Chapter 9 Marketing

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

​____________can promote the sales of products consumers might not otherwise​ buy, but the combined price must be low enough to get them to buy the package.

Price bundling

Setting the base price for a product is only the start. The company must then adjust the price to account for​ ____________________________ differences.

customer and situational

One price adjustment strategy is​ ______________________ pricing, whereby the company establishes​ cash, quantity,​ functional, or seasonal​ discounts, or varying types of allowances.

discount and allowance

Companies design a​ _______ that covers all their products

pricing structure

There are several types of product mix pricing​ situations, which include​ ______________, by-product pricing and product bundle pricing.

product line​ pricing, optional-product​ pricing, captive-product pricing

A company can use​ _________ by setting a low initial price to penetrate the market deeply and win a large market share.

​market-penetrating pricing

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

In pricing innovative new​ products, a company can use​ ________ by initially setting high prices to maximize the amount of revenue from various segments of the market.

​market-skimming pricing

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.

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

Competitors' reactions to a price change flow from a set reaction policy or​ ________.

a fresh analysis of each situation

Consumers will base their judgments of a​ product's value on the prices that competitors charge for similar products. In setting​ prices, companies need to consider three factors. What are the three​ factors?

customer perceived​ value, costs, and​ competitors' pricing strategies

The price​ ceiling, the maximum price a company can​ charge, is set by​ ________.

customer perceptions of the​ product's value

The three major pricing methods include​ ______.

customer​ value-based pricing,​ cost-based pricing, and​ competition-based pricing

Buyer reactions to price changes are influenced by the​ ________.

meaning customers see in the price change

Customers weigh the price of a product against the perceived values of using the product. Companies must understand concepts like​ _______ and​ ________.

price-demand relationship; consumer sensitivity to prices

Pricing is difficult because the various products have​ ______________ and​ _________________________.

related demand and​ costs; face different degrees of competition

Another price adjustment strategy is​ ______________ pricing, where the company sells a product at two or more prices to accommodate different​ customers, product​ forms, locations, or times.

segmented

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 is a potentially effective action a company could take in response to a​ competitor's price​ cut?

Increase both price and quality

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

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

The strategy for setting a​ product's price often has to be changed when the product is part of​ _______________, which looks for a set of prices that maximizes its profits on the​ _______________.

a product​ mix; total product mix

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

​Value-based pricing begins with analyzing​ ___________.

consumer needs and value​ perceptions, and the price is set to match perceived value

Companies apply a variety of price adjustment strategies to account for differences in​ ___________________.

consumer segments and situations

Companies facing or anticipating a​ competitor's price change may take one or more​ actions, which include sitting​ tight, reducing their own​ price, raising perceived​ quality, _______________________________.

improving quality and raising​ prices, or launching a fighting brand

Economic conditions can have a major impact on pricing decisions. Marketers have responded by​ _________.

increasing their emphasis on​ value-for-the-money pricing strategies

Pricing strategies usually change as a product passes through its life cycle but are especially challenging during the​ _______ stage.

introductory

External pricing considerations include​ ________________________________ such as the​ economy, reseller​ needs, and government actions.

the nature of the market and demand and environmental factors

Other internal factors that influence pricing decisions include​ ____________.

the​ company's overall marketing​ strategy, objectives, and marketing​ mix, as well as organizational considerations

Internal factors that affect pricing include​ ________.

the​ company's overall marketing​ strategy, objectives, marketing​ mix, and other organizational considerations.

The company that faces a price change initiated by a competitor must try to understand the​ ________ as well as the​ _______.

​competitor's intent; likely duration and impact of the change

Product costs set the floor for a​ product's price. If the company prices the product below its​ costs, the​ company's profits will suffer. In setting its price between these two​ extremes, the company must consider several external and internal​ factors, including​ ________.

​competitors' strategies and​ prices, the overall marketing strategy and​ mix, and the nature of the market and demand