marketing chapter 10

What are average fixed costs?

the fixed costs per unit produced

What is the name for a pricing strategy in which the price can easily be adjusted to meet changes in the marketplace?

dynamic pricing

In which step of the price planning process does a firm analyze the​ economy, competition, government​ regulations, consumer​ trends, and the internal​ environment?

step 4

Which of the following refers to the percentage of a​ market, defined in terms of either sales units or​ revenue, accounted for by a specific​ firm, product​ lines, or​ brands?

market share

The percentage of a market in terms of sales units or revenue that General Electric accounts for is known as its​ ________.

market share Market share is the percentage of a market​ (defined in terms of either sales units or​ revenue) accounted for by a specific​ firm, product​ lines, or brands. Market share is quoted within the context of a particular set of competitors.

The amount added to the cost of a product to create the price at which a channel member will sell the product is known as __________.

markup

Which of the following refers to an amount added to the cost of a product to create the price at which a channel member will sell the​ product?

markup

What is loss-leader pricing?

the pricing policy of setting prices very low or even below cost to attract customers into a store

What is penetration pricing?

the pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase

What is an internal reference price?

A set price or a price range in consumers' minds that they refer to in evaluating a product's price

Which pricing strategy is especially important when selling on the Internet because of the speed and ease of changing prices to meet marketplace​ demands?

Correct. One of the most important opportunities the Internet offers is dynamic​ pricing, in which the seller can quickly and easily adjust prices to meet changes in the marketplace.

Which of the following refers to a pricing strategy in which the price can easily be adjusted to meet changes in the​ marketplace?

Dynamic pricing

Which of the following refers to an online strategy in which the price can easily be adjusted to meet changes in the​ marketplace?

Dynamic pricing

Which of the following refers to demand in which changes in price have large effects on the amount​ demanded?

Elastic demand

Which of the following refers to a deceptive pricing tactic in which an advertised price special is used as bait to get customers into the store with the intention of selling them a​ higher-priced item?

bait and switch

What is the last step in the price planning process?

develop pricing strategy

If you see a loaf of bread that is priced at​ $14.99, your past experience tells you that that price is substantially higher than a normal loaf of bread would be. If you feel that a loaf of bread should be less than​ $2.00, then this is your​ _____ price.

internal reference

Examining the pricing environment is the step in the price planning process that __________.

looking at the economy, the competition, government regulation, consumer trends, and the international environment?

When retailers advertise products at very low prices or even below cost in the hopes that customers will purchase other items at regular​ prices, they are engaging in​ _____.

loss leader pricing

Which of the following refers to the costs of production that fluctuate depending on the number of units​ produced?

variable cost

Which of the following pricing strategies is heavily used by hospitality companies like​ airlines, hotels, and cruise lines because these businesses charge different prices to different customers in order to manage capacity while they maximize​ revenues?

yield management pricing

Consumers who purchase the GE Profile or Monogram product lines perceive the products as having a higher quality and thus are willing to pay a higher price. Which of the following would best describe the inference of​ GE's product​ lines?

​Price-quality Price-quality inference is one in which consumers expect to pay a higher price for something that has a perceived or real higher quality than the competing products.​ Thus, the GE product lines best represent this higher​ quality, higher price inference.

Which of the following is an illegal marketing practice in which an advertised price special is used to get customers into the store with the intention of switching them to a higher-priced item?

bait-and switch

Which of the following refers to the most popular and fastest growing digital​ currency?

bitcoin

What kind of pricing is a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price?

cost plus pricing

What are variable costs?

costs are the costs of production that are tied to and vary depending on the number of units produced.

Which of the following represents the​ customer's desire for a good or​ service?

demand Correct. Demand refers to​ customers' desire for a​ product: How much of a product are they willing to buy as the price of the product goes up or​ down?

Which of the following pricing strategies would be used if a firm bases the selling price on an estimate of volume or quantity that it can sell in different markets at different​ prices?

demand based pricing

​eBay, eCrater,​ Bonanzle, eBid, and CQou all utilize which of the following models to allow shoppers to bid on everything from bobbleheads to​ health-and-fitness equipment to a Sammy Sosa​ home-run ball?

online actions

Which of the following represents the value of something we give up when gaining something​ else?

opportunity cost Correct. Other nonmonetary costs often are important to marketers. It is also important to consider an opportunity​ cost, or the value of something we give up to obtain something else.

A Rolex​ watch, a Louis Vuitton​ handbag, and a Rolls Royce automobile are all examples of​ _____ products.

prestige

Which of the following pricing strategies includes expenses tied to a product and a predetermined amount of​ profit?

Cost-Plus Correct. The most common​ cost-based approach to pricing a product is​ cost-plus pricing, in which the marketer totals all the costs for the product and then adds an amount to arrive at the selling price. Many marketers use​ cost-plus pricing because of its simplicity users need only know or estimate the unit cost and add the markup.

What is the first step in the price planning process?

set pricing objectives

Which of the following describes elastic demand for a product?

Elastic demand for a product occurs when customers are sensitive to changes in prices, and a change in price results in a substantial change in demand.

Which of the following is the practice of selling items below cost in order to build traffic and sales volume in a​ store?

Loss-Leader Pricing Correct. Some retailers advertise items at very low prices or even below cost and are glad to sell them at that price because they know that once in the​ store, customers may buy other items at regular prices. Marketers call this​ loss-leader pricing; they do it to build store traffic and sales volume.

Which of the following best describes the practice of Internet price​ discrimination?

Offering different prices to different customers for the same product Correct. Internet price discrimination is an Internet pricing strategy that charges different prices to different customers for the same product.

Which of the following occurs when two or more companies conspire to keep prices at a certain​ level?

Price fixing

Which pricing strategy is practiced by retailers who offer good quality products at reasonable​ prices?

Every Day Low Pricing (Value) Correct. Retailers typically practice one of two pricing strategies based on​ customer's needs: EDLP and​ High/Low pricing. Firms that practice value pricing or everyday low pricing​ (EDLP) develop a pricing strategy that promises good quality and durable products at reasonable prices every day.

The first step when planning pricing policies for a good or service is to develop​ _____.

Pricing Objectives Correct. The first crucial step in price planning is to develop pricing objectives. These must support the broader objectives of the​ firm, such as maximizing shareholder​ value, as well as its overall marketing​ objectives, such as increasing market share.

Which of the following pricing tactics is used when price reductions are offered only during a certain time of the​ year?

Seasonal discounts

Assume that for a given​ product, the total fixed costs are​ $100,000 and the contribution per unit to fixed costs is​ $50. What is the​ break-even point expressed in the number of​ units?

2,000

The idea that two products are similar in quality and value because the prices are similar is known as​ _____.

Assimilation Effect Correct. If the prices​ (and other​ characteristics) of the two products are fairly​ close, the consumer will probably feel the product quality is similar. This is an assimilation effect.

GE could offer discounts to its retailers that sell its products to the end user. One such discount is used for products during​ non-peak times to entice retailers and wholesalers to buy​ off-season. This is known as which type of​ discount?

Seasonal discounts are often used by companies to entice retailers and wholesalers to buy products during the​ off-season. GE could offer this type of discount to retailers or wholesalers for its products that have seasonal demand.

Which of the following describes surge pricing?

Surge pricing is a pricing strategy in which the price of a product is raised as demand for that product goes up and lowered as demand goes down.

What is the break-even point?

The point at which a firm doesn't lose any money but doesn't make any profit is known as the

Why is it important for organizations to accurately estimate the demand for a good or​ service?

To plan production, marketing, and budgets Correct.​ It's extremely important for marketers to understand and accurately estimate demand. Plans for production of the product as well as marketing activities and budgets must all be based on reasonably accurate estimates of potential sales.

The __________ is primarily used to show the quantity of a product that customers will buy in a given time period, at different prices that might be charged.

demand curve

A trade discount is a __________.

discounts are discounts off list price of products to members of the channel of distribution who perform various marketing functions

Which of the following refers to the costs of production that do not change with the number of units​ produced?

fixed cost

Which of the following is a business strategy in which a product in its most basic version is provided free of charge but the company charges money for upgraded versions of the product with more​ features, greater​ functionality, or greater​ capacity?

freemium pricing

What is the term used when a company provides a product in its most basic version free of charge but charges money for upgraded versions of the product?

freemium strategy

General Electric created its Profile and Monogram lines of products to have a higher price and appeal to​ status-conscious consumers. This indicates that the Profile and Monogram lines of products follow which type of pricing​ strategy?

prestige value Prestige pricing is used when a company wants to meet an image enhancement objective to appeal to​ status-conscious consumers, as is the case with the GE Profile line of products. Prestige pricing is used when a company wants to meet an image enhancement objective to appeal to​ status-conscious consumers, as is the case with the GE Profile and Monogram product lines.

Which of the following refers to the assignment of​ value, or the amount the consumer must exchange to receive the offering or​ product?

price

​_____ means selling two or more goods or services as a single package for one price-a price that is often less than the total price of the items if bought individually.

price bundling

Which of the following pricing strategies is usually the rule in an oligopolistic industry that a few firms​ dominate, which might be in the best interest of all players because it minimizes price​ competition?

price leadership

Marketers often apply their understanding of the psychological aspects of pricing in a practice they call​ ________, whereby items in a product line sell at different​ prices, or price points.

price lining

Which of the following describes uniform-delivered pricing?

pricing is a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location.

When pricing strategies are determined by ___________ objectives, the focus is on a target level of profit growth or a desired net profit margin.

profit

​_____ pricing means that the firm charges a​ high, premium price for its new product with the intention of reducing it in the future in response to market pressures.

skimming

When setting​ prices, it is important that GE follow laws or regulations that prohibit unethical pricing. Which law prohibits companies from selling products to protect small​ businesses?

unfair trade acts Unfair sales acts are state laws that prohibit from selling products to protect small businesses.