Chapter 10

Companies that adopt value added pricing ___.

Attach value added features and services to differentiate their offers and support their higher prices

Target return pricing uses the concept of a(n) _____, which shows the total costs and total revenue expected at different sales volume levels

Break-even chart

With accumulated production experience and higher volume of production, companies not only become more efficient but also____.

Gain economies of scales

When Mc Donald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ____ pricing.

Good value

If demand changes greatly with a small change in price, we say the demand is ________.

elastic

Under ________, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price.

monopolistic competition

Fixed costs ____.

costs that do not vary with production or sales level

________ pricing uses buyers' perceptions of value as the key to pricing.

customer value based

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

customer-oriented

Which of the following is most likely a risk associated with experience-curve pricing?

Aggressive pricing often gives a product a cheap image

Which of the following involves setting prices based on a rival firm's strategies, costs, prices, and market offerings?

Competition based pricing

___ involves setting prices based on the costs for producing, distributing, and selling the products plus a fair rate of return for effort and risk.

Cost-based pricing

Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged?

Demand curve

What is usually the first step in cost-based pricing?

Designing the product

Developing an effective integrated marketing mix program involves coordinating price decisions with product design, promotion, and ___ decisions.

Distribution

Cost-plus pricing ___.

Involves adding a standard markup for profit

DivetheBlue, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer DiveTheBlue, which has earned a reputation for selling high quality products. This exemplifies ____.

Nonprice position

The long run average cost (LRAC) curve indicates the ____.

Per unit cost of output in the long run

The Great Recession of 2008 to 2009 triggered a shift in consumer attitudes toward ___.

Perception of value

___refers to a measure of the sensitivity of demand to change prices.

Price elasticity

Departments or managers that have an influence on pricing include sales manager, finance manager, accountants , and

Production managers

As a manufacturer increases price, the ______ drops

break even volume

Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________ pricing.

everyday low

When companies set prices, the government and social concerns are ____ factors affecting pricing decisions.

external

________ pricing refers to offering just the right combination of quality and gratifying service at a fair price.

good value

Which of the following involves introducing less-expensive versions of established, brand name products?

good-value pricing

________ pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

high to low

___ refers to the amount of money charged for a product or service.

price

________ is the only element in the marketing mix that produces revenue.

price

Price setting is usually determined by ________ in large companies.

product managers

In which situation is the market dominated by one seller?

pure monopoly

Overhead costs ___ as the number of units produced increases.

remain the same

Which of the following is a cost-based approach to pricing?

target return pricing

Which of the following is an external factor that affects pricing decisions in a company?

the nature of the market