OSU Marketing 3250: Chapter 10
*Which of the following is a cost-based pricing approach?* A. Break-even pricing B. Value-added pricing C. Competition-based pricing D. High-low pricing E. EDLP pricing
A. Break-even pricing
*Luxury automobile manufacturers typically add quality, services, and other features to differentiate their offers and thus support their higher price. This is an example of __________.* A. value-added pricing B. customer-based pricing C. good-value pricing D. cost-based pricing E. everyday low pricing
A. value-added pricing
*Beyond the nature of the market, demand, and the economy, what other factors in a firm's external environment must a company consider when setting prices?* A. The company's overall marketing strategy and selecting target markets B. Resellers, the government, and social concerns C. The company's overall marketing strategy and marketing mix D. The government, resellers, and profit objectives E. Resellers, the government, and the marketing mix
B. Resellers, the government, and social concerns
*Price is the only part of the marketing mix that __________.* A. incurs costs B. does not play a role in creating customer value C. attracts buyers D. produces revenue E. is defined by the consumer
D. produces revenue
*Which of the following statements about price is correct?* A. Prices have no impact on a firm's bottom line. B. Price is not an important competitive asset. C. Marketers do not a have lot of flexibility in setting and changing price. D. Pricing is not a problem for marketing executives. E. Customers have put increasing pricing pressures on many companies.
E. Customers have put increasing pricing pressures on many companies.
*Which type of market consists of many buyers and sellers trading over a range of prices rather than a single market price?* A. Pure competition B. Pure monopoly C. Oligopolistic competition D. Uniform commodities E. Monopolistic competition
E. Monopolistic competition
*The amount of money charged for a product is its __________.* A. price B. cost C. profit D. revenue E. breakeven point
A. price
*A(n) __________ shows the number of units the market will buy in a given time period at different prices.* A. value curve B. demand curve C. perceptual map D. production schedule E. supply curve
B. demand curve
*Which of the following statements is true regarding costs?* A. Totals costs are the sum of long-run average costs and short-run average costs. B. Average cost tends to decrease with accumulated production experience. C. Variable costs vary directly with the level of sales. D. Experience curve pricing is a low risk strategy. E. Costs do not vary with different levels of production.
B. Average cost tends to decrease with accumulated production experience.
*Which of the following statements regarding customer value-based pricing is correct?* A. Using this strategy, marketers must convince buyers that the product's value at that price justifies its purchase. B. In using this strategy, companies often find it hard to measure the value customers attach to their product. C. This strategy is seldom used because buyers rarely consider perceived value when evaluating a product's price. D. Using this strategy, marketers first design the product and marketing program, then set the price. E. Customer valuedash-based strategy begins with determining product costs.
B. In using this strategy, companies often find it hard to measure the value customers attach to their product.
*Which of the following statements is correct regarding different types of markets?* A. Under oligopolistic competition, the market consists of many buyers and sellers trading in a uniform commodity and sellers do not spend much time on marketing strategy. B. Under oligopolistic competition each seller is alert and responsive to competitors' pricing strategies and marketing moves. C. In a pure monopoly, the market consists of many buyers and sellers trading over a range of prices. D. Under monopolistic competition the market is dominated by one seller. E. Under pure competition sellers spend considerable time on marketing strategy and pricing decisions.
B. Under oligopolistic competition each seller is alert and responsive to competitors' pricing strategies and marketing moves.
*On a break-even chart, the break-even volume is located __________.* A. at the intersection of total revenue and fixed costs B. at the intersection of total revenue and total costs C. at the intersection of target profit and total costs D. at the intersection of total revenue and variable costs E. at the intersection of total revenue and target profit
B. at the intersection of total revenue and total costs
*Which factor sets the ceiling on setting a product's price?* A. Revenue B. Customer's value perceptions C. Competitors D. Demand E. Company costs
B. Customer's value perceptions
*Retailers such as Macy's and JC Penney charge higher prices on an everyday basis, but run frequent promotions to lower prices temporarily on selected items. This is an example of __________.* A. value-added pricing B. high-low pricing C. EDLP pricing D. cost-plus pricing E. break-even pricing
B. high-low pricing
*In which type of market does no buyer or seller have much impact on setting the going market price?* A. Monopolistic competition B. Pure monopoly C. Pure competition D. B2B market E. Oligopolistic competition
C. Pure competition
*Two external factors which must be considered in pricing decisions are __________.* A. the marketing mix and the nature of the market B. the marketing mix and demand C. demand and the nature of the market D. company objectives and the marketing mix E. the marketing mix and the economy
C. demand and the nature of the market
*Internal factors that affect pricing include __________.* A. the company's overall marketing strategy, objectives, and the nature of the market B. the company's overall marketing strategy, the nature of the market, and demand. C. the company's overall marketing strategy, objectives, and marketing mix D. the company's overall marketing strategy, objectives, and demand E. the nature of the market, demand, and the economy.
C. the company's overall marketing strategy, objectives, and marketing mix
*The strategy of __________ means that the firm attempts to offer the right combination of quality and good service at a fair price.* A. customer-based pricing B. value-added pricing C. good-value pricing D. cost-based pricing E. everyday low pricing
C. good-value pricing
*Which of the following correctly identifies the three major pricing strategies used by marketers?* A. Customer valuedash-based pricing, revenue-based pricing, and profit-based pricing B. Customer valuedash-based pricing, revenue-based pricing, and competition-based pricing C. Customer valuedash-based pricing, cost-based pricing, and revenue-based pricing D. Customer valuedash-based pricing, cost-based pricing, and competition-based pricing E. Customer valuedash-based pricing, cost-based pricing, and profit-based pricing
D. Customer valuedash-based pricing, cost-based pricing, and competition-based pricing
*What is the first thing marketers must do when using value-based pricing?* A. Determine product costs. B. Convince buyers that the product's value at a given price justifies the purchase. C. Set the target price to match customer perceived value. D. Design a quality product. E. Assess customer needs and value perceptions.
E. Assess customer needs and value perceptions.
*Which of the following is true regarding the pricedash-demand relationship?* A. If demand is inelastic, a small change in price will result in a large change in demand. B. A demand curve shows the number of units a company will produce in a given time period at different prices that might be charged. C. Price elasticity measures how responsive price will be to a change in demand. D. Demand and price are directly relatedlong dash—the higher the price, the greater the demand. E. If demand is elastic, sellers will consider lowering their price.
E. If demand is elastic, sellers will consider lowering their price.
*Which factor sets the floor on setting a product's price?* A. Competitors B. Demand C. Customer's value perceptions D. Revenue E. Product costs
E. Product costs
*What is target costing?* A. Basing price on customer perceptions of cost B. Setting acceptable costs and then setting the price C. Pricing products without any consideration to costs D. Designing a product, then determining its cost and price E. Setting a price and then setting costs that will ensure that the price is met
E. Setting a price and then setting costs that will ensure that the price is met
*How is price determined using cost-plus pricing?* A. The price is set by determining the customer's value perceptions. B. The price is set so that total revenue covers total costs. C. The price is set based on competitor's prices. D. The price is set based on demand. E. The price is set by adding a standard mark-up to the cost of the product.
E. The price is set by adding a standard mark-up to the cost of the product.
*New, premium movie theaters offer features such as online reserved seating, high-backed leather executive chairs with armrests and footrests, the latest in digital sound and super-wide screens, and other amenities for which they charge a higher price. This is an example of which type of pricing?* A. Break-even pricing B. Cost-plus pricing C. High-low pricing D. EDLP pricing E. Value-added pricing
E. Value-added pricing
