MKTG 361 CH 13 LS

According to the price equation, to find the actual price, you should do which of the following to the list price?

-add extra fees -subtract incentives and allowances

Which of the following are the three factors that influence demand?

-consumer tastes -price and availability of similar products -consumer income

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

-consumers' access to pricing information from many competitors -companies' ability to change prices frequently

Which of the following must be done before an approximate price level is selected?

-estimate demand and revenue -determine cost, volume, and profit relationships

Which two of the following are factors that cause price inelasticity?

-products are considered necessities -few available substitutes

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

-target return -maximizing current profits

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

-total cost -total revenue

A break-even analysis chart shows the intersection of which two curves?

-total revenue -total costs

Total cost is the sum of which of these?

-variable cost -fixed cost

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?

Movement along a demand curve occurs because of

a change in price

Which of the following does NOT cause a shift in the demand curve?

a change in price

A shift in the demand curve is the result of

a change in selling conditions

The typical relationship between price and demand is shown as

a downward-sloping demand curve

When Wilkinson Sword exchanged some of its knives for advertising used to promote its razor blades, it was an example of

barter

The __ - __ point is the quantity at which total revenue and total cost are equal

break-even

Compared to other company objectives, the sales objective

can be translated more easily into meaningful targets for marketing managers

The cost of changing prices is a pricing constraint; as a result, most firms

change the prices of their products more often if they sell online

Variable costs __ production volume

change with

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

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

costs

Fixed costs are

costs that do not fluctuate when production changes

The social responsibility pricing objective often results in

decreased profits

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

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

demand curve

A product with __ demand is one in which a slight decrease in price results in a relatively large increase in demand or units sold

elastic

Price __ of demand is a measure of how sensitive consumer demand and the firm's revenues are to changes in the product's price

elasticity

Executive salaries are a good example of a __ cost

fixed

You sell picture frames at your business, and because they're flying off the shelves you decide to give your salaried managers a 5% raise. What does this do to your break-even point?

fixed costs increase, so the break-even point does as well

Price is the one element in the marketing mix that __

generates revenues

A product for which nostalgia or fad factors come into play is likely to

have higher prices later in its product life cycle

When there are many substitute products available, the price elasticity of demand for a given product will likely be __

higher

The key element in the definition of pure competition is that the products offered by the different firms are perceived by the consumer to be

identical

A demand curve enables a firm to examine prices

in terms of quantity sold

According to price elasticity, when the price of iPhones drop, the demand for iPhones is likely to

increase

To increase customer value for a given price, the market must

increase perceived benefits

When a 1 percent decrease in price results in less than a 1 percent increase in quantity sold, demand for the product or service is:

inelastic

Despite the recent increases in gas prices, Americans have barely decreased their consumption, which is an example of

inelastic demand

Which of the following product categories is the best example of an oligopoly?

large jetliners, which consists of just Boeing and Airbus

If a firm prices a product low, to the customer this may signal

low quality

When a firm sells more product than it needs to cover its total costs, it will

make a profit

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

Which profit-oriented pricing objective is common in many firms because the targets can be set and performance measured quickly?

maximizing current profit

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

maximum units sold

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

The situation in which many firms compete for customers in a given market and the products are differentiated is known as __

monopolistic competition

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

When only a few firms dominate a market, it is known as __ competition

oligopolistic

In a pure competition market, advertising

only serves to inform buyers that the product is available

Value is defined as

perceived benefits divided by price

The money or other considerations exchanged for the ownership or use of a product or service is its

price

When a successful new product is introduced to the market, the lack of competition (including from your own company) removes

price constraint

Pricing decisions are difficult because

price simultaneously affects total revenue and total cost

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

price; costs; profit

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

pricing constraints

Total revenue less (that is, minus) total cost is known as

profit

Price transparency has encouraged what type of change in the marketplace?

proliferation of low-cost providers

Order the following types of competitive markets from most competitive to least, with the most on top oligopoly monopolistic competition pure monopoly pure competition

pure competition monopolistic competition oligopoly pure monopoly

In which of the following does the competitive market NOT provide a pricing constraint for the marketer?

pure monopoly

When a consumer is comparing the costs and benefits of substitute items, he or she is developing a

reference value

A firm with a sales objective will set prices at a level that generates more

revenues

Consumers' zeal for low prices combined with the ease of making price comparisons on the Internet has resulted in many companies adding __ to their list prices

surcharges

When a company sets a profit goal of 20 percent for pretax ROI, it is using which type of pricing objective?

target return

The three elements influencing the demand curve are consumer __, consumer __, and the price and availability of similar product

tastes; income

In an industry that has an oligopoly, price wars are likely to benefit only

the consumer

Market share can be measured as the ratio of __ compared to the total industry units sold

the firm's units sold

Why are customers willing to pay extra for a Kohler walk-in tub which eliminates the need to step over the side of the tub

the safety features enhance the product's value

An international firm that contracts with suppliers overseas would be most likely to do so for which of these reasons?

the suppliers might have efficiencies and lower hourly wages, reducing production prices

Total revenue equals the product quantity sold times

the unit price

In a pure competition market, the primary purpose for advertising is

to inform buyers that a product is available

Price times quantity sold is

total revenue

The unit variable cost is

total variable cost divided by the quantity

The pricing objective based on the quantity of product sold by a firm is also called

unit volume

The pricing objective known as __ can be counterproductive if it is achieved by drastic price cutting that drives down profit

unit volume

Creative marketers engage in __ when they increase product benefits without changing the price

value-pricing

By increasing __ and holding all other variables constant, profit will decrease

variable cost

Direct labor and materials are also known as

variable costs

Total cost is

variable costs plus fixed costs