Principles of Marketing ch 11
Patents and limited competition reduce ________, making high prices possible for technology products early in their life cycles.
.....
Which of the following is an example of deceptive pricing?
A bait an switch to lure customers into the store to sell them a higher priced product.
Promotional Allowance
A price reduction offered to channel members for featuring the manufacturer's product in their advertising or selling activities When a manufacturer offers a grocery retailer an extra amount of free product for including this product in weekly advertising and in-store sale Instead of offering a ________ allowance to retailers, some manufacturing companies like P&G have chosen to use an everyday low pricing (EDLP) strategy.
Trade-in and promotional ________ are reductions for list or quoted prices for performing some activity.
ALLOWANCE
Predatory pricing
Charging a very low price for a product with the intent of driving competitors out of business Proving the practice of ________ is difficult because it must be shown that there was an explicit attempt to destroy a competitor with the use of a low price.
Price discrimination
Charging different prices to different buyers for goods of like grade and quality If a firm sells the same product to different buyers at different prices
Organizations choosing competitor-oriented approaches to set prices might use which of the following strategies?
Loss-leader pricing Customary pricing
With which profit-oriented pricing objective is a firm likely to price its products relatively low compared to their cost to develop, with the prospect of gaining a high market share?
Managing for long-run profits
American firms are sometimes criticized for using which profit-oriented pricing objective, because it results in a short-term orientation? Which profit-oriented pricing objective is common in many firms because the targets can be set and performance measured quickly?
Maximizing current profit
Strategies that can be used as part of a firm's profit objectives include which two of the following?
Maximizing current profits Target return
If total cost is greater than total revenue, then profit is
Negative
Which of the following is an example of a demand-oriented approach to setting an approximate price?
Prestige
Deceptive pricing
Price deals that mislead consumers
Cost-Oriented
Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, manufacturing cost and profit EX: Target priced its new patio furniture sets by adding 15 percent to the invoice price it paid for those products. DEF:Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit.
Legal and regulatory issues and consumer demand are pricing ________ that limit what a company can charge for its products. The demand for a product class, a product, or a brand, or the newness of a product can act as pricing ________ to limit a firm's options. Patents and limited competition reduce ________, making high prices possible for technology products early in their life cycles.
Pricing constraints
Which of the following are important types of discounts for marketing strategy?
Seasonal discounts Cash discounts Quantity discounts
Which of the following acts makes price fixing illegal?
Sherman Antitrust Act
price elasticity of demand
The percentage change in quantity demanded relative to a percentage change in price
Price Fixing
The practice of colluding with other firms to set prices. Conspiracy among firms to set prices The Sherman Act made price fixing illegal. A ONE-PRICE policy is also known as fixed pricing.
Which of the following are essential to consider when setting a price?
What will provide a profit to the company? What are customers willing to pay? What will pay for all associated costs, including marketing?
Skimming Pricing
When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use When a firm introduces an innovative new product, it may choose ________ pricing, setting the highest initial price that customers who really desire the product are willing to pay. effective, there must be sufficient customers willing to buy the product at the high initial price, they should interpret that high price as signifying high quality, and that high price should not attract competition.
Trade Disount
also known as functional discounts. To reward channel members for future marketing efforts.
Horizontal Price Fixing
an agreement between competitors to set a standard price for customers. When two or more competitors explicitly or implicitly set prices
Break-Even
analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
Demand - Oriented
approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision. Penetration, price lining, and bundle pricing are all types of which of the following pricing approaches? pricing approaches weigh factors underlying expected customer tastes and preferences more heavily than other factors. DEF : Factors underlying customer tastes and preferences are weighed most heavily. EX :A new energy efficient light bulb was introduced at $3.00 (about three times the price of a conventional bulb) and will last 6,000 hours (about four times the conventional bulb).
Prestige Pricing
involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. With ________ pricing, the marketer must not drop the price of a product below the point where customers become skeptical of its quality and refuse to purchase it.
Price fixing, price discrimination, and predatory pricing are
legally prohibited.
Many Japanese car firms are willing to give up immediate profits for long-term penetration of the market. This is a pricing objective known as
managing for long-run profits.
Bundle Pricing
marketing of two or more products in a single package price
Marketing Manager
narrow the range of choices among the variety of pricing strategies.
Value
perceived benefits divided by price.
Total revenue = unit _____ x quantity ______
price; sold
Loss Leaders
pricing entails selling a product below its customary price to attract attention to it.
One -price
setting a price with no variation for product buyers
Demand Curve
shape: Negative-Slope Curve The chart that shows how many units of a product or service consumers will demand during a specific period of time at different prices the axes represents the price of a product while the other represents the maximum units sold
Which of the following is a characteristic of bundle pricing?
Consumer value is enhanced by not having to make separate purchases
Profit
Total revenue minus total cost
Demand-oriented, cost-oriented, and profit-oriented approaches can be used to set a(n) ________ price level for a product. Multiple choice question.
Approximate
quantity discount
Customers are encouraged to buy a larger number of a single product
Profit -Oriented
DEF: The price setter balances both revenues and costs to set a price. EX: The owner of a vacuum cleaner store sets a target of a 20 percent return on sales. By focusing on target profit pricing or target return pricing, a firm is using a ________ pricing approach
When a board of directors determines a specific profit goal, marketing managers usually implement When a company sets a profit goal of 20 percent for pretax ROI, it is using which type of pricing objective?
Target Return Objective.
Organizations can be most effective using skimming pricing under which two of the following conditions?
The customer understands and highly values the product. The product is protected by patent.
Price
The money or other consideration (including other products and services) exchanged for the ownership or use of a product is known as To determine ______ for a product, you must consider limitations based on customers, actual costs, and profits. A firm must know its competitors' ________ in order to best set its own.
Which of the following are true of seasonal discounts?
They contribute to more efficient production for the manufacturer. They reward channel members for accepting the risk of increased inventory.
Seasonal Discount
To encourage buyers to stock inventory earlier than their demand would require.
Cash Discount
To encourage retailers to pay their bill quickly. reduces the invoice total if the buyer pays the invoice prior to the end of the discount period
Competition-Oriented Pricing
approaches to pricing stress what "the market" is doing. EX: Intel slashed its prices to be more similar to those of AMD, a rival computer chip maker. DEF: Price setter stresses what "the market" is doing is determining a price. If firms set prices with specific consideration of firms challenging them directly for customers, they have adopted a ________ approach to pricing. A pricing constraint firms face is the price that its _________ are currently charging and likely to charge in the future.
Variable Costs
change in direct relation with quantity produced and sold. Change production volume the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
Pricing Objectives
frequently reflect corporate goals, while pricing constraints often relate to conditions existing in the marketplace. Marketing managers may identify profit, market share, social responsibility, or even survival involve specifying the role of price in an organization's marketing and strategic plans.
penetration pricing
seen as the exact opposite of skimming pricing when introducing a new product. Organizations using ________ pricing set the initial price low for the introduction of the new product to appeal immediately to the mass market.
The newer a product and the earlier it is in its life cycle,
the higher the price that can usually be charged.
A trade-in allowance is price reduction given
when a used product is part of the payment on a new product.