Chapter 19
Bill's Pills is a full-service pharmacy and drug store located in a small, southern city. Since many of Bill's Pills' customers are on Medicare, the business must wait several months before they are reimbursed by the state that leads to cash flow issues for the pharmacy. Which strategy would be most useful for Bill's Pills to raise cash quickly?
Offer special discounts or sales to customers
Pricing decisions are impacted by many factors. Which of the following factors is NOT related to pricing?
a company's stock price
In conducting an assessment of her accounting firm, Paige discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Paige's profits would equal _______.
a loss of $32,000
A(n) _______ discount is defined as a concession in price to achieve a desired goal.
allowance
The oldest form of exchange is known as _______.
bartering
The _______ is/are considered the lowest level at which a company would price its product or service.
costs
A business marketer may offer _______ pricing that involves reducing a product's price relative to the transportation costs or other costs associated with the physical distance between buyer and seller.
geographic
In order to calculate the breakeven point, fixed costs are divided by _______.
per-unit contribution to fixed costs
It is important for marketers to know competitors' pricing, so marketers can adjust pricing within their own firms accordingly. Marketers have the least amount of flexibility in setting prices in _______.
perfect competition
Brandon is an avid golfer and often entertains customers on the golf course. He's considering purchasing a new set of clubs and is concerned both about the price and quality of the clubs. What type of consumer best describes Brandon and his golf club purchase?
value conscious
Shelia's Cookie Shop has fixed costs of $21,000, variable costs of $3,000, and it produces 4,500 cookies. What is Shelia's Cookie Shop's average variable costs?
$0.67
Sandy recently leased her first apartment and is purchasing accessories and décor. She enjoys shopping at HomeGoods and believes she is saving a lot of money since the store's sales tickets include information about "their price" and "our price." The information provided on the sales tag is called a(n) _______.
external reference price
Auto Parts USA uses _______ when selling parts to its sister store, Auto Essentials. That is, it uses the full price less a small discount to reflect the lack of sales effort and other expenses.
market-based cost
Producers commonly provide intermediaries with discounts, or reductions, from list prices and they are classified into five categories. Which of the following is NOT a type of discount offered to business markets?
quality
Rental car companies purchase thousands of new cars each year for their fleets. Companies like Hertz and Enterprise Rent-A-Car are likely to receive _______ discounts when purchasing from automobile manufacturers.
quantity
Suppose that Sony has determined that its popular PlayStation game system _______ when it has total costs of $7 million and sells $7 million worth of product in the same fiscal year.
reaches the breakeven point
A firm implementing a value-conscious strategy should _______.
recognize consumers who are concerned about both price and quality of a product
Customers can often get _______ discounts on winter clothes in March or April, when retailers need to make room for spring and summer fashions.
seasonal
Tuscany Pizza sells its frozen pizzas to grocery stores in the Midwest for $4.50 each. Its annual fixed costs to produce the pizzas are $80,000 annually and its variable costs are $2 per pizza. Calculate the breakeven point for Tuscany Pizza.
32,000
Which of the following statements is true regarding consumers' reliance on the price-quality relationship?
Consumers are more likely to rely on the price-quality relationship when they cannot judge the quality of the product themselves.
Which regulations or laws limit the use of price differentials?
Robinson-Patman Act and Clayton Act
The _______ has had a strong impact on pricing decisions since it prohibits conspiracies to control prices and has led courts to rule that price-fixing among firms in an industry is illegal.
Sherman Antitrust Act
Stephanie has recently opened a popcorn business selling a variety of popcorn flavors such as caramel, buffalo wing, and cheddar cheese. Stephanie is interested in determining the _______ for each flavor of popcorn that would help her figure out the level of popcorn she needs to sell in order to cover her costs of production.
break even point
The level at which the costs of producing a product equals the revenue made from selling the product is termed _______.
breakeven point
Which of the following products would most likely be classified as a prestige product based upon consumer demand and responses to price fluctuations?
cristal champagne
_______ discounts are quantity discounts aggregated over a stated time period.
cumulative
Jacobsen's Department store featured advertisements that showed a man's suit on sale for $199.99—marked down from $250. However, it was found that the suit was never actually sold at the $250 price point. This is an example of _______.
deceptive pricing
What is the typical shape of the demand curve for most products?
downward sloping
If an inverse relationship exists between a product's price and the quantity demanded for the item, the demand is described as _______.
elastic
Firms that stress low price tend to market differentiated products.
false
Average total cost typically _______.
has a U shape, declining initially and then increasing when marginal cost rises above average total cost
At times, customers interpret a _______ price as possessing _______ product quality.
higher; higher
The Comfort Station Restaurant features daily lunch specials just like grandma used to make and enjoys serving "comfort-style" food—food that nurtures and comforts the soul. The restaurant is near a large office complex and competes against many national chains such as Chipotle, McDonald's, and Subway. It typically offers its lunch specials at $8.99 per person, but recently lowered its prices to $6 per person hoping that consumers would relate this price to Subway's $6 sandwich deal, which was so popular. Which of the following objectives is The Comfort Station Restaurant most likely seeking to achieve?
increasing market share
Jessie White recently graduated from dental school and is planning to start his own dental practice. He has never taken any business classes or economics courses and has very little business-related experience. The costs to start up a dental practice are quite high considering the equipment, rent, employee labor costs, and other supplies or materials needed for the business. Jessie was speaking with a friend who graduated with a degree in marketing about how to maximize profitability. The friend was telling Jessie that it's important to understand fixed costs, variable costs, marginal costs, and marginal revenue since profit will be at its highest when _______.
marginal costs equal marginal revenue
Zach enjoys dressing well and believes it's important to his image that he looks polished and professional. He makes his purchase decisions based on the reputation of a brand and appreciates the additional status that brands such as Burberry and Rolex provide to him. He is characterized as a _______ consumer.
prestige sensitive
In transfer pricing, one method that might be used is _______. The cost is calculated based on what it would cost to produce the goods at full plant capacity.
standard full cost
Which of the following outcomes is most correct if a marketer were to raise the price of its product when demand is inelastic?
total revenue will increase
It has been relatively rare for a firm to be charged with predatory pricing.
true
Studies show that purchases of store brand food items are on the rise. During the last economic downturn, consumers began purchasing store brand items, like Kroger brand soup and cereal, in an effort to save money. Most consumers felt the Kroger brand items were of the same quality as manufacturer brands like Campbell's or General Mills. As a result, these _______ consumers still purchase store brands even though the economy is doing well.
value conscious
Marginal revenue (MR) minus marginal costs (MC) tells a company _______.
whether a unit makes a profit
Tim O'Brien gets the invoice for a load of gravel he purchased last week. The price of the gravel was $55, and the terms are 2/10, n/45. If Tim pays the invoice in five weeks, he will owe _______.
$55
Four Roses bourbon, based in Kentucky, is known for crafting exceptional bourbon, and its Single Barrel bourbon is priced at a premium level to distributors at $28 per bottle. Its average variable cost is $12 per bottle and total fixed costs are $65,000. How many units of the Single Barrel bourbon will Four Roses need to sell in order to reach its breakeven point?
4,063
Which of the following mathematical expressions is true with regard to pricing and the generation of a firm's revenue?
Profit = (price × quantity sold) − total costs
Which of the following actions should a firm follow when marginal costs are equal to marginal revenue?
Stop producing additional units in order to maximize profitability
Versace's men's cologne "Gucci Guilty" is most likely considered a prestige product. If the marketing managers at Versace wanted to test the elasticity of the demand to confirm its prestige product status, which of the following outcomes would they likely expect?
The demand for the product would diminish at a certain higher price point.
Which of the following statements is true with regard to premium-priced products?
They are often marketed through selective or exclusive distribution channels.
Skippy Peanut Butter offers grocery stores a discounted price on cases of peanut butter when the grocery store agrees to participate in advertising and sales support programs such as newspaper flyers or point-of-purchase displays. This discount is known as a(n) _______ discount.
allowance
Add It Up produces and sells calculators. The company's average fixed costs totaled $5.60, average variable costs totaled $2.50, and the company produced 7,500 calculators last year. Calculate Add It Up's total cost.
$60, 750
If the percent change of quantity demanded for razors is .5 and the percent change in price is −.18, what is the price elasticity of demand?
-2.78
To compete effectively on a price basis, which of the following must be true?
A firm should be the low-cost seller of the product.
Steven Spielberg is considering starting his own cable company. He is aware that the barriers to entry are high and he would be competing against just a few cable providers. The cable industry can be considered _______.
An oligopoly
Miller Ltd. would like to conduct business with GE Aircraft Engines. In an effort to earn business, Miller Ltd. offers to absorb all of the freight costs. This is an example of which type of pricing?
Freight absorption pricing
_______ refers to what the price means or what it communicates to customers.
Interpretation
Which of the following best describes the shape of the demand curve for a prestige product?
It has a curved shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. However, beyond a certain high price point, demand declines.
Which of the following statements is NOT an advantage of nonprice competition?
It is very flexible and can be quickly changed.
Why do retailers generally want to avoid a price war?
It slashes profit margins for the retailers involved.
DeAngela owns several boutiques in Georgia and Florida that specialize in women's apparel and accessories. DeAngela personally selects each item that is sold in her stores, often selecting items based on quality and the latest fashion trends. DeAngela markets her stores by promoting the personal service customers receive from store associates as well as the uniqueness of the items. DeAngela is likely competing in a market described as _______.
Monopolistic competition
Griffin Audio specializes in creating high-fidelity speakers for the music enthusiast and has received awards for the sound quality of the speaker systems. It is launching a line of over-the-ear headphones and ear buds and seek to position its new products as a higher quality and prestigious alternative to one of its top competitors, Beats by Dr. Dre. Which of the following pricing strategies should Griffin Audio utilize?
Price the headphones and ear buds at a higher price than the Beats headphones
After the bird flu devastated U.S. chicken flocks a few years ago, restaurants, bakeries, and other companies that used eggs were forced to find alternatives or reformulate their recipes. Now that chicken flocks have bounced back, production is at normal levels. However, poultry farms have noticed a significant decrease in demand for eggs. As a result, which of the following is most likely true?
Prices of eggs will decrease in an effort to sell more eggs.
Microsoft offers retailers such as GameStop, Target, and Walmart a discount on the unit price of its popular Xbox game system when they purchase 1,000 or more units at one time. This is known as a(n) _______ discount.
Quantity
Which of the following factors or situations would affect the success of a company's use of nonprice competition?
The existence of unique product features that consumers value
Agatucci's Restaurant is marketing a line of frozen pizzas based on its famous recipe it has served at the restaurant for the last 40 years. The pizzas will be sold in grocery stores across the country, and prior to the national roll-out, Agatucci's used test marketing to determine the appropriate price and market niche for its pizzas. It discovered that the typical grocery store would sell 25 pizzas per day at $6.99, 45 pizzas per day at $7.49, and 38 pizzas per day at $8.99. Which of the following best describes what Agatucci's learned as a result of its test marketing and pricing study?
The pizzas are considered a prestige product.
Discounts that are used to attract and keep effective resellers by compensating them for performing certain functions such as transportation or warehousing are called _______ discounts.
Trade
Isaiah has been subscribing to ESPN The Magazine for several years. He loves reading the articles every month and thinks that $29.95 for a one-year subscription is a great deal. He recently received a subscription renewal notice from ESPN. The new yearly rate for the magazine is $39.95. Isaiah isn't sure that he is willing to pay more for the subscription. Isaiah is likely using _______ to make this determination.
an internal reference price
If Roberts Electronics finds that the average total cost and the marginal cost of its radar detectors are both $85, then _______.
average total cost is at its lowest level
Roberts Tool & Die Co. creates metal parts for manufacturers, including the aluminum posts for head rests in many automobiles manufactured in the United States. If the company observes that marginal costs and average total costs are both $39, then _______.
average total costs are at its lowest level
The Wheeler-Lea Act and the Federal Trade Commission Act prohibit _______.
deceptive pricing
Consumers are more likely to rely on _______ prices when they have less experience making purchasing decisions regarding the product.
external reference
If a firm is using nonprice competition to distinguish its products from other brands, it does not need to worry about competitors' prices.
false
Seasonal discounts provide price incentives to customers during peak selling seasons.
false
The value of an idea cannot be assessed by price.
false
With prestige products, a firm will always be able to sell more at a higher price.
false
_______ are costs that do not vary with changes in the number of units produced or sold.
fixed costs
Abdul has started a lawn mowing business in his neighborhood. He spends $4 every month for a small advertisement in the community newsletter. He also pays for gasoline to use in the lawn mower. The money Abdul spends on the advertisement is a _______ cost and the money he spends on gasoline is a _______ cost.
fixed; variable
Carmen Sanchez is a sales representative for Sherwin Williams and her territory includes an approximately 120-mile radius of her "home" retail store. Her customers are painting contractors and facility managers of office complexes, apartment buildings, hospitals, and other businesses who might have commercial painting needs. Carmen uses her company vehicle and spends about five hours each day in her car visiting her customers and prospecting for new business. Since her territory is so large, Carmen puts about 200 miles on her car each day that consumes a lot of gasoline. She tries to be economical when choosing gas stations, but it doesn't really matter how much the gas costs—she pays the price. In this case, demand for gasoline is _______.
inelastic
An _______ price is developed in the buyer's mind through experience with the product.
internal reference
The breakeven point is important for firms to know and understand because if a company is unable to sell products at this point or higher, it is _______.
losing money
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's _______ cost.
marginal
You've been hired as a pricing analyst to assist a firm in setting their prices. The company wants to maximize its profits, and profit maximization is achieved when _______.
marginal costs equal marginal revenue
Justin, a sales representative for Serta Mattress manufacturers, phones Kirk of Southside Furniture to inform him that if he will increase his recent order of 15 mattress sets to 20, he will receive a 14 percent price reduction. This offer is due to a recent overstock condition at the factory and will not be available in the future. The discount offered here is _______.
non-cumulative
_______ buyers are ones who often purchase products that signify prominence and status.
prestige sensitive
The practice of employing price differentials that tend to injure competition by giving one or more buyers a competitive advantage over other buyers is known as _______.
price discrimination
Jose Rodriguez is a pricing analyst for Walgreens and is responsible for all products in the grocery category including chilled merchandise. Jose knows that consumers who purchase grocery items at Walgreens are willing to pay more for these items than they normally would at the grocery store since Walgreens is providing more location convenience and a faster shopping experience. Jose typically tests the _______ of demand by working with local store managers in several different Walgreens stores and adjusting the price so that he can determine the best price that maximizes profitability for the chain.
price elasticity
The mathematical result of dividing the percentage change in quantity demanded by the percentage change in price is known as the _______.
price elasticity of demand
In the mid-1990s, Archer Daniels Midland Company was accused of _______. The company, along with its Japanese and Korean competitors, agreed to a set price for lysine, an additive found in animal feed, for their mutual benefit.
price fixing
The EU recently fined major truck makers for pricing that they viewed as anticompetitive. Many years ago, the managers at five of the companies got together and decided to set certain prices. By setting agreed-upon prices, customers would have to purchase at those prices and could not go to a competitor that sold comparable products at lower prices. They also agreed to pass the costs of environmental regulations onto consumers. These truck makers were fined for _______.
price fixing
Which of the following products would most likely utilize personal sales representatives to assist customers with their purchase decision?
smartphones
If all firms producing the same product charge the same price for it, _______.
the firm with the lowest production costs is the most profitable
As a marketing mix variable, price is an important element since it directly relates to _______.
the generation of total revenue
If tickets to a Major League Baseball game have a classic demand curve, then _______.
the number of tickets sold will increase as ticket prices decrease
Sutter Homes Winery offers special discounts to retailers to compensate them for providing transportation or warehousing services, which are known as _______ discounts.
trade
The popular cleaning products Tide and Downy are both brands that are part of the Procter & Gamble family. Some formulas of Tide include Downy—thus, the Tide brand would purchase Downy from the Downy division of Procter & Gamble. This purchase would involve _______ pricing.
transfer
Instead of charging each of his customers across the United States a different price for shipping, José decided to average the costs of shipping to customers in Florida, Washington, Vermont, and Kansas and charge everyone the same price. What type of pricing is José using?
uniform geographic pricing
Hamilton Manufacturing, located in New Hampshire, offers to ship items to different parts of the country according to _______. That is, customers in the Southwest, Midwest, Southeast, Rocky Mountains, and Pacific regions pay different prices according to transportation costs to those areas.
zone pricing
Max Weber is the owner of a food truck business and specializes in farm-to-table fare—healthy ingredients, no GMOs, and all organic produce. His food costs are much higher since he sources from farmers who utilize sustainable agricultural practices and no pesticides. He also works with local farmers who raise animals in a sustainable manner—no antibiotics or hormones for beef, chicken, pork, and turkey. Max is reviewing his pricing structure and wants to determine his profit for the month. His total revenue was $8,500 and his total costs were $4,500. He has a fixed price system where he charges $10 for entrees and he sold 850 entrees this month. How much profit did Max's food truck business earn?
$4,000
The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells its fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the breakeven point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. It believes a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the breakeven point?
1,007 units
If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen?
Above some price level, the quantity demanded would begin to decrease.
Marketers at Procter & Gamble (P&G) want to calculate the price elasticities of demand for two of their products: Dawn dishwashing detergent and Pampers diapers. The company raised prices slightly over the last year to offset increased costs and want to analyze the effects of that price change. To calculate price elasticity of demand for each product, the marketers looked at the change in prices and quantities demanded of each product, separately, from last August and this August. They found that Dawn dishwashing liquid had a price elasticity of demand of −1.24 while Pampers diapers had a price elasticity of demand of −0.41. They discovered that the percentage change in quantity demanded for Pampers was much less than the percentage change in quantity demanded for Dawn. Which of the following is true?
It would be more beneficial for P&G to raise the price of Pampers than raise the price for Dawn.
GoPro video camera company wants to maximize its profit on its popular Hero6 video camera. Which of the following would be the best action for GoPro to achieve its profit maximization goal?
Manufacture GoPro Hero6 cameras at the point where marginal costs equal marginal revenue
_______ is/are most likely to have an inelastic demand curve.
Milk
Mitch uses Verizon for wireless services and has set up an automated system where Verizon automatically deducts the monthly service fee from his bank account. The amount of money that is deducted by Verizon each month for the cellular service is called Verizon's _______.
Price
Which of the following statements is true with regard to price?
Price is the value paid for a product in a marketing exchange.
Which of the following statements about price as an element of the marketing mix is true?
The pricing element of the marketing mix is very flexible, and marketers can quickly respond to changes in demand or competitors' actions.
Marketers at Procter & Gamble (P&G) want to calculate the price elasticities of demand for two of their products: Tide laundry detergent and Charmin toilet paper. The company raised prices slightly over the last year to offset increased costs and want to analyze the effects of that price change. To calculate price elasticity of demand for each product, the marketers looked at the change in prices and quantities demanded of each product, separately, from last August and this August. They found that Tide laundry detergent has a price elasticity of demand of −2.97 while Charmin toilet paper has a price elasticity of demand of −0.59. They discovered that the percentage change in quantity demanded for Charmin was much less than the percentage change in quantity demanded for Tide. Which of the following is true?
Tide laundry detergent is more elastic than Charmin toilet paper.
Custom Hot Rods specializes in restoring or creating custom vehicles and motorcycles to customers who appreciate one-of-a-kind vehicles. Custom Hot Rods typically produces two units each month. If it's able to produce one more unit each month, it will incur _______.
a marginal cost
Fernando makes and sells custom signs to sell online. He calculated his _______ by dividing his variable costs by the number of units produced.
average variable cost
Ford purchased a 30-second primetime television advertising spot, but later determined it would prefer an ad spot on Sundays during football season. Ford ended up trading its advertising spot with Apple. This is an example of _______.
bartering
Stepan Chemical is a global supplier of chemicals to manufacturers worldwide. One of its customers, Dow Chemical was negotiating with Stepan for a surfactant material that's utilized in Dow's popular RoundUp herbicide product. The purchasing manager at Dow was interested in negotiating a lower price for Stepan's material and discovered that Stepan usually purchased polymer products from various suppliers. The Dow manager developed a plan to create a trade whereby Stepan would receive its POLYOX, polymer product, in exchange for its BIO-SOFT, surfactant product. Thus, Dow and Stepan used _______ to facilitate the exchange.
bartering
Rex is opening a retail outlet and will primarily sell used video games and game systems. Which of the following would most likely represent a fixed cost for Rex?
building rent
When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude?
consolidated mustard is a prestige good
China accused a well-known national retailer of engaging in unfair competition. According to Chinese authorities, the retailer had discounted many of its products. However, the stores allegedly informed consumers through promotions that the original prices for these products were much higher than they were initially. This made consumers think they were getting steeper discounts. This is an example of _______.
deceptive pricing
If the demand for coffee beverages is similar to most products, if Starbucks were to increase the price of its coffee beverages, demand or sales of these beverages to consumers would most likely _______.
decrease
Rinnai produces tankless water heaters which sell for $650. In the United States, Rinnai estimates its manufacturing costs are $250 per unit if it produces 1,000 units per week. If it produces 1,001 units per week, its costs are $280 per unit. The $30 difference is a(n) _______.
marginal cost
The Old Country Buffet notices that when it serves 501 customers at dinner instead of 500, its total revenue increases $12. This $12 increase represents the Old Country Buffet's _______.
marginal revenue
An advertisement for West Bank illustrates the bank's personal connections with customers unlike the larger bank it competes against. West Bank uses the tagline, "We know you by name." What type of practice is West Bank using in marketing its services?
nonprice competition
Commercials for Fruit of the Loom's new Everlight underwear for women discuss how light the fabric is saying, "You won't even notice you're wearing it." Fruit of the Loom is using _______ to distinguish its product from other brands.
nonprice competition
Parker Bell has been using an iPhone 7 for several years and is eligible for an upgrade from Verizon on his next phone. Over the last few years, Parker's iPhone screen has been replaced three times—a common issue for many smartphone users. Parker had purchased the phone insurance but quickly found that although the insurance would replace his phone, he would have to pay $149 and would likely receive a refurbished unit rather than a brand new phone. Parker was watching TV one night and noticed an advertisement for the Droid Turbo 2 phone featuring "the world's first shatterproof screen." Parker decided he was going to replace his iPhone 7 with the Droid Turbo 2 and didn't even consider other models. He had a reason to care about screen maintenance and out-of-pocket expenses and is excited to get the new Droid Turbo 2. What type of practice is Motorola using in its marketing of the Droid Turbo 2?
nonprice competition
_______ occurs when a marketer utilizes distinctive product features, service, product quality, promotion, packaging, or other factors to differentiate its products or services from their competitors.
nonprice competition
A technology attorney claims that while Amazon has done a lot of good for the industry, it is engaging in aggressive pricing strategies. According to him, Amazon purchases books for one price and then sells them for much cheaper. For instance, it allegedly purchases a book for $13 and sells it for $9. Because of its power and scale, Amazon can currently get away with this. The lawyer believes Amazon will drive prices down so low that rivals cannot compete, and it will gain up to 90 percent market share. Authors will then have to sell their books at knock-down prices because they have nowhere else to go. The technology attorney is accusing Amazon of _______.
predatory pricing
Louis Vuitton is a fashion brand often associated with elite or high-profile customers who can afford spending $1,000 or more on a purse. One of its most popular handbags is the Alma, which is a structured bag and part of the Monogram collection. Louis Vuitton closely monitors its sales and wanted to test the elasticity of demand. It noticed that when the Alma bag was priced at $1,500, a greater quantity was sold compared to a retail price of $1,300. However, if the price was $1,750, sales of the bag declined. The pricing research conducted by Louis Vuitton demonstrates that the Alma bag is a _______ product.
prestige
Burberry, a fashion retail brand selling men's and women's apparel and accessories, has recently been recognized as providing the highest level of customer service in the industry as customers rate the company extremely high on personalized service. Burberry clothing is quite expensive and may incorporate its iconic plaid fabric—partly as a signature element but also to convey to others that the wearer can afford Burberry. It's become somewhat of a status brand and those who purchase Burberry are high-income earners or aspire to live the life of a high-income earner. Which of the following best describes Burberry customers?
prestige sensitive
Walmart promotes its private label brand Equate for laundry detergent using a shelf tag to draw attention to the savings that consumers can receive if they purchase the product. In addition, the name of the product, Equate, signifies that the brand is the same or equal to name-brand alternatives. Walmart is competing on the basis of _______ with its Equate brand.
price
Best Buy is a national retailer specializing in entertainment, appliances, computers, and stereo equipment. Best Buy is considered a category killer retailer since it has a wide range of merchandise in limited product categories and are able to negotiate special discounts from suppliers due to its ability to purchase in bulk. Best Buy encourages customers to shop the competition but make their purchase from Best Buy—either online or in the stores since Best Buy will meet or exceed any advertised price on any of its products. What type of practice is Best Buy implementing through its price-match guarantee?
price competition
Companies may engage in _______, which is defined as emphasizing price as an issue and matching or beating competitors' prices.
price competition
Sherman's Appliances advertises a "price match" guarantee that it will meet or exceed competitors' prices on all products in the store. What type of strategy is Sherman's Appliances utilizing?
price competition
Sherman's is a family-owned furniture and appliance retailer with four locations in central Illinois. The business is family-owned and now run by the son of the founder. Sherman's frequently uses television advertising and social media to promote the business and recently began offering a price match guarantee. The company is encouraging customers to check competitor prices while shopping at Sherman's and will even offer customers the use of an iPad to check deals. Sherman's will meet or beat any advertised competitor's price on similar merchandise. What type of practice is Sherman's implementing through its price-match guarantee?
price competition
Maja is always searching for a bargain. She regularly shops at several different grocery stores in order to find the lowest prices. She is not brand loyal and is willing to buy generic branded items in order to save money. Maja is a _______ consumer.
price conscious
Busch Stadium in St. Louis, Missouri, where the St. Louis Cardinals baseball team is based, is surrounded by a large number of restaurants and bars who are interested in attracting fans before and after games to dine or drink at their locations. Recently, one bar offered $1 drafts and another decided to offer $1 pitchers. The manager of a third bar decided to offer a buy-one-get-one half-price special on entrees as she knew that lowering prices on beer could result in a(n) _______ that could erode profits and be harmful to all competitors
price war
A customer's _______ refers to whether the price will move customers closer to purchase of the product and the degree to which the price enhances their satisfaction with the purchase experience and with the product after purchase.
response to the price
Back2Nature produces granola bars and protein snacks geared toward hikers and people that spend a lot of time outside. The company announced that it would increase product quality by using cage free eggs and whole grains in its products moving forward. We may expect to see the demand curve to _______.
shift to the right
Nonprice competition emphasizes distinctive product features, service, and product quality.
true
Rent is usually a fixed cost.
true
Aldi's food stores that are owned by a German company have been expanding across the United States and feature a smaller retail store space with a limited selection of brand-name merchandise. Aldi's has worked hard to develop partnerships with suppliers to source items and package private or store-brand merchandise that's similar to a national brand product. For example, Aldi's offers its Millville brand of cookies and snack items such as a strawberry grain bar that's similar in appearance and taste to Nutrigrain. Aldi customers appreciate both high-quality products at a reasonable price point. What type of shoppers does Aldi's attract?
value-conscious
Sweet Things is a bakery specializing in cupcakes, cookies, and pies. The owners purchase ingredients such as sugar, flour, spices, baking soda, chocolate, and butter as raw materials to create its sweet treats. These ingredients or raw materials would most likely be classified as _______ costs.
variable