point at which the costs of producing a product equal the revenue made from selling the product. C. price that consumers consider reasonable and fair for a product. D. percentage a product is marked up in response to consumer demand. E. percentage change in quantity demanded in response to a percentage change in price.
e
One of the most important strategic decisions a firm faces is _______ because it reflects the value the product delivers to consumers as well as the value it captures for the firm. A. advertising B. promotion C. profit management D. production management E. pricing
e
Scotts Fertilizer has a 4-step program for lawn care. Each step features a different product. Scotts sells the fertilizer as a set containing one bag of each of the 4-step products. If Scotts decided to sell each product individually rather than as a set, it would be an example of which pricing strategy? A. dumping B. dynamic pricing C. minimal pricing D. underpricing E. unbundling
e
Since consumers have the tendency to compare prices on almost everything they buy, marketers should attempt to capitalize on this tendency when setting prices by determining the price consumers will consider fair and reasonable for a product. This is known as the A. benchmark price. B. break-even point. C. dynamic price. D. reasonable price. E. reference price.
e
Which of the following is also called the Advertising Act? A. the Anti-Price Discrimination Act B. the Robinson-Patman Act C. the Clayton Antitrust Act D. the Federal Trade Commission Act E. The Wheeler-Lea Act
e
taUnited States travels to China and buys huge amounts of designer purses for a much lower price than could be purchased at home. They import the purses back into the States where they sell them for less than the normal market price. The purses are considered to be A. illegal imports. B. black market goods. C. contraband D. smuggled goods. E. gray market goods.
e
