Chapter 14

Which of the following is an example of monopolistic competition? - apparel, with many providers that seek ways to differentiate themselves and claim market share - the oil industry, with a limited number of providers - a county water board that is the sole provider of water to the county - agricultural products like corn and soybeans, with many sellers providing essentially identical products

- apparel, with many providers that seek ways to differentiate themselves and claim market share

Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following? - as price increases, demand decreases - as price decreases, demand decreases - as price decreases, demand increases - as price increases, demand increases

- as price increases, demand decreases - as price decreases, demand increases

Firms engaged in competitor orientation might use which of the following strategies? (select all that apply) - competitive parity - premium pricing - target return pricing - status quo pricing

- competitive parity - status quo pricing

A break-even analysis graph contains which of the following? (select all that apply) - costs - profit and loss - target return price - revenue

- costs - profit and loss - revenue

Which of the following are drawbacks of a market penetration pricing strategy? (select all that apply) - profits would most likely be maximized - customers would perceive that the product is probably low quality - setting the price lower than the item's value is "leaving money on the table" - customers could have the impression that the company is insensitive to what prices should be - the company would need a large production capacity

- customers would perceive that the product is probably low quality - setting the price lower than the item's value is "leaving money on the table" - the company would need a large production capacity

A firm may set low prices to: (select all that apply) - discourage firms from entering the market - encourage new competitors to the market - take market share away from competitors - encourage current firms to leave the market

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

In the customer orientation strategy, firms might sell their products or services at high prices in order to: (select all that apply) - enhance the value of the products in consumers' minds - to discourage competitors from entering the market - drive competitors out of the marketplace - enhance the company's reputation and image - communicate exclusivity

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

Select all of the follow that are benefits of a market penetration pricing strategy - raise production costs higher than competition - establish market share - earn profits - build sales - discourage competitors - tendency to resist change

- establish market share - earn profits - build sales - discourage competitors

What is essential to prove a complain of predatory pricing in the market? (select all that apply) - evidence that the prices charged were below the store's average cost - evidence that the prices charged were far above the prices charged by competitors - evidence that the company lured customers in with false advertising - evidence that the company meant to eliminate competition

- evidence that the prices charged were below the store's average cost - evidence that the company meant to eliminate competition

Pricing is the _______ of the four Ps - least challenging - least understood - easiest - least susceptible to competitive forces

- least understood

Break-even analysis examines the relationship between which of the following (select all that apply) - price - value - units - cost

- price - costs

What are the characteristics of horizontal price fixing? (select all that apply) - price is the focus of the decision-making process for consumers - price is no longer a factor for consumers to consider - business rivals that produce and sell the same type of merchandise scheme together - a firm controls the production and complete distribution of the product from beginning to end

- price is no longer a factor for consumers to consider - business rivals that produce and sell the same type of merchandise scheme together

Channel members include which of the following? (select all that apply) - retailers - manufacturers - wholesalers - consumers

- retailers - manufacturers - wholesalers

The customer orientation strategy increases value by: (select all that apply) - price collusion with competitors - using status-quo pricing to complete - setting prices to match consumer expectations - focusing on customer satisfaction

- setting prices to match consumer expectations - focusing on customer satisfaction

The types of strategies that could be implemented in a profit orientation strategy include which of the following? (select all that apply) - target return pricing - sales orientation strategy - maximizing profits strategy - status quo pricing

- target return pricing - maximizing profits strategy

Prestige products or services follow the premise that _______ that is associated with the product - the higher the price, the greater the status - the lower the price, the higher the value - the lower the price, the greater the status - the higher the price, the lower the value

- the higher the price, the greater the status

Setting the price for a new product is less difficult when other products like it are already being sold. This is true because ______ - all retail outlets in the area can get together and agree to sell the product for the same price, regardless of its actual value - the market will have established a general value for that sort of item - consumers will have become used to paying artificially high prices for products in that category - consumers will have learned to depend on that type of product and will pay whatever it costs

- the market will have established a general value for that sort of item

Which of the following statements about demand curves is true? - they can be either straight or curved - they are identical for all products and services - they include date on advertising expenditures - they can be predicted with complete accuracy

- they can be either straight or curved

Which of the following are examples of monetary sacrifices included in the overall price? (select all that apply) - travel costs - hassles - competition - shipping

- travel costs - shipping

When is price the most powerful indicator of the quality of a product or service? - when the consumer is directly involved in the marketing of the product or service - when the product or service is offered by a large, well-branded company - when the consumer does not now much about the product category - when the consumer is very knowledgeable about the product category

- when the consumer does not now much about the product category

When firms compete by lowering price at retail, they are engaged in ______

a price war

When companies advertise items for a very low price, even though in fact they don't plan to sell anything at that price, it is known as ______

balt and switch

A useful technique that enables manager to examine the relationships among cost, price, revenue, and profit over different levels of production and sales is called ______

break-even analysis

The five Cs of pricing include ________ - cost uniqueness - company objectives - channel dynamics - customer salaries

company objectives

If a firm initially set prices similar to major competitors' prices, this is an example of _______ pricing

competitive parity

Products whose demands are positively related to one another are known as ______ products

complementary

Which variable is needed to determine the break-even point in units mathematically?

contribution per unit

The percent change in the quantity of one product demanded compared with the percent change in price in another product is _______-price elasticity

cross

Which of the five Cs of pricing is the first step

determining company objectives

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

does not indicate

For most products, demand increases as the price decreases. Because of this general trend, demand curves usually have a(n) _______ slope

downward

When Walmart promotes that the average Walmart price will be lower than the competition, it is using a(n) ______ strategy

everyday low pricing

When consumers relish the challenge of getting the lowest price and are willing to expend the time and effort to seek out the lowest price every time, retailers should use the _______ strategy

high/low pricing

When there are many substitute products available, the price elasticity of demand for given product will likely be _______

higher

A demand curve enables a firm to examine prices ______

in terms of how many buyers want the product

Which of the following statements about horizontal price fixing is true?

it is illegal

Consumers are generally _______ sensitive to price increase for necessities like milk than for items such as restaurant dining - more - equally - less

less

Which pricing tactic lowers the price below store cost?

loss-leader pricing

Price is one of the _______ in a consumer's purchase decision

most important factors

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

oligopolistic

The key characteristic of vertical price fixing is that the ______

parties who collude are at different levels of the same marketing channels

Over the years, Walmart has been accused of opening stores in new communities with artificially low prices, set for the sole purpose of driving competing stores in the area out of business. This type of behavior is called __________ pricing.

predatory

Janyce Cosmetics makes high-end cosmetics. It is able to charge considerably more for its skincare products than its competitors because consumers consider Janyce to be worth the price. Which pricing strategy is Janyce using?

premium pricing

The overall sacrifice a consumer makes to acquire a product or service is known as _______

price

The ration of change in a price and its effect on the quantity of the product demanded is known as ________

price elasticity of demand

Scheming with other companies to control prices is called ______

price fixing

When a new product appeals to consumers who are willing to pay a premium price to have an innovation first, marketers should use a ______ pricing strategy

price skimming

A(n) _______ price is the benchmark price against which buyers compare the actual selling price of the product

reference

Fixed cost

remain the same level despite changes in production

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

sales-oriented

When the price of portable MP3 players dropped, the demand for CD players declined. Portable MP3 players and CD players are ______

substitue products

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

suggested retail price

When a firm is aiming for a particular amount of profit as its overriding concern, it usually implements _______

target profit pricing

Firms that want to achieve a standard markup would likely focus on ____ pricing

target return

As people make more money, their spending behavior changes. This is known as _______

the income effect

Total cost is ______

the sum of total variable cost and total fixed cost

Price times quantity is ________

total revenue

True or false: It is illegal to directly lie in advertising

true

Primary labor and materials are better known as:

variable costs