MKTG 301 chapter 9
__________ is attaching features and services to differentiate a company's offers and charging higher prices.
Value-added pricing
__________ is/are costs that vary directly with the level of production.
Variable costs
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
The Ford Mustang is offered in several different models. Ford will use __________ pricing to determine the price steps between the different models.
product line
Segmented pricing
refers to prices that allow for differences in customers, products, or locations.
Promotional pricing
refers to temporary price reductions to spur on short-run sales.
Determining product costs is the __________ step in cost-based pricing.
second
Cost-based pricing is __________.
setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Internal factors that affect pricing include ________.
the company's overall marketing strategy, objectives, marketing mix, and other organizational considerations.
One major objective associated with a market-penetration pricing strategy is to ________.
win a large market share
Sadie's Restaurant has listened to its customers over the years and is now able to offer the right combination of quality and good service at a fair price. Which pricing strategy is Sadie's using?
Good-value pricing
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
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
When a company sets a high price as the initial price of a new product, it is pursuing a ________ new product pricing strategy.
market-skimming
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.
product-bundle
Which of the following is a cost-oriented pricing approach?
Breakeven pricing
Which of the following is a potentially effective action a company could take in response to a competitor's price cut?
Increase both price and quality
__________ 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
Which of the following is a potentially effective action a company could take in response to a competitor's price cut?
Reduce price
Many state colleges and universities charge one price for in-state students and a higher price for out-of-state students. Which price adjustment strategy are these schools using?
Segmented pricing
__________ is the second step in value-based pricing.
Setting a target price to match the customer's perceived value
__________ is/are pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
Target costing
__________ is/are the sum of the fixed and variable costs for any given level of production.
Total Costs
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
Which of the following statements is true regarding initiating price increases?
Wherever possible, the company should consider ways to meet higher costs or demand without raising prices.
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
Price elasticity
a measure of the sensitivity of demand to changes in price.
Dynamic pricing
adjusts prices continually to meet the characteristics and needs of individual customers and situations.
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
Printer companies often charge a fairly low price for their ink jet printers (relative to costs) and a high price for replacement cartridges. These companies are using a strategy of ________ pricing.
captive-product
Fixed costs are __________.
costs that do not vary with production or sales level
Companies that use ________ continually adjust prices to meet the characteristics and needs of individual customers and situations.
dynamic pricing
Convincing buyers of a product's value is the __________ step in cost-based pricing.
fourth
__________ is the first step in value-based pricing.
Assessing the customer needs and value perceptions
___________ is 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
__________ is based on a buyer's perceptions of value rather than on the seller's cost.
Customer value based pricing
What are the three major pricing strategies used by marketers?
Customer value-based pricing, cost-based pricing, and competition-based pricing
Which of the following statements is true regarding initiating price cuts?
Cutting prices in an industry loaded with excess capacity may lead to price wars
Which of the following statements is true regarding initiating price cuts?
Cutting prices in an industry loaded with excess capacity might lead to price wars.
__________ is the fourth step in value-based pricing.
Designing products to deliver the desired value at a target price
__________ is the third step in value-based pricing.
Determining costs that can be incurred
Which of the following statements is true regarding oligopolistic competition?
Each seller is alert and responsive to competitors' pricing strategies and marketing moves
Designing a good product is the __________ step in cost-based pricing.
First
__________ is offering just the right combination of quality and good service at a fair price.
Good-Value Costing
Which of the following is true regarding the price-demand relationship?
If demand is elastic, sellers will consider lowering their price.
Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as ________.
an indicator of quality
The price ceiling, the maximum price a company can charge, is set by ________.
customer perceptions of the product's value
Over the years, U.S. air carriers have been accused numerous times of collusion when setting prices. This illegal practice is called _______.
price fixing
With ________, the price is used to say something about the product.
psychological pricing
A demand curve __________.
shows the number of units the market will buy in a given time period, at different prices that might be changed
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
Price is __________.
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
Internal factors that affect pricing include ________.
the company's overall marketing strategy, objectives, and marketing mix
Setting the price is the __________ step in cost-based pricing.
third
Dynamic pricing is when companies continually adjust prices to meet the characteristics and needs of individual customers and situations. Where is this method especially prevalent today?
Online buying
Which of the following statements is true regarding how price might play an important role in helping to accomplish company objectives?
Pricing can create excitement for a brand.
What are the five product mix pricing situations?
Product line pricing, optional-product pricing, captive-product pricing, by-product pricing, and product bundle 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 pricing
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 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