Chapter 14: Pricing Concepts

Prestige products or services do not follow the ______ curve. Multiple choice question. elastic demand unitary demand downward-sloping demand upward-sloping demand

downward-sloping demand

A pricing ______ is the general way a company decides how its prices will be determined over the long term, based on the five Cs of pricing. Multiple choice question. strategy tactic equation scenario

strategy

When a firm is aiming for a particular amount of profit as its overriding concern, it usually implements ______. Multiple choice question. target profit pricing the maximizing profits strategy target return pricing premium pricing

target profit pricing

The ratio of change in a price and its effect on the quantity of the product demanded is known as ______. Multiple choice question. prestige products and services price elasticity of supply the downward-sloping demand curve price elasticity of demand

price elasticity of demand

Prestige products or services follow the premise that ______ associated with the product. Multiple choice question. the higher the price, the greater the status the lower the price, the greater the status the higher the price, the lower the value the lower the price, the higher the value

the higher the price, the greater the status

When a firm uses a mathematical model to identify the price at which the firm will make the most money possible, it is implementing ______. Multiple choice question. the target profit pricing strategy the maximizing profits strategy the target return pricing strategy competitive parity

the maximizing profits strategy

According to the cross-price elasticity of demand, when the price of DVD players drops, the demand for DVDs is likely to ______. Multiple choice question. decrease remain unchanged increase first increase then decrease

increase

Firms usually implement target _______ ________ to stimulate a certain level of sales at a certain profit per unit.

profit pricing

Target return pricing is an example of what type of orientation? Multiple choice question. Competitor Customer Sales Profit

Profit

A demand curve shows that a company will sell 10,000 units if it prices its new product at $200 per unit, but it will sell 20,000 units if it reduces the price to $75. If the company wants to maximize profits, it should price the new product at ______. Multiple choice question. $50 $75 $200 $275

$200

Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following? (Check all that apply.) Multiple select question. As price decreases, demand increases. As price decreases, demand decreases. As price increases, demand increases. As price increases, demand decreases.

As price decreases, demand increases. As price increases, demand decreases.

True or false: A firm with a primary objective of very high sales growth will have the same pricing strategy as a firm with a primary objective of being a quality leader.

False Pricing strategies should support and allow the firm to reach its overall objectives, which, in this case, are different. The different objectives should lead to different pricing strategies.

Channel members include which of the following? (Choose every correct answer.) Multiple select question. Manufacturers Wholesalers Consumers Retailers

Manufacturers Wholesalers Retailers

______ makes up one of the Cs of the five Cs of pricing. Multiple choice question. Company staff The customer Channel flexibility Council professionals

The customer

Which of the following are reasons that firms implement a market penetration pricing strategy? (Choose every correct answer.) Multiple select question. To resist change To raise production costs above the competition To build sales To earn profits To discourage competitors To establish market share

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

True or false: Customers are one of the five Cs of pricing.

True

A useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales is called ______. Multiple choice question. break-even analysis cross-price elasticity cost-benefit analysis fixed costs

break-even analysis

With the ______ pricing strategy, a company adopts retail prices that are typically somewhere between the product's regular price and the sharply discounted sale prices that competitors occasionally offer. Multiple choice question. reference odd everyday low high/low

everyday low

A demand curve enables a firm to examine prices ______. Multiple choice question. relative to profits in terms of demand and the firm's objectives relative to each of the orientation strategies simultaneously in terms of supply or how many producers offer the same good or service

in terms of demand and the firm's objectives

Price is best defined as ______. Multiple choice question. the consumer's break-even point the overall sacrifice a consumer is willing to make to acquire a specific product or service the overall sacrifice a consumer will make to obtain one of the five Cs the last element of the marketing mix a consumer will always agree with

the overall sacrifice a consumer is willing to make to acquire a specific product or service

Which of the following are considered part of the five Cs of pricing? (Check all that apply.) Multiple select question. Channel members Company objectives Change management Charter membership Competition Customers

Channel members Company objectives Competition Customers

Which is one of the five Cs of pricing? Multiple choice question. Cost uniqueness Customer salaries Channel dynamics Company objectives

Company objectives

How does penetration pricing discourage rival companies from entering the market? (Choose every correct answer.) Multiple select question. Competitors who enter the market will temporarily face higher unit costs. It negates the experience curve effect, which usually helps competitors. The profit potential in the market is relatively low. It encourages price skimming, which is too risky for most companies to engage in.

Competitors who enter the market will temporarily face higher unit costs. The profit potential in the market is relatively low.

Which of the following types of theories is the maximizing profits strategy based on? Multiple choice question. Economic Psychological Social Political

Economic

Which of the following do you need to know to calculate target return price? (Check all that apply.) Multiple select question. Expected unit sales Break-even point Variable costs Fixed costs

Expected unit sales Variable costs Fixed costs

Which of the following is another term for target return percentage? Multiple choice question. Profit Contribution per unit Break-even point Markup

Markup

Break-even analysis examines the relationships between which of the following? (Choose every correct answer.) Multiple select question. Value Price Unions Cost

Price Cost

Strategies that can be used as part of the profit orientation strategy include which of the following? (Choose every correct answer.) Multiple select question. Value-based pricing Competitive parity Target profit pricing Maximizing profits

Target profit pricing Maximizing profits

The types of strategies that could be implemented in a profit orientation strategy include which of the following? (Choose every correct answer.) Multiple select question. Status quo pricing Target return pricing Sales orientation strategy Maximizing profits strategy

Target return pricing Maximizing profits strategy

Which of the following accurately characterize demand curves? (Choose every correct answer.) Multiple select question. They show how much consumers will demand during a specific period at different prices. They are identical for all products and services in a given industry. They are completely accurate prediction models. They relate demand to prices while assuming everything else remains unchanged.

They show how much consumers will demand during a specific period at different prices. They relate demand to prices while assuming everything else remains unchanged

The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called ______-price elasticity.

cross, cross price, or cross-price

The graph that shows how many units of a product or service consumers will want during a specific period at different prices is known as the ______ curve. Multiple choice question. demand price versus sales supply consumer

demand

For most products, demand increases as the price decreases. Because of this general trend, demand curves usually have a(n) ______ slope. Multiple choice question. upward vertical horizontal downward

downward

When a 10% decrease in price produces more than a 10% increase in quantity sold, the product or service is responsive to price changes and is considered to be ______. Multiple choice question. in high demand unaffected inelastic elastic

elastic

The strategy of ______ appeals to consumers because it reduces their need to spend time comparing prices at various stores. Multiple choice question. everyday low pricing (EDLP) odd/even pricing loss leader pricing benchmark reference pricing image pricing

everyday low pricing (EDLP)

The ______ pricing strategy features frequent sales, during which prices are lowered for a short time. Multiple choice question. odd everyday low high/low reference

high/low

When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first. Multiple choice question. reference point price skimming value-based penetration pricing

penetration pricing

Products that cost a lot of money but that people buy anyway because of the status and exclusivity that they project to others are called _______ products.

prestige

The equation for price elasticity of demand is the percentage change in quantity demanded divided by percentage change in ______. Multiple choice question. perceptions supply profits price

price

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

price

If McDonald's reduces the price of a Big Mac by 25% and sales increase by more than 50%, the firm could describe demand as which of the following? (Choose every correct answer.) Multiple select question. price insensitive price sensitive inelastic elastic

price sensitive elastic

Competition, channel members, costs, customers, and company objectives are the five critical components of _____. Multiple choice question. pricing quality variety promotion

pricing

Firms that are less concerned with the level of profits and more interested in the rate at which profits are generated relative to their investments tend to use ______. Multiple choice question. premium pricing target return pricing contribution per unit calculations competitive parity

target return pricing

The _____ is fixed costs plus the sum of the variable costs. Multiple choice question. profit margin break-even point net contribution per unit total cost

total cost