MKT291 Chapter 11 Homework

Which of the following is an example of deceptive pricing?

A bait an switch to lure customers into the store to sell them a higher priced product.

Predatory pricing

Charging a very low price for a product with the intent of driving competitors out of business

Price discrimination

Charging different prices to different buyers for goods of like grade and quality

The Internet has resulted in which two of the following that affect the competitive environment for pricing?

Companies' ability to change prices frequently Consumers' access to pricing information from many competitors

_______-oriented approaches to pricing set the price to reflect the way the marketer wants consumers to interpret prices relative to competitor's offerings.

Competition

________-oriented approaches to pricing set the price to reflect the way the marketer wants consumers to interpret prices relative to competitor's offerings.

Competition

Price fixing

Conspiracy among firms to set prices

Select all of the following that are common approaches to setting an approximate price level for a product.

Cost-oriented Competition-oriented Demand-oriented

_______-oriented pricing approaches weigh factors underlying expected customer tastes and preferences more heavily than other factors.

Demand

Demand-oriented pricing approaches weigh which factors most heavily?

Expected customer tastes and preferences

Demand-oriented

Factors underlying customer tastes and preferences are weighed most heavily.Factors underlying customer tastes and preferences are weighed most heavily. ex: A new energy efficient light bulb was introduced at $3.00 (about three times the price of a conventional bulb) and will last 6,000 hours (about four times the conventional bulb).

With which profit-oriented pricing objective is a firm likely to price its products relatively low compared to their cost to develop, with the prospect of gaining a high market share?

Managing for long-run profits

Strategies that can be used as part of a firm's profit objectives include which two of the following?

Maximizing current profits Target return

_______ pricing is seen as the exact opposite of skimming pricing when introducing a new product

Penetration

Deceptive pricing

Price deals that mislead consumers

Cost-oriented

Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit.Price is set by looking at the production and marketing costs, and then adding enough to cover direct expenses, overhead, and profit. ex: Target priced its new patio furniture sets by adding 15 percent to the invoice price it paid for those products.

Competition-oriented

Price setter stresses what "the market" is doing is determining a price. ex: Intel slashed its prices to be more similar to those of AMD, a rival computer chip maker.Intel slashed its prices to be more similar to those of AMD, a rival computer chip maker.

_______________ discounts are price reductions offered on products to stimulate purchasing during times of low consumer demand, allowing a manufacturer to smooth out manufacturing highs and lows.

Seasonal

Which of the following are profit-oriented approaches to setting a price?

Target profit pricing Target return pricing

Profit-oriented

The price setter balances both revenues and costs to set a price. ex: The owner of a vacuum cleaner store sets a target of a 20 percent return on sales.

Seasonal discounts specifically do which two of the following?

They contribute to more efficient production for the manufacturer. They reward channel members for accepting the risk of increased inventory.

Seasonal discounts

To encourage buyers to stock inventory earlier than their demand would require.

Quantity discounts

To encourage customers to place larger orders.

Cash discounts

To encourage retailers to pay their bill quickly.

Trade discounts

To reward channel members for future marketing efforts.

Break-even analysis analyzes the relationship between which two at various levels of output?

Total cost Total revenue

_______ discounts are also known as functional discounts.

Trade

The demand curve is

a graph relating quantity sold and price.

______________ - ________________ analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

break; even

The marketing of two or more products in a single package price is known as ________ pricing.

bundle

A pricing constraint firms face is the price that its _________ are currently charging and likely to charge in the future.

competitors

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

Factors that limit the range of prices a firm may set are known as pricing

constraints.

___________-oriented approaches to pricing start with production and manufacturing costs and then add enough to cover direct, expenses, overhead, and profit

cost

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

cost-oriented.

Generally, the greater the ________ for a product, the higher the price that can be set.

demand

When the New York Mets set higher ticket prices for games versus the popular New York Yankees than for those versus the Pittsburgh Pirates, its pricing is constrained by

demand.

If a firm sells the same product to different buyers at different prices, it may be considered price

discrimination

Prestige pricing means the organization deliberately prices a product ________ so that ________ consumer will be attracted to the product and buy it.

high; quality-conscious

Price fixing, price discrimination, and predatory pricing are

legally prohibited.

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.

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

maximization; return

A marketing manager considers pricing objectives and constraints to

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

A firm may set goals for its business in terms of profit, sales, or unit volume. These are types of pricing ________ .

objectives

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

objectives

Value is defined as

perceived benefits divided by price.

When using _____________________________ pricing, a firm sets a very low price for one or more of its products with the specific intent to drive its competition out of business.

predatory

With ________ pricing, the marketer must not drop the price of a product below the point where customers become skeptical of its quality and refuse to purchase it.

prestige

Charging different prices to different buyers for goods of like grade and quality is known as

price discrimination.

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

price elasticity of demand.

Which of the following are pricing practices that are legally restricted?

price fixing predatory pricing

The practice of colluding with other firms to set prices is called

price fixing.

The money or other consideration (including other products and services) exchanged for the ownership or use of a product is known as

price.

Total revenue = unit _____ x quantity ______

price; sold

A firm must know its competitors' ________ in order to best set its own.

prices

Total revenue minus total cost is known as

profit

Total ______________________ is equal to the unit price for a product times the quantity of it sold.

revenue

Price fixing is the conspiracy among firms to

set prices for a product.

When a firm introduces an innovative new product, it may choose ____________ pricing, setting the highest initial price that customers who really desire the product are willing to pay.

skimming

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 ________, prices are lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices

skimming pricing

Competition-oriented approaches to pricing

stress what "the market" is doing.

The newer a product and the earlier it is in its life cycle,

the higher the price that can usually be charged.

Bundle pricing refers to

the marketing of two or more products in a single package price.

Price is defined as

the money or other considerations exchanged for the ownership or use of a product.

To determine ______ for a product, you must consider limitations based on customers, actual costs, and profits.

the price

Break-even analysis analyzes the relationship between which two at various levels of output?

total cost; total revenue

According to the profit equation, profit is

total revenue minus total cost

The ratio of perceived benefits to price is a product's ____________

value

When using competition-oriented pricing approaches, price setters stress

what "the market" is doing.

Which of the following are essential to consider when setting a price?

What will provide a profit to the company? What will pay for all associated costs, including marketing? What are customers willing to pay?

Marketing managers may identify profit, market share, social responsibility, or even survival as pricing

objectives.

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

objectives; constraints

A ________ policy is also known as fixed pricing.

one-price

Setting a price with no variation for product buyers is called a ________ policy.

one-price

A firm may introduce a new product with __________________ pricing by using a low initial price designed to appeal to the many customers that are believed to be price sensitive.

penetration

Organizations using ________ pricing set the initial price low for the introduction of the new product to appeal immediately to the mass market.

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

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

quantity demanded; price