Marketing Learn Smart Activity

potential drawbacks of a market penetration pricing strategy

-"leaving money on the table" - Need large production capacity - Low quality perception

What are the characteristics of horizontal price fixing?

-Competitors that produce and sell competing products collude - Price is taken out of the decision making process for consumers

Benefits of a market penetration pricing strategy

-Discourages potential competitors - potential to build sales -potential to gain market share -potential to earn profits

A firm may set low prices to:

-Encourage current firms to leave the market - take market share away from competitors -discourage firms from entering the market

in the customer orientation strategy, firms might sell their products or services at high prices in order to:

-Enhance the company's reputation and image - enhance the value of the products in consumers' minds - communicate exclusivity

What is essential to prove a complaint for predatory pricing in the market?

-Evidence that the firm intends to drive out competition -Evidence that the prices charged are below the store's average cost

Strategies that can be used as part of the profit orientation strategy include:

-Target profit pricing -target return pricing -maximizing profits strategy

some limitations to break-even analysis are:

-That it represents an average price to account for variances - it cannot predict how many units will sell - that firms have to perform several analyses at different quantities

What are the benefits of the high/low pricing strategy.

-attracts consumers at both ends of the price-sensitivity scale -it serves two different market segments -it creates excitement due to the limited duration of sales

The types of strategies that could be implemented in a profit orientation strategy include:

-target return pricing - maximizing profits strategy

Firms engage in competitor orientation might use which of the following strategies

Competitive parity status quote pricing

For a firm, rent, landscaping and insurance are best examples of:

Fixed Costs

A break even analysis graph contains which of the following

Fixed costs, Total Revenue, and Total Costs

Some states prohibit ____ pricing, where items are sold at a price below the store's cost, by requiring some minimum markup

Loss Leader Pricing

Manufacturers often set a (n) ______ and attempt to require retailers to sell their merchandise at this price

MSRP manufacturer's suggested retail price.

Channel members include which of the following

Manufacturers, Retailers, Wholesalers

Firms using a ________ Strategy set the initial price low for the introduction of the new product or service

Market Penetration strategy

When a firm is able to use mathematical mode that can explain and predict sales, it is able to implement the:

Maximizing profits strategy

if a firm sells the same product to different re-sellers at different prices it can be considered ________ ____________. However, in some cases, such as offering quantity discounts, is considered acceptable by law.

Price Discrimination

There are many forms of price discrimination, but only some of them are considered illegal under the following legislation

Robinson-Patman Act & Clayton Act

What are monetary sacrificing included in the overall price?

Shipping & Travel Costs

The saying, "you get what you pay for" indicates that price provides information about:

The quality of product or service

a down-ward sloping demand curve for a product like teeth-whitening kits show

as price increases, demand decreases

When sellers advertise items for a very low price without the intention of selling any of those items, it is known as:

balt and switch

A useful technique that enables managers to examine the relationship among cost, price, revenue, and profit over different levels of production and sales is called _______.

break-even-analysis

Variable costs _______ production volume

change with

When developing a pricing strategy, channel members should:

clearly communicate their pricing goals to one another

The five Cs of pricing include

company objectives

if a firm initially sets prices similar to major competitors' prices, this is an example of ______ pricing

competitive parity

Price fixing is the practice of colluding with other firms to _______ prices

control

break-even analysis examines the relationships between which of the following?

cost, profit, and price

The Five Cs of pricing are: Company objectives, customers, channel partners, competition, and __________

costs

The percent change in the quantity of one product demanded compared with the percent change in price in another product is:

cross-price elasticity

Demand curves can be described as

curved or straight

Some specialty retailers attempt to compete, not by setting low prices, but by justifying higher prices through high levels of personalized service. This is an example of a _____ orientation to pricing

customer

The ________ makes up one of the Cs of the fice Cs of pricing

customer

Advertisements should never ________ the consumer to the point of causing harm

deceive

Profit alone _______ how many units should be sold before a firm breaks even

does not indicate

By reducing consumers' search costs, ____ adds value because consumers can spend less time comparing prices, including sale prices, at different stores

everyday low pricing (EDLP)

Although it is not always the case, many firms expect the unit cost to drop significantly as the accumulated volume sold increases, an effect known as the _______ ________effect.

experience curve

Price is the one element in the marketing mix that:

generates revenue

Some retailers prefer a __________ strategy which relied on the promotion of sales, during which prices are temporarily reduced to encourage purchases

high/ low pricing

When there are many firms competing for customers in a given market, but the products are differentiated, it is known as:

monopolistic competition

In many geographic areas, utilities such as water and electricity are available from only one provider. This is an example of a level of competition called a:

monopoly

When only a few firms dominate, it is known as __________ competition

oligopolistic

Employing _______ pricing, a firm sets a very low price for one or more of its products with the specific intent to drive its competition out of business

predatory

The equation for elasticity of demand is the percentage change in quantity demanded, divided by percentage change in:

price

A _______ pricing strategy can be used when innovators and early adopters are willing to pay a higher price to obtain a new product or service

price skimming

When a new product is similar to what already appears on the market _____ is somewhat easier because the product's approximate Value has already been established

pricing

When consumers perceive that different companies sell products that are commodities, it is known as:

pure competition

A ________ price is the benchmark price against which buyers compare the actual selling price of the product

reference

Firms that believe increasing sales will help the firm more than increasing profits use the:

sales orientation strategy

When incomes drop, the demand for an elastic product:

tends to decrease

Price is ________ of the four Ps to manage

the most challenging

contribution per unit

the price, minus the variable cost per unit

Price times quantity is:

total revenue

Total cost is:

variable cost plus fixed costs