MKTG 409 Pride - Chapter 19
Pricing decisions are impacted by many factors. Which of the following factors is not related to pricing? consumers' interpretation and response expectations of other channel members costs a company's stock price
a company's stock price
In conducting an assessment of her accounting firm, Paige discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Paige's profits would equal __________. $222,000 a loss of $32,000 a loss of $20,000 $28,000 $40,000
a loss of $32,000
Agatucci's Restaurant is marketing a line of frozen pizzas based on their famous recipe they have served at the restaurant for the last 40 years. The pizzas will be sold in grocery stores across the country, and prior to the national roll-out, Agatucci's used test marketing to determine the appropriate price and market niche for their pizzas. They discovered that the typical grocery store would sell 25 pizzas per day at $6.99, 45 pizzas per day at $7.49, and 38 pizzas per day at $8.99. Which of the following best describes what Agatucci's learned as a result of their test marketing and pricing study? Demand for Agatucci's pizza is inelastic. Demand for Agatucci's pizza is a normal, downward sloping curve. Consumers are not very interested in purchasing the Agatucci brand. The pizzas are considered a prestige product.
The pizzas are considered a prestige product.
Which of the following statements is true with regard to premium-priced products? They are less likely to require personal selling activities. Advertisements often include the product's price. They are often marketed through intensive distribution. They are often marketed through selective or exclusive distribution channels.
They are often marketed through selective or exclusive distribution channels.
Which of the following outcomes is most correct if a marketer were to raise the price of its product when demand is inelastic? The demand curve will shift to the left. Demand will drop. Total revenue will decrease. Total revenue will increase.
Total revenue will increase.
If Roberts Electronics finds that the average total cost of its radar detectors and the marginal cost of its radar detectors are both $85, then _________. average total cost is at its lowest level average total cost is at its maximum its marginal costs are falling average total costs are rising demand is elastic
average total cost is at its lowest level
Roberts Tool & Die creates metal parts for manufacturers, including the aluminum posts for head rests in many automobiles manufactured in the United States. If the company observes that marginal costs and average total costs are both $39, then marginal costs are at its lowest level average total costs are at its highest level marginal costs are peaking average total costs are at its lowest level
average total costs are at its lowest level
Suppose that Sony has determined that its popular PlayStation game system achieves _________ when it has total costs of $7 million and sells $7 million of product in the same fiscal year. losses profitability equilibrium break-even point
break-even point
The level at which the costs of producing a product equals the revenue made from selling the product is termed marginal revenue point profit maximization point equilibrium level break-even point
break-even point
Rex is opening a retail outlet and will primarily sell used video games and game systems. Which of the following would most likely represent a fixed cost for Rex? garbage pickup advertising expenditures electricity building rent
building rent
_____ discounts are quantity discounts aggregated over a stated time period. Trade Cash Quantity Cumulative
cumulative
China accused a well-known national retailer of engaging in unfair competition. According to Chinese authorities, the retailer had discounted many of its products. However, the stores allegedly informed consumers through promotions that the original prices for these products were much higher than they were initially. This made consumers think they were getting steeper discounts. This is an example of _________. predatory pricing price discrimination counterfeit pricing deceptive pricing price fixing
deceptive pricing
The Wheeler-Lea Act and the Federal Trade Commission Act prohibit independent pricing policies price discrimination price-fixing deceptive pricing
deceptive pricing
If the demand for coffee beverages is similar to most products, if Starbucks were to increase the price of its coffee beverages, demand or sales of these beverages to consumers would most likely depend on competitor responses to the price increase increase stay the same decrease
decrease
What is the typical shape of the demand curve for most products? U-shaped C-shaped upward sloping downward sloping
downward sloping
A business marketer may offer _____ pricing that involves reducing a product's price relative to the transportation costs or other costs associated with the physical distance between buyer and seller. cash trade allowance geographic
geographic
At times, customers interpret a ____ price as possessing ______ product quality. moderate; higher higher; lower lower; higher higher; higher
higher; higher
The Comfort Station Restaurant features daily lunch specials just like grandma used to make and enjoys serving "comfort-style" food—food that nurtures and comforts the soul. The restaurant is near a large office complex and competes against many national chains such as Chipotle, McDonald's, and Subway. It typically offers its lunch specials at $7.99 per person but recently lowered its prices to $5 per person hoping that consumers would relate this price to Subway's $5 sandwich deal, which was so popular. Which of the following objectives is The Comfort Station Restaurant most likely seeking to achieve? increasing the number of competitors decreasing total costs increasing per-item revenue increasing market share
increasing market share
Rinnai produces tankless water heaters which sell for $650. In the United States, Rinnai estimates its manufacturing costs are $250 per unit if it produces 1,000 units per week. If it produces 1,001 units per week, its costs are $280 per unit. The $30 difference is a(n) average cost variable cost fixed cost marginal cost
marginal cost
Jessie White recently graduated from dental school and is planning to start his own dental practice. He has never taken any business classes or economics courses and has very little business-related experience. The costs to start up a dental practice are quite high considering the equipment, rent, employee labor costs, and other supplies or materials needed for the business. Jessie was speaking with a friend who graduated with a degree in marketing about how to maximize profitability. The friend was telling Jessie that it's important to understand fixed costs, variable costs, marginal costs, and marginal revenue since profit will be at its highest when marginal revenue equals fixed costs variable costs are less than fixed costs fixed costs are less than marginal revenue marginal costs equal marginal revenue
marginal costs equal marginal revenue
You've been hired as a pricing analyst to assist a firm in setting their prices. The company wants to maximize its profits, and profit maximization is achieved when total variable costs equal average revenue average total costs equal marginal revenue marginal costs exceed marginal revenue marginal costs equal marginal revenue
marginal costs equal marginal revenue
Old Country Buffet notices that when they serve 501 customers at dinner instead of 500, their total revenue increases $12. This $12 increase represents Old Country Buffet's incremental revenue average revenue total revenue marginal revenue
marginal revenue
_______ is most likely to have an inelastic demand curve. Carbonated beverages Video game Airplane tickets for a vacation Milk
milk
Which of the following products would most likely utilize personal sales representatives to assist customers with their purchase decision? music DVDs video games laundry detergent mobile telephones
mobile telephones
Justin, a sales representative for Serta Mattress manufacturers, phones Kirk of Southside Furniture to inform him that if he will increase his recent order of 15 mattress sets to 20, he will receive a 14 percent price reduction. This offer is due to a recent overstock condition at the factory and will not be available in the future. The discount offered here is _________. cumulative noncumulative cash seasonal trade
noncumulative
Louis Vuitton is a fashion brand often associated with elite or high-profile customers who can afford spending $1,000 or more on a purse. One of its most popular handbags is the Alma, which is a structured bag and part of the Monogram collection. Louis Vuitton closely monitors its sales and wanted to test the elasticity of demand. It noticed that when the Alma bag was priced at $1,500, a greater quantity was sold compared to a retail price of $1,300. However, if the price was $1,750, sales of the bag declined. The pricing research conducted by Louis Vuitton demonstrates that the Alma bag is a _____ product. standard reverse-demand convenience prestige
prestige
Burberry, a fashion retail brand selling men's and women's apparel and accessories, has recently been recognized as providing the highest level of customer service in the industry as customers rate the company extremely high on personalized service. Burberry clothing is quite expensive and may incorporate its iconic plaid fabric—partly as a signature element but also to convey to others that the wearer can afford Burberry. It's become somewhat of a status brand and those who purchase Burberry are high-income earners or aspire to live the life of a high-income earner. Which of the following best describes Burberry customers? quality-conscious price-conscious value-conscious prestige-sensitive
prestige-sensitive
Zach enjoys dressing well and believes it's important to his image that he looks polished and professional. He makes his purchase decisions based on the reputation of a brand and appreciates the additional status that brands such as Burberry and Rolex provide to him. He is characterized as a _____ consumer. quality-conscious price-conscious value-conscious prestige-sensitive
prestige-sensitive
Mitch uses Verizon for wireless services and has set up an automated system where Verizon automatically deducts the monthly service fee from his bank account. The amount of money that is deducted by Verizon each month for the cellular service is called its expense profit cost price
price
Walmart promotes its private label brand Equate for laundry detergent using a shelf tag to draw attention to the savings that consumers can receive if they purchase the product. In addition, the name of the product, Equate, signifies that the brand is the same or equal to name-brand alternatives. Walmart is competing on the basis of _______ with its Equate brand. packaging promotion product attributes price
price
Best Buy is a national retailer specializing in entertainment, appliances, computers, and stereo equipment. Best Buy is considered a category killer retailer since they have a wide range of merchandise in limited product categories and are able to negotiate special discounts from suppliers due to their ability to purchase in bulk. Best Buy encourages customers to shop the competition but make their purchase from Best Buy—either online or in the stores since Best Buy will meet or exceed any advertised price on any of its products. What type of practice is Best Buy implementing through its price-match guarantee? value-conscious pricing integrated pricing nonprice competition price competition
price competition
Companies may engage in ___________, which is defined as emphasizing price as an issue and matching or beating competitors' prices. supply-based economics nonprice competition price discrimination price competition
price competition
Sherman's Appliances advertises a "price match" guarantee that they will meet or exceed competitors' prices on all products in the store. What type of strategy is Sherman's Appliances utilizing? equity competition supply-chain marketing nonprice competition price competition
price competition
Sherman's is a family-owned furniture and appliance retailer with four locations in central Illinois. The business is family-owned and now run by the son of the founder. Sherman's frequently uses television advertising and social media to promote the business and recently began offering a price match guarantee. The company is encouraging customers to check competitor prices while shopping at Sherman's and will even offer customers the use of an iPad to check deals. Sherman's will meet or beat any advertised competitor's price on similar merchandise. What type of practice is Sherman's implementing through its price-match guarantee? value-conscious pricing integrated pricing nonprice competition price competition
price competition
The practice of employing price differentials that tend to injure competition by giving one or more buyers a competitive advantage over other buyers is known as collusion deceptive pricing price-fixing price discrimination
price discrimination
Jose Rodriguez is a pricing analyst for Walgreens and is responsible for all products in the grocery category including chilled merchandise. Jose knows that consumers who purchase grocery items at Walgreens are willing to pay more for these items than they normally would at the grocery store since Walgreens is providing more location convenience and a faster shopping experience. Jose typically tests the _______ of demand by working with local store managers in several different Walgreens stores and adjusting the price so that he can determine the best price that maximizes profitability for the chain. sensitivity feasibility quantity price elasticity
price elasticity
The mathematical result of dividing the percentage change in quantity demanded by the percentage change in price is known as the marginal revenue average variable cost marginal cost price elasticity of demand
price elasticity of demand
The EU recently fined major truck makers for pricing that they viewed as anticompetitive. Many years ago, the managers at five of the companies got together and decided to set certain prices. By setting agreed-upon prices, customers would have to purchase at those prices and could not go to a competitor that sold comparable products at lower prices. They also agreed to pass the costs of environmental regulations onto consumers. These truck makers were fined for ____________. predatory pricing price discrimination counterfeit pricing deceptive pricing price fixing
price fixing
The Busch Stadium in St. Louis, Missouri, where the St. Louis Cardinals baseball team is based, is surrounded by a large number of restaurants and bars who are interested in attracting fans before and after games to dine or drink at their locations. Recently, one bar offered $1 drafts and another decided to offer $1 pitchers. The manager of a third bar decided to offer a buy-one-get-one half-price special on entrees as she knew that lowering prices on beer could result in a(n) _______ that could erode profits and be harmful to all competitors. competitive skirmish advertising battle competitive game price war
price war
Which of the following mathematical expressions is true with regard to pricing and the generation of a firm's revenue? profit = price × quantity sold revenue = quantity sold − total costs total costs = price × quantity sold profit = (price × quantity sold) − total costs
profit = (price × quantity sold) − total costs
Which of the following factors or situations would affect the success of a company's use of nonprice competition? cutting prices in response to a competitor's pricing strategy employing an everyday low-price strategy the marketer's ability to negotiate favorable price terms with suppliers. the existence of unique product features that consumers value
the existence of unique product features that consumers value
As a marketing mix variable, price is an important element since it directly relates to a company's reputation the level of market share a firm achieves the number of employees a company hires the generation of total revenue
the generation of total revenue
Discounts that are used to attract and keep effective resellers by compensating them for performing certain functions such as transportation or warehousing are called _____ discounts. cash allowance seasonal trade
trade
Sutter Homes Winery offers special discounts to retailers to compensate them for providing transportation or warehousing services, which are known as _____ discounts. seasonal cash quantity trade
trade
The popular cleaning products Tide and Downy are both brands that are part of the Procter and Gamble family. Some formulas of Tide include Downy—thus, the Tide brand would purchase Downy from the Downy division of Procter and Gamble. This purchase would involve _____ pricing. multinational zone base-point transfer
transfer
Non-price competition emphasizes distinctive product features, service, and product quality. True False
true
Rent is usually a fixed cost. True False
true
Aldi's food stores that are owned by a German company have been expanding across the United States and feature a smaller retail store space with a limited selection of brand-name merchandise. Aldi's has worked hard to develop partnerships with suppliers to source items and package private or store-brand merchandise that's similar to a national brand product. For example, Aldi's offers its Millville brand of cookies and snack items such as a strawberry grain bar that's similar in appearance and taste to Nutrigrain. Aldi customers appreciate both high-quality products at a reasonable price point. What type of shoppers does Aldi's attract? economy-sensitive prestige-sensitive price-conscious value-conscious
value-conscious
Brandon is an avid golfer and often entertains customers on the golf course. He's considering purchasing a new set of clubs and is concerned both about the price and quality of the clubs. What type of consumer best describes Brandon and his golf club purchase? quality-conscious prestige-conscious price-conscious value-conscious
value-conscious
The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells their fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the break-even point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. They believe a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the break-even point? 390 units 507 units 337 units 1,007 units
1,007 units
Four Roses bourbon, based in Kentucky, is known for crafting exceptional bourbon, and its Single Barrel bourbon is priced at a premium level to distributors at $28 per bottle. Its average variable cost is $12 per bottle and total fixed costs are $65,000. How many units of the Single Barrel bourbon will Four Roses need to sell in order to achieve break-even point? 4,643 2,322 5,417 4,063
4,063
Which of the following best describes the shape of the demand curve for a prestige product? It has a straight-line shape showing that consumers' willingness to purchase the product stays the same regardless of the product's price. It has a straight-line shape showing that consumers are less willing to purchase the product at higher prices than lower prices. It has a straight-line shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. It has a curved shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. However, beyond a certain high price point, demand declines.
It has a curved shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. However, beyond a certain high price point, demand declines.
Seasonal discounts provide price incentives to customers during peak selling seasons. True False
false
The value of an idea cannot be assessed by price. True False
false
With prestige products, a firm will always be able to sell more at a higher price. True False
false
Max Weber is the owner of a food truck business and specializes in farm-to-table fare—healthy ingredients, no GMOs, and all organic produce. His food costs are much higher since he sources from farmers who utilize sustainable agricultural practices and no pesticides. He also works with local farmers who raise animals in a sustainable manner—no antibiotics or hormones for beef, chicken, pork, and turkey. Max is reviewing his pricing structure and wants to determine his profit for the month. His total revenue was $8,500 and his total costs were $4,500. He has a fixed price system where he charges $10 for entrees and he sold 850 entrees this month. How much profit did Max's food truck business earn? $3,500 $6,500 $8,500 $4,000
$4000
Tim O'Brien gets the invoice for a load of gravel he purchased last week. The price of the gravel was $55, and the terms are 2/10, n/45. If Tim pays the invoice in five weeks, he will owe ____________. $55.00 $53.90 a penalty $56.10 $58.30
$55.00
Tuscany Pizza sells its frozen pizzas to grocery stores in the Midwest for $4.50 each. Its annual fixed costs to produce the pizzas are $80,000 annually and its variable costs are $2 per pizza. Calculate the break-even point for Tuscany Pizza. 10,000 12,308 17,778 32,000
32,000
If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen? The demand curve for the product would always shift to the left. The quantity demanded would always increase. The quantity demanded would immediately fall. Above some price level, the quantity demanded would begin to decrease. The demand curve for the product would always shift to the right.
Above some price level, the quantity demanded would begin to decrease.
When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude? Consolidated mustard has a normal demand curve. Consolidated has an elastic product. Consolidated did poor market demand research. Consolidated engages in price competition. Consolidated mustard is a prestige good.
Consolidated mustard is a prestige good.
Which of the following statements is true regarding consumers' reliance on the price-quality relationship? Consumers are more likely to rely on the price-quality relationship when they are making purchases via the Internet. Consumers are always willing to pay more for a product to have higher levels of product quality. Consumers often associate higher prices with lower levels of product quality. Consumers are more likely to rely on the price-quality relationship when they cannot judge the quality of the product themselves.
Consumers are more likely to rely on the price-quality relationship when they cannot judge the quality of the product themselves.
Which of the following products would most likely be classified as a prestige product based upon consumer demand and responses to price fluctuations? Sony PlayStation game system Bounty paper towels Budweiser beer Cristal champagne
Cristal champagne
Which of the following statements is not an advantage of nonprice competition? Marketers have a wide array of factors to differentiate the product from competitor brands. Customers are less likely to seek competitive brands. It enhances customer loyalty toward a product or service brand. It is very flexible and can be quickly changed.
It is very flexible and can be quickly changed.
Why do retailers generally want to avoid a price war? It results in extremely low prices in the long-term. It slashes profit margins for the retailers involved. It is illegal and catches the attention of regulators. It results in retailers having to use nonprice competition. It harms consumers in the form of higher prices.
It slashes profit margins for the retailers involved.
GoPro video camera company wants to maximize its profit on their popular Hero4 video camera. Which of the following would be the best action for GoPro to achieve its profit maximization goal? Price the Hero4 at the level where marginal revenue is the lowest. Price the Hero4 at the level where average cost is the lowest. Price the Hero4 at the level where average revenue equals average cost. Manufacture GoPro Hero4 cameras at the point where marginal cost equals marginal revenue.
Manufacture GoPro Hero4 cameras at the point where marginal cost equals marginal revenue.
_________ occurs when a marketer utilizes distinctive product features, service, product quality, promotion, packaging, or other factors to differentiate its products or services from their competitors. Monopolistic competition Differential competition Price competition Nonprice competition
Nonprice competition
Bill's Pills is a full-service pharmacy and drug store located in a small, southern city. Since many of Bill's Pills' customers are on Medicare, the business must wait several months before they are reimbursed by the state that leads to cash flow issues for the pharmacy. Which strategy would be most useful for Bill's Pills to raise cash quickly? Seek discounts from suppliers. Increase prices of over-the-counter products. Hire an attorney to demand payment from the state. Offer special discounts or sales to customers.
Offer special discounts or sales to customers.
Which regulations or laws limit the use of price differentials? Sherman Antitrust Act Federal Trade Commission Act Wheeler-Lea Act Robinson-Patman Act and Clayton Act
Robinson-Patman Act and Clayton Act
_______ buyers are ones who often purchase products that signify prominence and status. Quality-conscious Value-conscious Price-conscious Prestige-sensitive
Prestige-sensitive
Which of the following statements is true with regard to price? Pricing considerations always involve an exchange of money. Price is relatively unimportant to buyers. Perceived quality is the only factor that influences consumers' perceptions of the value associated with a product's price. Price is the value paid for a product in a marketing exchange.
Price is the value paid for a product in a marketing exchange.
Griffin Audio specializes in creating high-fidelity speakers for the music enthusiast and has received awards for the sound quality of the speaker systems. They are launching a line of over-the-ear headphones and ear buds and seek to position their new products as a higher quality and prestigious alternative to one of their top competitors, Beats by Dr Dre. Which of the following pricing strategies should Griffin Audio utilize? Offer coupons to purchase the headphones and ear buds at a substantial discount compared to the Beats. Price the headphones and ear buds at the same price as the Beats. Price the headphones and ear buds at a lower price than the Beats. Price the headphones and ear buds at a higher price than the Beats.
Price the headphones and ear buds at a higher price than the Beats.
The _____ has had a strong impact on pricing decisions since it prohibits conspiracies to control prices and has led to courts ruling that price-fixing among firms in an industry is illegal. Price Discrimination Act Clayton Act Robinson-Patman Act Sherman Antitrust Act
Sherman Antitrust Act
Which of the following actions should a firm follow when marginal costs are equal to marginal revenue? Increase advertising to enhance consumer demand. Produce fewer units to decrease total costs. Reduce prices to create higher demand for the product. Stop producing additional units in order to maximize profitability.
Stop producing additional units in order to maximize profitability.
Versace's men's cologne "Gucci Guilty" is most likely considered a prestige product. If the marketing managers at Versace wanted to test the elasticity of the demand to confirm its prestige product status, which of the following outcomes would they likely expect? The demand for the product would be lower at higher prices. The demand for the product would vary widely based on the price. The demand for the product would be unaffected by the price. The demand for the product would diminish at a certain higher price point.
The demand for the product would diminish at a certain higher price point.
Which of the following statements about price as an element of the marketing mix is true? Price has limited effects on a firm's sales and profitability. Development of the price and pricing-related objectives involves a long-term commitment and once set, is rarely changed. Developing the price for a product or service is a lengthy process and is very inflexible. The pricing element of the marketing mix is very flexible and marketers can quickly respond to changes in demand or competitors' actions.
The pricing element of the marketing mix is very flexible and marketers can quickly respond to changes in demand or competitors' actions.
Custom Hot Rods specializes in restoring or creating custom vehicles and motorcycles to customers who appreciate one-of-a-kind vehicles. Custom Hot Rods typically produces two units each month. If it's able to produce one more unit each month, it will incur lower average variable costs fewer variable costs increased fixed costs a marginal cost
a marginal cost
A(n) _____ discount is defined as a concession in price to achieve a desired goal. seasonal cash trade allowance
allowance
Skippy Peanut Butter offers grocery stores a discounted price on cases of peanut butter when the grocery store agrees to participate in advertising and sales support programs such as newspaper flyers or point-of-purchase displays. This discount is known as a(n) _____ discount. seasonal cash trade allowance
allowance
Stepan Chemical is a global supplier of chemicals to manufacturers worldwide. One of their customers, Dow Chemical was negotiating with Stepan for a surfactant material that's utilized in Dow's popular RoundUp herbicide product. The purchasing manager at Dow was interested in negotiating a lower price for Stepan's material and discovered that Stepan usually purchased polymer products from various suppliers. The Dow manager developed a plan to create a trade whereby Stepan would receive its POLYOX, polymer product, in exchange for its BIO-SOFT, surfactant product. Thus, Dow and Stepan used _____ to facilitate the exchange. negotiation credit money bartering
bartering
The oldest form of exchange is known as retailing purchasing credit bartering
bartering
Stephanie has recently opened a popcorn business selling a variety of popcorn flavors such as caramel, buffalo wing, and cheddar cheese. Stephanie is interested in determining the ______ for each flavor of popcorn that would help her figure out the level of popcorn she needs to sell in order to cover her costs of production. demand curve price elasticity equilibrium level break-even point
break-even point
The _____ is/are considered the lowest level at which a company would price its product or service. profits variable cost average revenue costs
costs
If an inverse relationship exists between a product's price and the quantity demanded for the item, the demand is described as _______. unknown inelastic unitary elastic
elastic
Consumers are more likely to rely on _____ prices when they have less experience making purchasing decisions regarding the product. experiential adaptive internal reference external reference
external reference
Sandy recently leased her first apartment and is purchasing accessories and décor. She enjoys shopping at HomeGoods and believes she is saving a lot of money since the store's sales tickets include information about "their price" and "our price." The information provided on the sales tag is called a(n) value-conscious price internal reference price adaptive price external reference price
external reference price
Carmen Sanchez is a sales representative for Sherwin Williams and her territory includes an approximately 120-mile radius of her "home" retail store. Her customers are painting contractors and facility managers of office complexes, apartment buildings, hospitals, and other businesses who might have commercial painting needs. Carmen uses her company vehicle and spends about five hours each day in her car visiting her customers and prospecting for new business. Since her territory is so large, Carmen puts about 200 miles on her car each day that consumes a lot of gasoline. She tries to be economical when choosing gas stations, but it doesn't really matter how much the gas costs --- she pays the price. In this case, demand for gasoline is _________. variable unitary elastic inelastic
inelastic
An ______ price is developed in the buyer's mind through experience with the product. experiential association external reference internal reference
internal reference
_______ refers to what the price means or what it communicates to customers. Response Reference Signaling Interpretation
interpretation
The break-even point is important for firms to know and understand because if a company is unable to sell products at this point or higher, it is experiencing an increase in total costs experiencing a decline in marginal costs creating a profit losing money
losing money
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ____ cost. average variable fixed average total variable marginal
marginal
Parker Bell has been using an iPhone 5s for several years and is eligible for an upgrade from Verizon on his next phone. Over the last four years, Parker's iPhone screen has been replaced three times—a common issue for many smartphone users. Parker had purchased the phone insurance but quickly found that although the insurance would replace his phone, he would have to pay $149 and would likely receive a refurbished unit rather than a brand new phone. Parker was watching TV one night and noticed an advertisement for the Droid Turbo 2 phone featuring "the world's first shatterproof screen." Parker decided he was going to replace his iPhone 5s with the Droid Turbo 2 and didn't even consider other models. He had a reason to care about screen maintenance and out-of-pocket expenses and is excited to get the new Droid Turbo 2. What type of practice is Motorola using in its marketing of the Droid Turbo 2? value-conscious pricing feature superiority price competition nonprice competition
nonprice competition
In order to calculate the break-even point, fixed costs are divided by price per unit marginal revenue average variable costs per-unit contribution to fixed costs
per-unit contribution to fixed costs
A technology attorney claims that while Amazon has done a lot of good for the industry, it is engaging in aggressive pricing strategies. According to him, Amazon purchases books for one price and then sells them for much cheaper. For instance, it allegedly purchases a book for $13 and sells it for $9. Because of its power and scale, Amazon can currently get away with this. The lawyer believes Amazon will drive prices down so low that rivals cannot compete, and it will gain up to 90 percent market share. Authors will then have to sell their books at knock-down prices because they have nowhere else to go. The technology attorney is accusing Amazon of _____________. predatory pricing price discrimination counterfeit pricing deceptive pricing price fixing
predatory pricing
Producers commonly provide intermediaries with discounts, or reductions, from list prices and they are classified into five categories. Which of the following is not a type of discount offered to business markets? allowance quantity trade quality
quality
Microsoft offers retailers such as GameStop, Target, and Walmart a discount on the unit price of its popular Xbox game system when they purchase 1,000 or more units at one time. This is known as a(n) _____ discount. allowance seasonal cash quantity
quantity
A firm implementing a value-conscious strategy should show a comparison to external reference prices promote the prestige of their product or brand and signify higher status affiliations set prices higher than the competition to attract customers recognize consumers who are concerned about both price and quality of a product
recognize consumers who are concerned about both price and quality of a product
It has been relatively rare for a firm to be charged with predatory pricing. True False
true
Sweet Things is a bakery specializing in cupcakes, cookies, and pies. The owners purchase ingredients such as sugar, flour, spices, baking soda, chocolate, and butter as raw materials to create their sweet treats. These ingredients or raw materials would most likely be classified as _____ costs. sunk marginal fixed variable
variable
