marketing exam 3

What four factors must be taken into consideration to determine the "right" price for a product?

-Will the product provide a profit for the company? -Will it generate enough sales dollars to pay for the marketing of the product? -What are customers willing to pay for the product? -Will enough money be made to pay for the development and production of the product?

What are the two common forms of cost-plus pricing?

-fixed-fee -percentage-of-cost

What two elements are shown on a demand curve?

-price -quantity sold

How is target pricing executed?

Manufacturers deliberately adjust the composition of a product to achieve the estimated price that consumers are willing to pay for it.

How does a skimming pricing strategy approach price setting?

Prices are set high initially and then lowered in a series of steps.

Organizations can be most effective using skimming pricing under which two conditions?

The product is protected by patent. The customer understands and highly values the product.

Seasoned marketing managers will use the pricing approaches in which of the following ways?

They will consider several approaches together in setting an approximate price level.

What is the demand curve?

a graph relating quantity sold and price

What is the focus of target profit pricing?

a specific dollar volume of profit

What is the focus of target return-on-sales pricing?

a specific profit as a percentage of sales volume

Standard markup pricing entails ______.

adding a fixed percentage to the cost of all items in a specific product class

The demand for a product class, a product, or a brand, or the newness of a product can act as pricing ______ to limit a firm's options.

constraints

Selling via the Internet reduces which pricing constraint?

cost of changing prices

Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit.

cost-oriented

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are _____ approached

cost-oriented

Percentage-of-cost pricing, and fixed-fee pricing are two forms of what pricing approach?

cost-plus

The chart that shows how many units of a product or service consumers will demand during a specific period of time at different prices is known as the ______.

demand curve

Generally, a seller can charge a higher price for a product when ______.

demand for the product is high

A demand curve enables a firm to examine prices ______.

in terms of quantity sold

If a firm prices its products relatively low compared to the cost to develop, with the prospect of gaining a high market share, it is utilizing which profit-oriented pricing objective?

managing for long-run profits

Many Japanese car firms are willing to give up immediate profits for long-term penetration of the market. This is a pricing objective known as ______.

managing for long-run profits

On a demand curve, one of the axes represents the price of a product while the other represents the ______.

maximum units sold

Many sellers who compete on nonprice factors

monopolistic competition

Pricing ______ involve specifying the role of price in an organization's marketing and strategic plans.

objectives

Pricing ______ frequently reflect corporate goals, while pricing ______often relate to conditions existing in the marketplace.

objectives; constraints

Sears offers a Craftsman radial saw for $499.99 rather than $500, using a(n) ______ pricing approach.

odd-even

Few sellers who are sensitive to each other's prices

oligopoly

The ability to attract price sensitive customers and discourage competitors from entering a market make which pricing strategy appealing?

penetration

Which pricing approach is seen as the exact opposite of skimming pricing when introducing a new product?

penetration

Patents and limited competition reduce ______, making high prices possible for technology products early in their life cycles.

pricing constraints

By focusing on target profit pricing or target return pricing, a firm is using a ______ pricing approach.

profit-oriented

The price setter balances both revenues and costs to set a price.

profit-oriented

Many sellers who follow the market price for identical, commodity products

pure competition

When a firm has a particular profit goal in the form of a specific dollar amount as its overriding concern, it is likely to implement _______

target profit pricing

What are two profit-oriented approaches to setting a price?

target profit pricing target return pricing

How do a firm's channel members affect the price a firm can charge for its products?

the channel members must earn a profit, which raises the price

Why must a marketing manager consider pricing objectives and constraints?

to narrow the range of choices among the variety of pricing strategies

According to the profit equation, profit equals ______.

total revenue minus total cost

In the profit equation, what is multiplied by quantity sold?

unit price

Break-even analysis can help evaluate the impact of changes in ______ and ______ on ______.

price; costs; profit

Firms that set prices to give them a profit that is a specified percentage of the sales volume are using ______.

target return-on-sales pricing

What two strategies can be used as part of a firm's profit objectives?

-target return -maximizing current profits

American firms are sometimes criticized for using which profit-oriented pricing objective, because it results in a short-term orientation?

maximizing current profit

Select all of the benefits of a penetration pricing strategy.

-production costs drop with increased volume -potential to gain market share -discourages competitors

Break-even analysis is a technique that analyzes the relationship between which two variables at various levels of output?

-total revenue -total cost

Cost-oriented approaches to pricing consider which three things in the setting of a product's price?

-overhead -profit -production costs

Legal and regulatory issues and consumer demand are pricing ______ that limit what a company can charge for its products.

constraints

In the long run, a firm's ______ and those of its distributors set a baseline for a product's price, allowing the firm to both survive and get its product to consumers.

costs

Rolls-Royce cars, Chanel perfume, and Tiffany jewelry would most likely benefit from which type of pricing?

prestige

Break-even analysis analyzes the relationship between total revenue and total cost to determine profitability ______.

at various levels of output

Compared to other company objectives, the sales objective ______.

can be translated more easily into meaningful targets for marketing managers

Price setter stresses what "the market" is doing is determining a price.

competition-oriented

Factors underlying customer tastes and preferences are weighed most heavily.

demand-oriented

Penetration, price lining, and bundle pricing are all types of what pricing approach?

demand-oriented

A unit volume objectives for pricing should be used judiciously because higher volume goals can sometimes result in ______.

drastic price cutting that drives down profits

The percentage change in quantity demanded relative to a percentage change in price is known as ______.

price elasticity of demand

A pricing objective of increasing sales can have the disadvantage of leading to price cuts that may ______.

reduce the revenues of related products in the firm's line

A target return objective can be described as ______.

setting a specific profit goal, say 20 percent

For ______ pricing to be effective, there must be sufficient customers willing to buy the product at a high initial price, they should interpret the high price as signifying high quality, and the high price should not attract competition.

skimming

The best way to approach setting an approximate price level is to ______

consider several approaches in deciding

Current profit ______ and target ______ are two strategies used by firms that are pursuing a profit pricing objective.

maximization; return

In ______ pricing, an organization sets a price a few dollars or cents under an even number, such as at $3.99.

odd-even

When Swiss watchmaker TAG Heuer increased the average price of its watches from $250 to $1,000, its sales volume jumped sevenfold. This is evidence that ______ pricing is important in this product category.

prestige

What element of the marketing mix has a unique role in that it is the place where all other business decisions come together?

price

A retailer sells charcoal and lighter fluid together for one price that is lower than if the products were bought separately. What pricing strategy does this represent?

price bundling

If a department store manager prices a line of shirts at $29, $49, and $69, the manager is using which pricing strategy?

price lining

When Brooks Brothers prices its line of umbrellas at three price points, $58, $198, and $498 (or good, better, and best) it is using a ______ approach.

price-lining

One seller who sets the price for a unique product

pure monopoly

Price elasticity of demand is expressed as percentage change in ______ divided by the percentage change in ______.

quantity demanded; price

When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ______ pricing strategy.

skimming

In what pricing strategy are prices lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices?

skimming pricing

Which is an example of a demand-oriented approach to setting an approximate price?

skimming pricing

Adding a fixed percentage to the cost of all items in a specific product class is known as ______ pricing.

standard markup

Cost-plus pricing entails ______.

summing total units costs and adding a fixed percentage or fee to arrive at a price

In ______ pricing, an organization estimates what consumers are willing to pay for a product, and works backward, accounting for markups by retailers and wholesalers, to determine what it can charge for the product.

target

When a firm has a particular profit goal in the form of a specific dollar amount as its overriding concern, it is likely to implement ______.

target profit pricing

When a board of directors determines a specific profit goal, marketing managers usually implement a(n) ______ objective.

target return

A company that is looking to gain a specific percentage of the amount invested in a product would use which profit-oriented pricing approach?

target return-on-investment