Chapter 11 Adaptive Reading Assignment

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

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

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

-Cost-oriented -Competition-oriented -Demand-oriented

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

-Manufacturing cost -Profit -Overhead

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

-Predatory pricing -Price fixing

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

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

Match the following pricing issues that have legal implications to the correct description. 1.Price FIxing 2.Price Discrimination 3. Deceptive Pricing 4. Predatory pricing

1. Conspiracy among firms to set prices 2. Charging different prices to different buyers for goods of like grade and quality 3. Price deals that mislead consumers 4. Charging a very low price for a product with the intent of driving competitors out of business

Match the following pricing approaches with the focal points of its strategy. 1.Cost-oriented 2.Competition-oriented 3.Demand-oriented 4.Profit-oriented

1.Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit 2. Price setter stresses what "the market" is doing is determining a price. 3. Factors underlying customer tastes and preferences are weighed most heavily. Factors underlying customer tastes and preferences are weighed most heavily. 4.The price setter balances both revenues and costs to set a price.

Match the following pricing approaches with the correct example. 1. Cost-oriented 2. Competition-oriented 3. Demand-oriented 4. Profit-oriented

1.Target priced its new patio furniture sets by adding 15 percent to the invoice price it paid for those products 2. Intel slashed its prices to be more similar to those of AMD, a rival computer chip maker. 3.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) 4. The owner of a vacuum cleaner store sets a target of a 20 percent return on sales.

Which of the following is an Which of the following is an example of deceptive example of deceptive pricing?

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

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.

___________-_____________analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

Break-Even

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

Constraints

________-oriented pricing approaches weigh factors underlying expected customer tastes and preferences more heavily than other factors.

Demand

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

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.

Elasticity

Demand-oriented pricing approaches weigh which factors most heavily?

Expected customer tastes and preferences

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

Objective

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

Predatory pricing Price fixing

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

Target profit pricing Target return pricing

_________discounts are also known as functional discounts.

Trade

The demand curve is

a graph relating quantity sold and price.

A one-price policy means there is one price for

all buyers of the product

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

Factors that limit the range of prices a firm may set are known as pricing

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 using predatory pricing, a firm sets a very low price for one or more of its products in order to

drive its competition out of business.

Price fixing, price discrimination, and predatory pricing are

legally prohibited.

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

maximum units sold

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

maximum units sold.

Price deals that ________ fall into the category of deceptive pricing.

mislead consumers

A marketing manager considers pricing objectives and constraints to

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

Pricing ________ involve specifying the role of price in an organization's marketing and strategic plans.

objectives

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

objectives; constraints

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

one-price

Value is defined as

perceived benefits divided by price

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

price

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

price

The percentage change in quantity demanded relative to a percentage change in price is known as

price elasticity of demand

A firm must know its competitors' ________ in order to best set its own.

prices

Total revenue minus total cost is known as

profit

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

profit-oriented

Reductions in unit costs for a larger order are known as ________ discounts.

quantity

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

quantity demanded; price

Cumulative and noncumulative are the two general kinds of

quantity discounts.

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

reward wholesalers and retailers for marketing functions

Competition-oriented approaches to pricing

stress what "the market" is doing.

Price is defined as

the money or other considerations exchanged for the ownership or use of a product

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

the price

Total revenue equals the product quantity sold times

the unit price

Price times quantity sold is

total revenue

According to the profit equation, profit is

total revenue minus total cost.

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 relationship, or ratio, between a product's perceived benefits and the consumer's costs is known as its

value