Marketing Exam 4 Chapter 9
You should always start with ______ _____?
Customer value
Costs that do not vary (also know as overhead costs)
Fixed costs
the sum of the fixed and variable costs for any given level of production.
Total costs
Costs that vary with production
Variable costs
Paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way
allowances
When dealing with vlaue based pricing, there are 4 steps. What is the first step?
asses customer needs and value preceptions
Seller selects a city as a "base" point
basing point pricing
Price is considered ______ the marketing program is set.
before
What does the right price impact? _________________ _______________
bottom line
If a company wishes to sell the exact number of units to cover both its variable and fixed costs, what type of pricing strategy is it using?
breakeven pricing
Setting price to break even on the costs of making and marketing a product, or setting price to make a target return (target return costing)
breakeven pricing
Which of the following is a cost-oriented pricing approach?
breakeven pricing
Is this the broad narrow def. of price: the sum of all the values that customers give up in order to gain the benefits of having/using the product/service?
broad
Bath & Body Works offers "three-fer" deals on its soaps and lotions (such as three antibacterial soaps for $10). This is an example of _______ pricing.
bundel pricing
refers to setting a price for by-products in order to make the main product's price more competitive.
by product pricing
The simplest pricing method
cost plus pricing
If it ________ ____ _________ than your competition, you need to _______ __ __________ ________ or make ______ ___ ___ ________.
costs you more, charge a higher price, less of a profit
is based on a buyer's perceptions of value rather than on the seller's cost.
customer based value pricing
different customers pay different prices for the same product or service (kids/seniors vs. others at movies)
customer segmented pricing
what customer's get for the prices they pay.
customer value
As a marketer, you decide to focus not on the cost of producing the product, but rather on the customer's perception of the value of the product. Which type of pricing are you engaged in?
customer value based pricing
Based on buyers' perceptions of value rather than on the seller's cost
customer value based pricing
setting a price based on a buyer's perceptions of value rather than on the seller's cost.
customer value based pricing
Competitive _________________?
disavantage
Offering just the right combination of quality and good service at a fair price is known as which type of strategy?
good value pricing
combination of quality and good service at a fair prices.
good value pricing
is offering just the right combination of quality and good service at a fair price.
good value pricing
What are the two types of value based pricing?
good value pricing and value added pricing
Several conditions must be met for this low-price strategy to work. First, the market must be highly price sensitive so that a low price produces more market growth. Second, production and distribution costs must decrease as sales volume increases. Finally, the low price must help keep out the competition, and the penetration pricer must maintain its low-price position. Otherwise, the price advantage may be only temporary.
market penetration pricing
is setting a low price for a new product in order to attract a large number of buyers and a large market share.
market penetration pricing
____________ may be based on price.
positioning
Selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business is an illegal practice called _______.
predatory pricing
What is the only element in the marketing mix that produces revenue?
price
is the sum of all the values that customers give up to gain the benefits of having or using a product or service? (broad definition)
price
one of the most important elements that determine a firm's market share and profitability
price
Discounts and special-event pricing, Limited-time offers and cash rebates, Low-interest financing and longer warranties, and Free maintenance are forms of ______ _____?
promotional pricing
Temporarily pricing products below the list price to increase short-run sales (build buyer excitement!)
promotional pricing
refers to temporary price reductions to spur on short-run sales.
promotional pricing
one seller
prue monopoly
The_______ impacts the bottom line.
right price
When dealing with cost based pricing, there are 4 steps. What is the third step?
set price based on cost
When dealing with value based pricing, there are 4 steps. What is the second step?
set target price to match customer precieved value
In ______ companies, prices are often set by top management rather than by the marketing or sales departments.
small
Determining cost that can be incurred is what step of value based priing?
third
Setting the price based on cost is the ________ step in cost-based pricing.
third
a firm varies its price by the season, the month, the day, and even the hour. (matinee vs. evening at the movies)
time based pricing
is/are the sum of the fixed and variable costs for any given level of production.
total costs
In class, _______________________________was the company we discussed in an article that gave us an example of customer-driven pricing.
trader joes
Here, the company charges the same price plus freight to all customers, regardless of their location. The freight charge is set at the average freight cost. (opposite of FOB)
uniform delivered pricing
__________ is attaching features and services to differentiate a company's offers and charging higher prices.
value added pricing
is attaching features and services to differentiate a company's offers and charging higher prices.
value added pricing
refers to attaching value-added features and services to differentiate a company's offers and charging higher prices.
value added pricing
New, premium movie theaters offer features such as online reserved seating, high-backed leather executive chairs with armrests and footrests, the latest in digital sound, super-wide screens, and other amenities for which they charge a higher price. This is an example of which type of pricing?
value added pricing
is/are costs that vary directly with the level of production.
variable costs
What are the 3 types of costs?
variable, fixed, and total costs
One major objective associated with a market-penetration pricing strategy is to ________.
win a large market shares
If customers perceive that a product's price is greater than its value, they ______ buy it.
won't
Between FOB and Uniform-delivered pricing
zone pricing
Gillette charges a fairly low price for its razors (relative to costs) and a high price for razor blades. It is using a strategy of ___________ pricing.
captive product
refers to setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.
captive product pricing
setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.
captive product pricing
What do you need to do If it costs you more than your competition?
charge a higher profit or make less of a profit
After researching products similar to yours in the industry, you decide that your product has superior value. As such, you decide to price your product above the other products in the same industry. Which type of pricing strategy are you most likely using?
competition based pricing
Based on competitors' strategies, prices, costs, and market offerings
competition based pricing
product costs, competition and other external factors, and consumers perception of value are three major pricing strategies of what chart?
considerations in setting price
When dealing with cost based pricing, there are 4 steps. What is the fourth step?
convince buyers of products value
Pricing decisions must __________ with packaging, promotion, and distribution decisions.
coordinate
Pricing decisions must _______________ with packaging, promotion, and distribution decisions.
coordinate
Adding a standard markup to the cost of the product (markup pricing)
cost plus pricing
What is the simplest type of cost-based pricing?
cost plus pricing
What are the 2 types of costs based pricing?
cost plus pricing and breakeven pricing
What do all elements in the marketing mix, except for price, represent?
costs
all other elements in the marketing mix represent ______?
costs
Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for the company's effort and risk.
costs based pricing
setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
costs based pricing
You paid 75 cents for a can of soda this morning. However, the seller's cost is only 50 cents. Which type of selling strategy is the soda company most likely using?
costs plus pricing
company is trying to grab a larger market share, Company is doing poorly and trying to boost its sales, and Company wants the whole industry to _____ ______ to increase total demand are reactions from the competitors perspective
cut prices
In this figure normal case, price and demand are inversely related.
demand curve
shows the number of units the market will buy in a given time period, at different prices that might be changed.
demand curve
When dealing with cost based pricing, there are 4 steps. What is the first step?
design a good product
When dealing with value based pricing, there are 4 steps. What is the fourth step?
design product to deliver desired value at target price
When dealing with value based pricing, there are 4 steps. What is the third step?
determine costs that can be incurred
When dealing with cost based pricing, there are 4 steps. What is the second step?
determine product costs
Reducing prices to reward customer responses such as paying early or promoting the product
discount pricing
Adjusting prices continually to meet the characteristics and needs of individual customers and situations
dynamic pricing
Prevalent online where Internet introduces fluid pricing
dynamic pricing
adjusts prices continually to meet the characteristics and needs of individual customers and situations.
dynamic pricing
Demand changes greatly with a small change in price.
elastic demand
Nature of the market and demand, Economy, and Parties in the external environment are ________ factors.
external
Assess customer needs and value perception is what step of value-based pricing?
first
Convincing buyers of a product's value is the _____ step in cost-based pricing.
fourth
Designing products to deliver the desired value at a target price is what step of value based pricing
fourth
goods are placed free on board a carrier, hence FOB. At that point the title and responsibility pass to the customer, who pays the freight from the factory to the destination.
free on board origin pricing
Seller pays it all to gain business
freight absorption pricing
Demand hardly changes with a small change in price.
inelastic demand
Wherever possible, the company should consider ways to meet higher costs or demand without raising prices is true regarding?
initiating price increases
Overall marketing strategy, objectives and mix and Organizational considerations are _______ factors.
internal
What are the two factors that could have some affect on the pricing decisions?
internal and external factos
Normal case, price, and demand are _________ related.
inversely
In _________ companies, pricing is typically handled by divisional or product managers. In industries in which pricing is a key factor, companies often have pricing departments to set the best prices or help others set them.
large
Dynamic pricing is _______ as long as companies do not discriminate based on age, gender, location, or other similar characteristics.
legal
Many state colleges and universities charge one price for in-state students and a higher price for out-of-state students. Which form of segmented pricing are these schools using?
location based pricing
a company charges different prices for different locations, even though the cost of offering each location is the same. (in-state vs. out-of-state tuition)
location based pricing
The price the company charges will fall somewhere between one that is too _____ to produce a profit and one that is too _____ to produce demand.
low, high
must decide who within the organization should set prices
management
A company has set a low price on a new product it introduced. It wants to maximize its market share and attract a large number of buyers quickly. Which new product pricing strategy should the company use?
market penetration pricing
Setting a low price to attract a large number of buyers and a large market share
market penetration pricing
setting a low price for a new product in order to attract a large number of buyers and a large market share.
market penetration pricing
When Apple Computer Company introduced its iPhone, its priced the new product at $599, considerably higher than either their iPod or competing cellular phones. Apple Computer was pursuing a ___________________ new product pricing strategy.
market skimming
pricing is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
market skimming
Setting a high price to skim maximum revenues layer by layer from the segments willing to pay the high price. Company makes fewer but more profitable sales (price skimming)
market skimming pricing
This strategy works only under certain conditions. First, the product's quality and image must support its higher price, and enough buyers must want the product at that price. Second, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Finally, competitors should not be able to enter the market easily and undercut the high price.
market skimming pricing
setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
market skimming pricing
Many sellers, many buyers, range of prices (can differentiate)
monopolistic competition
Under ___________ ______________, the market consists of many buyers and sellers trading over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers. Sellers try to develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising, and personal selling to set their offers apart.
monopolistic competition
Is this the broad narrow def. of price: amount of money charged for a product or service?
narrow
can be created to differentiate the marketing offer (de-emphasize price!)
non-price decisions
Few large sellers (AT&T, Verizon, T-Mobil, Sprint own 90%)
oligopolistic competition
Under ____________ _____________, the market consists of only a few large sellers. Because there are few sellers, each seller is alert and responsive to competitors' pricing strategies and marketing moves.
oligopolistic competition
Each seller is alert and responsive to competitors' pricing strategies and marketing moves is true statement about?
oligopolistic competition
A car buyer can choose a base model at one price, or one with a premium sound and navigation system at a higher price. This is an example of _______ pricing.
optional product
refers to the pricing of optional or accessory products along with a main product.
optional product pricing
the amount of money charged for a product or a service. (narrow definittion)
price
the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.
price
the only element in the marketing mix that produces revenue
price
no demands above this price
price celiling
Product's quality has been reduced and Company's image has tarnished are _____ _______ reactions from the buyers prespective
price cuts
Reasons for ________ _______: Excess capacity, Falling demand due to strong price competition or a, weakened economy, and Attempt to dominate the market
price cuts
If demand is elastic, sellers will consider lowering their price is true regarding?
price demand relationship
is a measure of the sensitivity of demand to changes in price.
price elasticity
refers to the measure of the sensitivity of demand to changes in price.
price elasticity
Over the years, U.S. air carriers have been accused numerous times of collusion when setting prices. This illegal practice is called _______.
price fixing
no profits below this price
price floor
Product is more exclusive or better made and Company is being greedy are _____ _______ reactions from the buyers prespective
price increases
Reasons for ________ _________: Cost inflation and Over-demand
price increases
Boom or recession, Inflation, and Interest rates are factors impacting what? (great recession of 2008-2009)
price strageties
Cost-based Pricing is based on the cost of ______________, _____________________, and _______________ the _______________ plus a fair rate of return for effort and risk.
producing, distributing, and selling the product
refers to combining several products and offering the bundle at a reduced price.
product bundle pricing
different versions of the product are priced differently but not according to differences in their costs. (first class ticket v. coach)
product form pricing
The Ford Mustang is offered in several different models. Ford will use __________ pricing to determine the price steps between the different models.
product line
is setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
product line pricing
refers to determining the price steps to set between various products in a product line based on cost differences between the products,
product line pricing
refers to determining the price steps to set between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
product line pricing
setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
product line pricing
A retailer temporarily prices a few select items below cost to create excitement and pull consumers into the store. This is an example of _________ pricing.
promotional
With ________, the price is used to say something about the product.
psychological pricing
refers to pricing that considers the psychology of prices and not simply the economics. The price is used to say something about the product.
psychological pricing
Many sellers, many buyers, uniform commodity (wheat, cooper)
pure competition
Under _______ ___________, the market consists of many buyers and sellers trading in a uniform commodity. No single buyer or seller has much effect on the going market price. Sellers in these markets do not spend much time on marketing strategy.
pure competiton
In a _________ _________, the market is dominated by one seller. The seller may be a government monopoly, a private regulated monopoly, or a private unregulated monopoly. Pricing is handled differently in each case.
pure monopoly
Which of the following is a potentially effective action a company could take in response to a competitor's price cut?
reduce price
Prices that buyers carry in their minds and refer to when looking at a given product
reference prices
Determining product costs is the _______ step in cost-based pricing.
second
Setting target price to match customer percieved value is what step of value-based pricing?
second
________ ________, not price?
see value
In ___________ __________, the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs.
segmented pricing
refers to prices that allow for differences in customers, products, or locations.
segmented pricing
______% improvement in price can generate _____% increase in profitability.
small, large
__________% improvement in the price can generate __________% increase in profitability.
small, large
Start with an ideal selling price, then targets costs that ensure the price is met
target costing
____________ ___________: Start with an ideal selling price, then targets costs that ensure the price is met.
target costing
is/are pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
target costing
Geared2Beer, a craft beer brand, identifies a market segment that is willing to pay premium prices for its craft beer, and Geared2Beer managers select an ideal selling price. Managers then determine the costs to create craft beer that meets the ideal selling price. The company's pricing approach is referred to as ________.
target costing
UPS charges different prices for shipping depending on an item's destination. The more distant the city the package is being shipped to, the higher the price UPS charges. Which geographic pricing method is UPS using?
zone pricing