Marketing exam 3
Kyle estimates that the fixed costs associated with opening a new bank branch are $500,000. He expects the branch to attract 1,000 new customer accounts in the first year, each of which will cost $50 per year to service. He also expects to generate $100,000 per year in revenue. For Kyle, the total cost of opening the new branch and remaining open for one year will be $450,000. $650,000. $605,000. $500,000. $550,000.
$550,000. Total costs = Fixed costs + Variable costs, or $500,000 + (1,000 × $50) = $550,000. Revenues are not a factor when calculating total costs.
One problem in relying on price elasticity and demand curves when setting prices is -competitors can construct the same demand curves, so there is no advantage in using them. -marketing split from economics over the ideas of demand and elasticity. -only economists can properly analyze demand curves and set prices using this tool. -the way a product or service is marketed can have a profound impact on price elasticity. -the underlying ideas of the demand curve and elasticity are less relevant in the modern economy.
-the way a product or service is marketed can have a profound impact on price elasticity. Demand curves and price elasticity are the result of many factors, not the least of which is the nature of the marketing mix.
Samson rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Samson, the contribution per unit is $800. It cannot be determined from the information provided. $1,000. $100. $80.
80 Contribution per unit = Price Variable cost per unit = $100 − $20 = $80. His fixed costs and profit are not needed for this calculation.
________ price fixing occurs when competitors collude to control prices, and ________ price fixing occurs within a marketing channel to control prices passed on to consumers. Widespread; integrated Strategic; tactical Industry; supply chain Horizontal; vertical General; specific
Horizontal; vertical Horizontal price fixing occurs among competitors; vertical price fixing occurs within a channel.
What is the difference between a coupon and a rebate? Coupons are issued for products and rebates are issued for services. Coupons are for "cents/dollars off" while rebates are for "percentages off" the listed price. The manufacturer handles coupons while retailers handle rebates. The retailer handles coupons while manufacturers handle most rebates. There is no difference between coupons and rebates.
The retailer handles coupons while manufacturers handle most rebates Consumers redeem coupons at the retail store; most rebates are handled by the manufacturer and consumers must mail in a request.
Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on a demand curve. a sales orientation. multiple regression analyses. target return strategies. the law of averages.
a demand curve. A demand curve shows how many units of a product or service consumers will demand during a specific period of time at different prices. Demand curves evaluate how price changes affect consumers' purchase decisions, and in effect they measure consumers' different value perceptions.
For which of the following is demand likely to be most sensitive to price increases? electricity a specific brand of soft drink college tuition for last-semester seniors prescription drugs hospital care
a specific brand of soft drink A specific brand of soft drink has many substitutes, and so demand is likely to be sensitive to price increases. The greater the availability of substitute products, the higher the price elasticity of demand for any given product will be. One exception would be extremely brand-loyal consumers.
Golf ball manufacturers use "Iron Mike," a machine that swings a golf club at a constant velocity, to test the distance for new golf ball designs. When using Iron Mike, the manufacturers are engaged in premarket testing. product development. market testing. concept testing. alpha testing.
alpha testing Iron Mike is a form of alpha testing because it is done within the company, taking the place of a human who might hit the ball repeatedly.
An everyday low pricing strategy stresses the continuity of retail prices based on variable production costs. at a level below the deep-discount sales prices of competitors. at a level between the regular price and the deep-discount sale prices of competitors. at a level above regular retail prices. at a price skimming level.
at a level between the regular price and the deep-discount sale prices of competitors. Everyday low pricing focuses on providing reasonable prices on products all the time, instead of using regular prices, and then offering sales or deep discounts. By reducing consumers' search costs, EDLP adds value; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores.
Proving that a company has engaged in the deceptive ________ practice is not easy. bait and switch cumulative quantity discount zone pricing price discrimination reference pricing
bait and switch Bait and switch is a tactic in which a retailer advertises items for a very low price with no intention of actually selling any of them. Once a customer is in the store, sales personnel push the customer toward more expensive items. The laws against bait-and-switch practices are difficult to enforce because salespeople, simply as a function of their jobs, are always trying to get customers to trade up to a higher-priced model without necessarily deliberately baiting them. The key to proving deception centers on the intent of the seller, which is also difficult to prove.
A noncumulative B2B quantity discount is used primarily to attract new retail customers. considered illegal under the Robinson-Patman Act. based only on the amount purchased in a single order. offered only to one-time purchasers. used to encourage consumers to purchase larger quantities each time they buy.
based only on the amount purchased in a single order. B2B quantity discounts can be cumulative (in which the discount is based on the quantity purchased over a period of time) or noncumulative (in which the discount is based on a single order).
If a few of Xbox's customers are asked to try out a new video game that has not yet been released on the market; this is an example of market testing. test marketing. concept testing. premarket tests. beta testing.
beta testing Beta testing uses potential consumers who examine the product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.
Which of the following was considered a new-to-the-world product or service when introduced? Windows 10 Blu-ray the Mercedes mini sport utility vehicle washable plastic straws Fruity Cheerios
blu-ray The Mercedes mini-SUV, washable plastic straws, Fruity Cheerios and Windows 10 are all variants or improvements on existing products was a variant on an existing product.
When Dream Home Solutions began building custom houses in a large subdivision with other builders, the company priced its homes slightly higher than its competitors and promoted the added quality features found in Dream Home's houses. Dream Home was using a(n) ________ pricing strategy. value-based improvement-based premium reference-based competition-based
competition-based Dream Home Solutions was using a competition-based pricing strategy, setting prices slightly above those of the competition. Firms using competition-based pricing methods set their prices to reflect the way they want consumers to interpret their own prices relative to competitors' offerings.
In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. When it comes to pricing, Westin tends to charge its guests similar rates to what the Crown Plaza hotels charge. Westin is using a ________ pricing strategy. sales-oriented maximizing profits target return target profit competitive parity
competitive parity A competitive parity strategy is a type of competitor-oriented strategy in which the firm sets prices similar to those of the major competition.
When firms set prices similar to those of competitors, they are following a strategy of competitive parity. industry-standard pricing. market-broadening pricing. copycat pricing. me-too pricing.
competitive parity. A competitive parity strategy is a type of competitor-oriented strategy in which the firm sets prices similar to those of the major competition.
Dana owns a bakery where she sells cupcakes. Two blocks down there is another bakery, Sweet's Bakery, that sells cupcakes for $1 less than Dana. Dana decides to lower her price and match Sweet's Bakery prices. What type of pricing strategy is Dana implementing? profit-oriented pricing customer-oriented pricing competitor-oriented pricing sales-oriented pricing internal pricing
competitor-oriented pricing When firms take a competitor orientation, they strategize according to the premise that they should measure themselves primarily against their competition.
Evan is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of substitute products. purely competitive products. competitive parity products. status-quo pricing products. complementary products.
complementary products. Complementary products are things that are used together; yachts and docking space in marinas are an example.
In determining the price for his company's new photo printer, Antonio is assessing the total cost of owning his printer as compared to alternative products available in the market. Antonio is using ________ pricing. EDLP cost of ownership improvement value reference-based premium
cost of ownership Cost of ownership pricing considers not just the price initially paid but also the cost of owning the product across its lifetime. The costs of owning a printer would include supplies like ink, whose cost might vary across different printers.
Renata estimates the average cost of her floral arrangements is $12 regardless of whether she is making 5 or 25 arrangements that day. She adds a standard markup to the $12 estimate to determine her price. Renata is using a(n) ________ pricing method. cost-based improvement value reference-based EDLP value-based
cost-based Since Renata is pricing solely based on costs, she is using a cost-based method.
Many stores now e-mail codes to their customers that can be used on their websites or printed and brought into the store to receive discounts for products purchased. In this instance, the customer is using a ________ to receive the discount. coupon seasonal discount size discount rebate markdown
coupon A coupon offers a discount on the price of specific items when they are purchased.
During the ________ stage of the product life cycle, firms either position themselves for a niche segment of diehard consumers or they completely exit the market. decline introduction leveling maturity growth
decline Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.
Which of the following is included in the four product life cycle stage? innovation brainstorming stagnation decline prototyping
decline The four stages of the product life cycle are introduction, growth, maturity, and decline.
As personal computers became popular, the sale of typewriters decreased significantly and now typewriters are only used by a very small segment of consumers. Typewriters are in the ________ stage of the product life cycle. decline maturity evaluation growth introduction
decline Typewriters are in the decline stage. Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.
Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm's products by shifting the market from a monopoly to pure competition. increasing the income effect. reducing fixed costs and increasing the gray marketing effect. decreasing the price elasticity of demand. making demand more oligopolistic and less monopolistic.
decreasing the price elasticity of demand. Brand-loyal customers are less sensitive to price increases. Getting consumers to believe that a particular brand is unique, different, or extraordinary in some way makes other brands seem less substitutable, which in turn increases brand loyalty and decreases the price elasticity of demand.
When it comes to measuring consumers' price sensitivity, product prices are viewed as either elastic or inelastic. fixed or variable. complementary or substitutable. necessary or optional. dynamic or rigid.
elastic or inelastic. When measuring consumers' price sensitivity, the demand for a product is said to be either elastic (price sensitive) or inelastic (price insensitive).
Break-even analysis is useful because it allows managers to quantify the relationship between price elasticity and product elasticity. reposition products based on their break-even positioning revenue. estimate the quantity they will need to sell at a given price to break even. analyze the different elements contributing to their variable costs. determine the relationship between price and quantity demanded.
estimate the quantity they will need to sell at a given price to break even. 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 break-even analysis. Although it cannot actually help managers set prices, it does help them assess their pricing strategies because it clarifies the conditions in which different prices may make a product or service profitable. It becomes an even more powerful tool when performed on a range of possible prices for comparative purposes.
A demand curve is built on the assumption that price remains the same, and fixed costs change. everything but price and demand remains the same. income is derived from demand. the firm does not advertise. fixed costs change with quantity demanded.
everything but price and demand remains the same. Demand curves evaluate how changes in price effect demand for the product. They assume that other factors such as advertising expenditures and economic conditions remain constant.
Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the ________, which refers to a decrease in unit cost as product volume increases. improvement value effect slotting allowance benefit cumulative bundling benefit experience curve effect price-fixing return
experience curve effect The experience curve refers to a drop in unit cost as the quantity sold increases.
When Toyota introduced hybrid cars, there were waiting lists to buy them. Then Honda and a few other manufacturers entered the market, shifting the product life cycle for hybrid cars into the ________ stage of the product life cycle. growth introduction leveling decline maturity
growth As a few additional competitors moved into the hybrid car market, opening up production capacity for additional buyers, the hybrid market moved into the growth stage. The market becomes more segmented and consumer preferences more varied, which increases the potential for new markets or new uses of the product or service during the growth stage.
In a(n) ________ pricing strategy, marketers rely on the promotion of sales, during which prices are temporarily reduced to encourage purchases. EDLP bait-and-switch high/low price skimming uniform delivered
high/low An alternative to EDLP is a high/low pricing strategy, which relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.
If all three grocery stores in town decide to charge the same price for a gallon of milk, what type of pricing tactic is being used? vertical price fixing loss-leader pricing vertical price discrimination horizontal price fixing horizontal price discrimination
horizontal price fixing Horizontal price fixing occurs when competitors that produce and sell competing products or services collude or work together to control prices.
Ike manages a Shoney's restaurant. He is considering staying open later in the evening. For Ike, the variable costs associated with staying open longer hours will include routine maintenance. property taxes. hours worked by cooks. rent on the restaurant building. advertising costs.
hours worked by cooks. Only hours worked by cooks will be based on hours opened. All other costs are fixed.
Whenever Conrado considers upgrading his personal computer system, he consults with Navin, a knowledgeable friend who always has the newest technology. For Conrado, Navin is a(n) ________ in the diffusion of innovation curve. laggard early majority adopter innovator early adopters late majority adopter
innovater Navin, who always has the latest computer technology, is likely to be among the first group to adopt a new type of computer. This makes him part of the innovator group. Typically, innovators keep themselves very well informed about the product category by subscribing to trade and specialty magazines, talking to other experts, visiting product-specific blogs and forums that describe the coolest new products.
After a product has been launched, marketers must undertake a critical postlaunch review to determine whether the product and its launch were a success or failure and what additional resources or changes to the marketing mix are needed, if any. For a product that does move on, the firms can measure the success of the new product by interrelated factors that include all of the following except its satisfaction of technical requirements. its satisfaction of performance. its satisfaction of the firm's financial requirements. customer acceptance. its satisfaction of the firm's manufacturing requirements.
its satisfaction of the firm's manufacturing requirements. For those products that do move on, firms can measure the success of a new product by three interrelated factors: (1) its satisfaction of technical requirements, such as performance; (2) customer acceptance; and (3) its satisfaction of the firm's financial requirements, such as sales and profits. If the product is not performing sufficiently well, poor customer acceptance will result, which in turn leads to poor financial performance.
Computer game companies constantly monitor computer game-related blogs keeping track of the latest hot products, because they know that their customers crave the "latest and greatest" games. They use this information to create new products that primarily provide the benefit of satisfying the changing needs of former customers. taking advantage of a long product cycle. keeping up in a market where sales come mostly from new products. avoiding market penetration from products that have been on the market for a long time. creating diversification and reducing risk.
keeping up in a market where sales come mostly from new products. Since customers crave the "latest and greatest," this indicates that most sales come from new products, requiring game manufacturers to keep up with that trend. In industries that rely on fashion trends and experience short product life cycles—including apparel, arts, books, and software markets—most sales come from new products.
When the sequel to a movie eventually shows up on their regular television networks, ________ might watch it. early adopters the late majority innovators laggards the early majority
laggards Laggards make up roughly 16 percent of the market. These consumers like to avoid change and rely on traditional products until the products are no longer available. When the sequel to eventually shows up on their regular television networks, they might watch it.
Which of the following adopter categories refers to the last large group of buyers to enter a new product market? early majority early adopters late majority innovators laggards
late majority Late majority is the last large group of buyers to enter a new product market. Laggards buy after the late majority, but they are not a large group, and some of them never enter the market at all.
Which of the following groups are included in the diffusion of innovation curve? prototypers nonadopters late majority lead users pioneers
late majority The five groups in the diffusion of innovation curve are innovators, early adopters, early majority, late majority, and laggards.
When Blu-Ray disc players were new, they could cost around $1,000 and there were a limited number of discs available that would play on them. Stef and Garth waited, concerned with limited availability of discs and wishing for more choices in the market. By the time they purchased a Blu-Ray disc player, sales had leveled off and prices had declined significantly. Stef and Garth were part of the ________ diffusion of innovation group. early adopter late majority laggard innovator early majority
late majority The late majority is the last big group to enter a new product market. By the time the late majority enters the market, sales tend to level off or may be in decline.
Supermarkets often offer great deals on milk or eggs to get customers into their stores, knowing that many customers will also purchase items that have higher markups for the store. These supermarkets are using a ________ pricing tactic price lining cumulative quantity discount leader bundling slotting
leader Leader pricing is a tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store's cost.
Alain is a sales representative for an established awnings manufacturer. Business is good, but he is concerned that the company has spent little on new product development and has not created a new product in over five years. Without new products, Alain can market his current products only to his current customers or market the same products to similar customers. intensify his prototyping. expand his early adopter market segment. focus on concept testing. diversify.
market the same products to similar customers. Without innovation, firms would have only two choices: to continue to market current products to current customers, or to take the same products to other markets. New product development opens up greater opportunities.
Melinda has used Olay beauty products for years, even though there are many competitors on the market. She plans to purchase a recently introduced micro-sculpting cream from Olay's Regenerist line. Olay is in the ________ stage of the product life cycle. decline introduction maturity growth evaluation
maturity Although P&G does come out with new variations of the Olay product, it is in the maturity stage as P&G must defend its market share against fierce competition.
If a firm in a purely competitive market can differentiate its product or service, it becomes part of a(n) ________ market. monopolistic competition duopoly oligopolistic competition pure competition monopoly
monopolistic competition The difference between pure competition and monopolistic competition is that in pure competition, products are not differentiated, but in monopolistic competition, they are.
Pricing ________ products is especially challenging because little or nothing is known about consumers' perceptions of its value. new-to-the-world bundled cost-based service-related seasonal
new-to-the-world Developing pricing strategies for new products is one of the most challenging tasks a manager can undertake. When the new product is truly innovative, or what we call "new to the world," determining consumers' perceptions of its value and pricing it accordingly become far more difficult.
The commercial airline industry is considered what type of market? oligopolistic competition monopoly duopoly monopolistic competition pure competition
oligopolistic competition When a market is characterized by oligopolistic competition, only a few firms dominate. Examples of oligopolistic markets include the soft drink market and commercial airline travel.
For new product marketers, early adopters are important because they tend to be opinion leaders. alpha testing enthusiasts. fond of prototypes. the first to adopt a new product. few in number.
opinion leaders. Early adopters, who are not the very first buyers of a new product (those are the innovators) but who still buy very early in the product's life, are important to the diffusion of the products because they are often opinion leaders.
Which of the following are reasons for the high failure rate of new products? targeting a narrow segment of innovators failing to introduce lower-priced alternatives properly positioning the product overextending a firm's abilities doing too much product testing
overextending a firm's abilities Why is the failure rate for new products so high? One of the main reasons is the failure to assess the market properly by neglecting to do appropriate product testing, targeting the wrong segment, and/or poor positioning. Firms may also overextend their abilities or competencies by venturing into products or services that are inconsistent with their brand image and/or value proposition.
Mario is the first retailer in town to sell games for Sony's latest version of its PlayStation gaming console. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a ________ pricing strategy. price fixing reference penetration bundling skimming
penetration There are two primary new product pricing strategies: skimming, which focuses on selling at a high price to the innovators and early adopter; and penetration, which focuses on selling at a low price in order to gain market share as quickly as possible.
A major airline sells an aggressively low-priced ticket compared to a new low-fare airline which is trying to enter the market. The major airline may be accused of engaging in the unethical practice of price fixing. deceptive reference prices. leader pricing. price skimming. predatory pricing.
predatory pricing.
Sarita belongs to a national consumer panel created by a market research company. She regularly receives samples of new products from a variety of firms and fills out questionnaires about the products. The national consumer panel Sarita is part of is engaged in premarket testing. product launch. test marketing. concept testing. product development.
premarket testing Panels of this type are often used for premarket testing, which often combines product sampling with surveys collecting consumers' reactions to the product.
Rita knew that her established customers liked her product much better than her competitor's. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Rita was considering premium pricing. differential pricing. the value of quality. advantageous pricing. a top of market strategy.
premium pricing. Premium pricing means the firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter.
Samar customizes Harley-Davidson motorcycles. No two cycles are alike. He notices that very few customers even ask the price of his motorcycles before they decide to purchase them. Demand for his motorcycles is probably price sensitive. income elastic. price elastic. price inelastic. cross-price elastic.
price inelastic. Since Samar's customers don't seem to care about the price (price insensitive), we would not expect to see demand change much as price changes. This describes a situation where demand is price inelastic.
When Toyota introduced its Scion line of cars, the lowest-price model was listed for $15,000 while the highest-priced model was listed for $21,000, with two other list prices in between. Each price point represented distinct differences in the features and quality of the cars. Toyota used a ________ pricing approach. loss-leader market penetration zone slotting price lining
price lining When marketers establish a price floor and a price ceiling for an entire line of similar products and then set a few other price points in between to represent distinct differences in quality, the practice is called price lining.
Because there are only a few firms in markets with oligopolistic competition, price wars may occur. government often encourages consolidation to reduce the number of competitors. the many competitors will focus on product differentiation. producers do not have to consider the reactions of rival firms. everyone is a price taker.
price wars may occur. In markets with a small number of firms, price wars may occur when two firms compete primarily based on price.
At the break-even point, contribution per unit is zero. profits are zero. fixed costs are zero. price is maximized. costs are zero.
profits are zero. The break-even point is the place where revenues match total costs, and profits are zero.
What price competitive level would be indicated when the price is usually set according to the laws of supply and demand? monopolistic competition channel competition oligopolistic competition monopoly competition pure competition
pure competition With pure competition, a large number of sellers offer standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals. In such markets, price usually is set according to the laws of supply and demand.
Historically, prices were rarely changed except in response to radical shifts in market conditions. the center of attention in almost all marketing strategies. allowed to vary seasonally as cross-shopping tendencies fluctuated. calculated to minimize contribution per unit. analyzed and changed constantly.
rarely changed except in response to radical shifts in market conditions. Historically, managers have treated price as an afterthought to their marketing strategy, setting prices according to what competitors were charging or, worse yet, adding up their costs and tacking on a desired profit to set the sales price. Prices rarely changed except in response to radical shifts in market conditions.
Mario decided to purchase an electronic toothbrush priced at $100 because of a special offer from the manufacturer. By sending proof of purchase and the receipt to the manufacturer, he could receive a $40 check in return, making the final price $60. This pricing tactic is known as a rebate. cash discount. markdown. coupon. price line.
rebate Rebates provide a form of discount for consumers off the final selling price. A rebate promises savings, usually mailed to the consumer at some later date, only if the consumer carefully follows the rules.
Dante always buys and uses Bridgestone brand golf balls. If he finds a Titleist or Callaway ball in the rough, he gives it away. Brand-loyal golfers like Dante allow Bridgestone to charge a higher price and not lose many sales. By building a strong brand, Bridgestone has effectively focused on the competitive parity point for its products. shifted the golf ball market from a monopoly to pure competition. increased the income effect for its products. increased the cross-price elasticity for its products. reduced the price elasticity of demand for its products.
reduced the price elasticity of demand for its products. Brand-loyal customers like Dante are less sensitive to price increases and are willing to pay a higher price. The more such customers exist in a market, the less price elastic demand will be.
Marketers advertising an artificially high "regular price" are unethically attempting to influence consumers' ________ perceptions. seasonal price fixed price cost-based price leader price reference price
reference price If the reference price is bona fide, the advertisement is informative. If the reference price has been inflated or is just plain fictitious, however, the advertisement is deceptive and may cause harm to consumers.
Inkjet printers were a big improvement over the dot-matrix printers they replaced. Inkjet printers gained rapid acceptance in the marketplace primarily because of their trialability. complexity. observability. compatibility. relative advantage.
relative advantage. If a product or service is perceived to be better than substitutes, then the diffusion will be relatively quick. Inkjet printers offered a substantial relative advantage compared to dot-matrix printers.
Many years ago Honda's Accord and Ford's Taurus were the two top-selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a ________ pricing strategy. status-quo target return target profit sales orientation maximizing profits
sales orientation Ford wanted to sell more of the Taurus, even if it meant lower profits. Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits.
Firms can measure the success of a new product by slow sales and low profits. satisfaction of its technical requirements. customer reluctance to accept the product. fewer competitors in the market. uneven performance.
satisfaction of its technical requirements. Firms can measure the success of a new product by three interrelated factors: (1) its satisfaction of technical requirements, such as performance; (2) customer acceptance; and (3) its satisfaction of the firm's financial requirements, such as sales and profits.
The local sports store may purchase outswim-related products only during the winter months because the manufacturer offers a better price to the sports store. This type of pricing tactic is known as a cash discount. seasonal discount. customary discount. flexible price. slotting allowance.
seasonal discount. A seasonal discount is an additional reduction offered as an incentive to retailers to order merchandise in advance of the normal buying season.
Which of the following is a common business-to-business pricing tactics? price fixing predatory pricing seasonal discounts bait-and-switch
seasonal discounts Business pricing tactics include seasonal discounts, cash discounts, advertising allowances, slotting allowances, quantity discounts, and uniform delivered vs. zone pricing. The others are unethical practices.
Dylan designs and manufactures custom Murphy bed units. He has a number of unique products but can only produce in limited quantities. Dylan will probably not use a penetration pricing strategy because she would have to determine zone pricing discounts. she could not meet a rapid rise in demand. the experience curve effect would drop unit costs too rapidly. there are few barriers to competitive entry in the market. a low price would indicate low quality.
she could not meet a rapid rise in demand. There are two primary new product pricing strategies: skimming, which focuses on selling at a high price to the innovators and early adopters; and penetration pricing , which focuses on selling at a low price in order to gain market share as quickly as possible. In this case, a skimming strategy makes more sense because the lower demand will match the limited supply Marley can provide.
When Delta increases its average fares, American Airlines and United often follow with similar increases. This is an example of adding value. customer orientation. competitor orientation. customer orientation. status-quo pricing.
status-quo pricing. A competitor-oriented strategy, status-quo pricing, changes prices only to meet those of the competition. For example, when Delta increases its average fares, American Airlines and United often follow with similar increases.
A marketing professor in Boston, Massachusetts, maintains a museum of failed consumer products. Most new products in this museum failed during the ________ stage of new product development, when they are introduced to a limited geographic area. product development product launch pretesting concept testing test marketing
test marketing Test marketing introduces the offering to a limited geographical area (usually a few cities) prior to a national launch and is a strong predictor of product success because the firm can study actual purchase behavior, which is more reliable than a simulated test.
When McDonald's comes up with a new drink or sandwich for its restaurants, it often markets it in a dozen or so of its outlets. When the company does this, it is engaged in pretesting. concept testing. product launch. test marketing. product development.
test marketing Test marketing introduces the offering to a limited geographical area (usually a few cities) prior to a national launch and is widely used by fast-food chains.
A reference price is the external horizontal fixed price. the price against which buyers compare the actual selling price. the manufacturer's cost. the total price including tax. a cumulative quantity discount price.
the price against which buyers compare the actual selling price. A reference price is the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.
A company has a new concept for a lightweight bicycle that can be easily folded and taken with you inside a building or on public transportation. The company is currently engaged in concept testing. The most important question during this phase of product development pertains to marketing and advertising costs. the cost to manufacture the product. the cost of research and development. the respondent's purchase intentions if the product were made available. the price of the final product.
the respondent's purchase intentions if the product were made available. The most important question pertains to the respondent's purchase intentions if the product or service were made available.
Value-based pricing can be difficult to implement because the way consumers perceive value changes often. this method requires all costs be identified and calculated on a per-unit basis. everyday low pricing has neutralized the impact of price on consumers' purchase decisions. value depends on variable costs and not fixed costs. it is difficult to determine how competitors will price their products.
the way consumers perceive value changes often. Value-based pricing involves setting prices in accordance with consumers' perceived value. Sellers must know how consumers in different market segments will attach value to the benefits delivered by their products. They also must account for changes in consumer attitudes, because the way customers perceive value today may not be the way they perceive it tomorrow.
If a penetration pricing strategy results in lower per-unit cost, competitors might be discouraged from entering the market because they would likely need to produce a large volume quickly in order to compete. profits would increase too rapidly. they would be able to advertise only to the same target market as the firm that introduced the original product. selective consumer demand will increase gross profit margins. a high/low cost-based pricing strategy will not work.
they would likely need to produce a large volume quickly in order to compete. A penetration pricing strategy focuses on selling at a low price in order to gain market share as quickly as possible. If the increase in sales leads to a reduced per-unit cost, this gives a firm an advantage. New entrants in the market may have trouble catching up.
When automobile manufacturers introduced SUVs, they distributed and promoted them in the United States, but not in Europe where gasoline is heavily taxed, and roads are much smaller. Car manufacturers recognized that this new line of cars could not be easily tried by consumers. was not compatible with European market conditions. provided equivalent relative advantage for both European and U.S. customers. involved technology that was too complex. did not provide benefits that were observable.
was not compatible with European market conditions. SUVs were compatible with U.S. drivers' behavior and lifestyles, but the high cost of gas and the smaller roads made them incompatible under European standards. A diffusion process may be faster or slower, depending on various consumer features, including international cultural differences.