marketing - pricing

Under U.S. law, predatory pricing is considered ______.

illegal

Which type of costs change depending on the number of units produced or sold?

variable

Penetration pricing is also known as ______

volume maximization

When two or more companies collude to set a product's price, they are engaging in ______.

price fixing

To increase the perceived customer value and ultimately the number of units sold, customers and salespeople usually want to set ______ levels low.

price

Which of the following accurately describes the concept of dumping?

A company decides to sell its exports to another country at a lower price than it sells the same products in its domestic market.

Consumers are known to be more price sensitive the higher a product's price is relative to expectations. How might marketers capitalize on this tendency of consumers?

By identifying the reference prices of their targeted consumers before setting prices

Which data collection method is most closely associated with machine learning to model price changes?

Determining price elasticity of demand using artificial intelligence

From the following list, select all of the factors that have made global pricing more transparent and, in many cases, more competitive in recent times

Increased Internet access Technological advancements

Which of the following is true regarding break-even analysis?

It uses both internal and external data to determine the point at which a firm will earn back the costs associated with a product.

Which pricing strategy packages two or more products together and sells them at a single price?

Price bundling

Select all of the following choices that are ethical issues marketers may face as they seek to set prices for their products

Price fixing Price discrimination Predatory pricing

Which of these technological developments helps firms collect accurate point-of-sale data to use in setting price objectives?

SKU, or barcode, scanners

What is involved in the pricing practice known as unbundling?

Separating out individual goods, services, or ideas that make up a product and pricing each one individually

Which of the following is measured by price elasticity?

The market's response to a change in price

Promotional signs often read "Buy One, Get the Second Half Off" or "Buy Two, Get the Third for 40% Off." From the following list, select all the reasons why stores use the pricing strategy known as volume maximization, or penetration pricing, to sell their products.

To boost sales and profits To encourage customers to try a different product To attract new customers to the store

When determining the cost of a product, what is the marketers' goal?

To make sure they will not lose money by pricing the product too low

Companies are teaching ______ programs about the market, competitors, consumers, and other information and then using these programs to model market price changes.

artificial intelligence (AI)

The first step of the price-setting process is ______, and the last step is ______.

defining the pricing objectives; monitoring and evaluating the effectiveness of the price

A product's ______ is directly related to its price elasticity.

demand curve

A protectionist strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market is referred to as

dumping

Every year, Walter travels to China and legally buys large quantities of baseball caps related to MLB sports teams. He imports the caps into the United States, where he sells them for less than the normal market price at his storefront in New York City. The baseball caps are considered to be ______.

gray market goods

Prestige pricing involves pricing a product _____ than competitors.

higher

A situation in which a specific change in price causes only a small change in the amount purchased is referred to as _____ demand.

inelastic

Cost-plus pricing is also known as ____ pricing

markup

One of the most commonly used pricing tactics, largely because it is easy to implement and uses the same percentage across all products, is known as _____ pricing.

markup

Companies that select the right pricing strategies for their products are more likely to _____

maximize profits

Dante's company is about to release a new vacuum. He has decided to set the vacuum's price at $400 for the first year and then drop it to $325. This strategy is referred to as ______ and has the primary goal of ______.

price skimming; maximizing profit

A company that is releasing a new product will set the initial price high if it is using a(n) ______ strategy and will set the initial price low if it is using a(n) ______ strategy.

price skimming; penetration pricing

The essential element for capturing revenue and profits is ______.

pricing

What does profit margin refer to?

the amount a product sells for above the total cost of the product itself

As it relates to evaluating demand, marginal revenue can be defined as ______.

the change in total revenue that results from selling one additional unit of product

select all of the types of information that stores use SKU scanners to record.

the price the customer paid Each product or service purchased

Revenue can be described as _____

the result of the price charged to customers multiplied by the number of units sold

Companies use competitor data to inform their pricing strategy and ensure that ______.

their pricing is in line with competitors' pricing

When it comes to underpricing, what common mistake do marketers make?

they set prices really low to boost sales without considering all of the other factors that contribute to the value a customer places on a product.

Why are firms sometimes required to raise prices?

to recover their increasing costs and boost their profits

What is an illegal practice that intentionally misleads customers with price promotions and can lead to price confusion?

Deceptive pricing

Select all of the following that are considered variable costs for a firm.

Delivery costs Utilities Materials and supplies

Select all of the choices that are unique challenges related to global pricing for firms seeking to increase their revenue and profits

Dumping The gray market Tariffs

From the following list, select all of the examples of price gouging.

Following a destructive tornado, Keira, a shop owner, raises the price of filtered water from $2 to $9. After a major earthquake, Chris, a hardware store owner, raises the price of plywood by $20 per sheet.

Select all of the statements about the gray market that are true

Gray market goods allow consumers to obtain legally produced items for less than they could normally. Gray market goods cut into a firm's revenue and profits. Gray market buying and selling often occurs when the price of an item is significantly higher in one country than another.

From the following list, select all of the factors marketers should consider when determining which pricing tactic to use.

How customers intend to use the product The customer's ability to pay The value customers perceive the product to have

When it comes to establishing prices, which of the following stakeholders would be most interested in setting prices high across all product lines in order to increase profits for the firm?

Marketing executives

From the following list, select all of the pricing tactics marketers use to maintain profitability, create a positive brand image, attract customers, and reach their inventory and sales goals.

Markup pricing Price bundling Prestige pricing Odd pricing Seasonal discounts

Select the two pricing strategies that are used specifically with new products.

Penetration pricing Price skimming

Which of the following accurately describes the concept of prestige pricing?

Pricing a product higher than competitors to signal that it is higher in quality

Select all of the following items that are considered common fixed costs for a firm.

Rent Salaries Advertising Insurance

When do marketers who use price skimming set the highest price for a product?

Shortly after it launches

The marketers for Crumb Muffins are eager to start marketing and selling their new line of natural fruit muffins. From the following list, select all of the questions marketers should ask themselves when setting prices in a competitive price environment.

Should we price our muffins lower or higher than competitors' muffins? What do competitors charge for similar products? Should we match competitors' prices for muffins? How many competitors are out there? How will our competitors respond to our pricing?

What does price elasticity of demand measure?

The percentage change in quantity demanded in response to a percentage change in price

What is the main reason marketers use a price bundling strategy?

They can charge a higher price for the bundle than they can for the items individually.

Select all of the guidelines that apply to a firm's pricing objectives.

They should be specific. They should be measurable. They should reflect any market realities the firm faces.

What is the difference between correctly pricing a product based on customer value perceptions and price gouging?

When price gouging occurs, the customer usually has no choice but to pay the price.

Survival pricing is a pricing strategy that involves ______.

lowering prices to the point at which revenue just covers costs

A profit ______ shows the profitability of a product, service, business, or idea.

margin

A pricing tactic in which a firm prices its products a few cents below the next dollar amount is known as _____ pricing.

odd

The strategy in which a firm prices a product a few cents below the next dollar amount is known as ______ pricing.

odd

Maureen is a massage therapist who has just opened a new office. For the first few months, she offers 60-minute massages for just $30. She then begins charging the market rate of $60. Maureen is using the strategy of ______, which has the primary goal of ______.

penetration pricing; stimulating demand

Which marketing mix element is watched and regulated most closely because it directly impacts the financial viability of both organizations and individuals?

price

Overcharging during times of great need is called ______.

price gouging

A company's revenue minus its total costs is its

profit

Price skimming is also known as ______.

profit maximization

The two primary strategies for pricing new products are price skimming to maximize ______ and penetration pricing to maximize ______

profit; volume

Pricing decisions must be made with the goal of maximizing long-term, sustainable _______

profits

The prices consumers deem reasonable and fair for a product are called ______ prices.

reference

Fast-food restaurants sometimes use an à la carte menu, such as when offering cheeseburgers and french fries for purchase separately instead of as part of a combo deal. This pricing strategy is known as

unbundling

What are the two most common and effective strategies for raising prices?

unbundling and escalator

If a new salon and spa is charging customers less than they are willing to pay, this is known as ______.

underpricing

The break-even point is calculated by dividing total fixed costs by the ______.

unit contribution margin

Pricing objectives should be an extension of a firm's _______ objectives.

marketing

What type of pricing draws upon a basic human processing error?

odd

When the holidays are over, stores often reduce the price of remaining Christmas trees and decorations because demand for these products is at its lowest. Which pricing tactic does this represent?

Seasonal discounts

Which pricing strategy gives price reductions to customers purchasing goods or services during traditionally slow business times?

Seasonal pricing

An illegal practice that involves intentionally misleading customers with price promotions is known as ______.

deceptive pricing

Marla receives a credit card offer in the mail and is excited to sign up because of the low interest rate. But after she reads the disclaimers buried deep in the cover letter, she realizes that the interest rate will become exorbitantly high after six months. The credit card company is engaging in ______.

deceptive pricing

As a general rule, as the price for a product increases, consumer demand ______. On the other hand, as price decreases, consumer demand ______.

decreases; increases

Which type of costs remain constant and do not vary based on the number of units produced or sold?

fixed

viktor owns a small neighborhood grocery store. Regardless of how much merchandise he sells, he must pay the rent each month as well as his employees' salaries. Because these costs remain constant and are not dependent on the amount of merchandise Viktor sells, they are referred to as ______.

fixed cost

Which of the following products is most likely to have inelastic demand?

food

Select the two factors that influence price but are often overlooked.

Reference prices Underpricing

What is the "sweet spot" for prestige pricing?

When the price is neither too low nor too high

Before they launch a new product or service, companies conduct ______ to determine the time it will take for the product to earn the amount of money it cost to produce and launch it.

a break-even analysis

The barcode that appears on every product and allows companies to collect point-of-sale data is called ______.

a stock-keeping unit

Before a firm can estimate how much revenue it must generate to earn a profit, it must first calculate the ______ point so it knows the sales volume needed to achieve a profit of zero.

break-even

In a competitive price environment, a marketer's pricing strategy involves setting prices based on ______.

competitors' prices

Jarvis's firm is about to launch a new product but first he wants to calculate the time it will take to earn back the development and launch costs. In other words, Jarvis wants to _____

complete a break-even analysis

Seasonal discounts are price reductions given to customers purchasing goods or services ______.

during slow times of the year

A scenario in which demand changes significantly due to a small change in price is referred to as _____ demand.

elastic

In general, the more luxurious a product is, the more ______ the demand will be as a result of prestige pricing.

elastic

An agreement that provides for price increases depending on certain conditions is known as an ______ clause.

escalator

A firm that takes branded products and sells them through legal but unauthorized distribution channels is participating in the ______ market.

gray

Although its name has a negative connotation, the practice of price discrimination is illegal only if it ______.

injures the competition

Accurately calculating the costs to make a product sets a ______ and ensures that marketers will not lose money by ______.

lower price limit; pricing products too low

The new-product pricing strategy known as ______ pricing is often used for consumer products like food and services.

penetration

Volume maximization is also known as ______

penetration pricing

jermaine owns a stationery shop, and he places SKUs on all of his products, which allows him to record ______ when customers check out at the register. This information will help Jermaine ______.

point-of-sale data; set prices

the practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels, is known as ______.

predatory pricing

Brett's cable package includes HBO, Showtime, and the MLB Network, plus dozens of channels he has no interest in. By packaging products together and selling them at a single price, the cable company is using a strategy called ______.

price bundling

The practice of charging different customers different prices for the same product is known as ______.

price discrimination

Instead of trying to compete in one small rural area, two cable companies agree to offer their products for exactly the same rate to maintain their profit margins. These companies are engaging in ______.

price fixing

In the aftermath of a natural disaster such as a wildfire that devastates a town, the need for building supplies might be high. To prevent the illegal practice known as ______, there are laws in place to limit the prices that firms can charge customers for the building supplies.

price gouging

When determining a pricing strategy for a firm that sells its goods internationally, the firm must take into account the potential taxes on imports and exports that foreign countries will place on its goods. These potential taxes are known as ______.

tariffs

What is the main difference between marginal revenue and marginal cost?

Marginal revenue relates to sales, whereas marginal cost relates to production.

From the following list, select all of the components of price.

Money Effort Time

The escalator clause ensures that providers of goods and services do not encounter unreasonable ______ as a result of uncontrollable increases in the costs of, or decreases in, the availability of something required to deliver products to customers.

financial hardships

The degree to which a consumer's purchasing behavior is affected by price is referred to as ______.

price sensitivity

The degree to which the price of a product affects consumers' purchasing behavior is referred to as ______. This factor is ______.

price sensitivity; highly variable between consumers

Profit maximization is a pricing strategy that involves ______.

setting a relatively high price for a period of time after the product launches

Volume maximization is a pricing strategy that involves ______.

setting prices low to encourage more purchases

Companies use the survival pricing strategy to ______. As part of survival pricing, a firm's revenue ______.

stay afloat during a tough time; just covers costs

Lowering prices to the point at which revenue just covers costs is known as _____ pricing.

survival

Taxes on imports and exports between countries are called

tariffs

Which of the following products is most likely to have elastic demand?

A novelty mailbox shaped like a fish

Select all of the following statements that are true about pricing strategy.

Pricing strategy must support and be supported by the other elements of the marketing mix. Companies use data about competitors to ensure that their prices are in line with competitors' prices.

Price elasticity of demand describes how demand is affected by a percentage change in

cost

Penetration pricing involves setting prices ______.

low to encourage more purchases

Companies determine how much their product or service is worth to consumers by setting a ______.

price

After a wildfire sweeps through his small town, Sam, the owner of a small store, raises the price of a bottle of water from $1 to $6. This is an example of ______.

price gouging

Profit maximization is also known as ______.

price skimming