Marketing Chapter 19

True. One strategy to get adequate distribution for a new product is to offer dealers a large trade allowance to help offset the costs of promotion

One strategy to get adequate distribution for a new product is to offer dealers a large trade allowance to help offset the costs of promotion

False. A firm has maximized its profits when its marginal revenue equals its marginal cost.

A firm has maximized its profits when its marginal revenue exceeds its marginal cost.

False. Profit maximization means setting prices so that total revenue is as large as possible relative to costs.

A marketer using a profit maximization strategy will charge the highest prices the market will bear.

False. Adequate distribution for a new product is often obtained by offering a larger-than-usual profit margin to its distributors.

Adequate distribution for a new product is often obtained by reducing the size of the profit margin for its resellers.

True. As products enter the growth stage of the product life cycle, prices generally begin to stabilize.

As products enter the growth stage of the product life cycle, prices generally begin to stabilize.

True. Break-even analysis determines what sales volume must be reached before total revenue equals total costs.

Break-even analysis determines what sales volume must be reached before total revenue equals total costs.

False. These are called fixed costs.

Costs that do not change as output is increased or decreased are called stable costs.

False. As the popularity of yield management systems increases, their use is spreading to manufacturing (in terms of production capacity).

Yield management systems can only be used by service industries.

False. Firms pricing their products solely on the basis of costs are not following the marketing concept.

Firms that price their products solely on the basis of costs are adhering to the marketing concept.

True. High purchase prices may create feelings of pleasure and excitement in consumers.

High purchase prices may create feelings of pleasure and excitement in consumers.

True. If demand for milk is inelastic, consumers will not change their purchasing habits greatly when the price of milk changes.

If demand for milk is inelastic, consumers will not change their purchasing habits greatly when the price of milk changes.

True. If the formula for elasticity results in a measure of elasticity (E) equal to 1, the increase in sales exactly offsets the decrease in price, so total revenue remains the same.

If the formula for elasticity results in a measure of elasticity (E) equal to 1, the increase in sales exactly offsets the decrease in price, so total revenue remains the same.

False. If E is greater than 1, demand is elastic.

If the formula for elasticity results in a measure of elasticity (E) greater than 1, demand is said to be inelastic.

True. Markup pricing, adding an amount to cost to cover expenses and profit, is one of the most common pricing methods used by intermediaries to establish a selling price

Markup pricing, adding an amount to cost to cover expenses and profit, is one of the most common pricing methods used by intermediaries to establish a selling price

False. Maximization of cash should never be a long-run objective because cash maximization may mean little or no profitability. Without profits, a company cannot survive.

Maximization of cash should be a long-term objective.

False. Price is not necessarily measured in terms of money. In bartering, other items of value may be exchanged.

Price is defined as the perceived value of a good or service that is exchanged for a certain dollar amount.

False. Price is often used as a promotional tool to increase consumer interest.

Price should not be used as a promotional tool.

True. Prices may actually rise for a product in the decline stage of the product life cycle.

Prices may actually rise for a product in the decline stage of the product life cycle.

False. This is revenue. Profit is revenue minus expenses.

Profit is the price charged to customers multiplied by the number of units sold.

False. Price equilibrium is the price at which supply and demand are equal, and there is no inclination for prices to rise or fall.

Profit maximization is the price at which supply and demand are equal, and there is no inclination for prices to rise or fall.

False. They tend to benefit more from price promotions that products perceived to be of lower quality.

Research has shown that products perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

True. Sales-oriented pricing objectives are based either on market share or dollar or unit sales.

Sales-oriented pricing objectives are based either on market share or dollar or unit sales.

False. Status quo pricing seeks to maintain existing prices or to meet the competition's prices.

Status quo pricing objectives suggest that the firm should try to keep its price consistent regardless of what competition does with its prices.

True. Target return on investment is the most common profit objective used by firms.

Target return on investment is the most common profit objective used by firms.

True. The manufacturers that remain in the market toward the end of the maturity stage typically offer similar prices.

The manufacturers that remain in the market toward the end of the maturity stage typically offer similar prices.

True. Today's firms must develop specific, measurable, and attainable pricing objectives if they hope to survive in highly competitive markets.

Today's firms must develop specific, measurable, and attainable pricing objectives if they hope to survive in highly competitive markets.

False. While variable costs do vary with changes in the level of output, marginal costs are the changes in total costs associated with a one-unit change in output.

Variable costs vary with changes in the level of output, whereas marginal costs do not vary as output changes.

False. Demand is elastic when there are many substitute products available.

When many substitute products are available, demand is inelastic.

False. When pricing goals are mainly sales oriented, demand considerations usually dominate.

When pricing goals are mainly sales oriented, cost considerations usually dominate.

False. Yield management systems (YMS) were first developed in the airline industry.

Yield management systems (YMS) were first used by Internet service providers.