Chapter 10 Quiz
What is the first thing marketers must do when using value-based pricing? A. Determine product costs. B. Convince buyers that the product's value at a given price justifies the purchase. C. Design a quality product. D. Assess customer needs and value perceptions. E. Set the target price to match customer perceived value.
Assess customer needs and value perceptions.
Which of the following statements is true regarding costs? A. Variable costs vary directly with the level of sales. B. Average cost tends to decrease with accumulated production experience. C. Totals costs are the sum of long-run average costs and short-run average costs. D. Costs do not vary with different levels of production. E. Experience curve pricing is a low risk strategy.
Average cost tends to decrease with accumulated production experience.
Which of the following correctly identifies the three major pricing strategies used by marketers? A. Customer value-based pricing, cost-based pricing, and revenue-based pricing B. Customer value-based pricing, cost-based pricing, and profit-based pricing C. Customer value-based pricing, revenue-based pricing, and profit-based pricing D. Customer value-based pricing, cost-based pricing, and competition-based pricing E. Customer value-based pricing, revenue-based pricing, and competition-based pricing
Customer value-based pricing, cost-based pricing, and competition-based pricing
Which factor sets the ceiling on setting a product's price? A. Revenue B. Competitors C. Company costs D. Customer's value perceptions E. Demand
Customer's value perceptions
Which of the following statements about price is correct? A. Prices have no impact on a firm's bottom line. B. Customers have put increasing pricing pressures on many companies. C. Price is not an important competitive asset. D. Pricing is not a problem for marketing executives. E. Marketers do not a have lot of flexibility in setting and changing price.
Customers have put increasing pricing pressures on many companies.
Which of the following is true regarding the price-demand relationship? A. If demand is inelastic, a small change in price will result in a large change in demand. B. Demand and price are directly related—the higher the price, the greater the demand. C. If demand is elastic, sellers will consider lowering their price. D. Price elasticity measures how responsive price will be to a change in demand. E. A demand curve shows the number of units a company will produce in a given time period at different prices that might be charged.
If demand is elastic, sellers will consider lowering their price.
Which of the following statements regarding customer value-based pricing is correct? A. Customer value-based strategy begins with determining product costs. B. Using this strategy, marketers first design the product and marketing program, then set the price. C. In using this strategy, companies often find it hard to measure the value customers attach to their product. D. This strategy is seldom used because buyers rarely consider perceived value when evaluating a product's price. E. Using this strategy, marketers must convince buyers that the product's value at that price justifies its purchase.
In using this strategy, companies often find it hard to measure the value customers attach to their product.
Which type of market consists of many buyers and sellers trading over a range of prices rather than a single market price? A. Pure monopoly B. Uniform commodities C. Monopolistic competition D. Oligopolistic competition E. Pure competition
Monopolistic competition
Which factor sets the floor on setting a product's price? A. Product costs B. Competitors C. Revenue D. Demand E. Customer's value perceptions
Product costs
In which type of market does no buyer or seller have much impact on setting the going market price? A. Oligopolistic competition B. Pure competition C. Pure monopoly D. B2B market E. Monopolistic competition
Pure competition
Beyond the nature of the market, demand, and the economy, what other factors in a firm's external environment must a company consider when setting prices? A. The company's overall marketing strategy and selecting target markets B. Resellers, the government, and social concerns C. The government, resellers, and profit objectives D. Resellers, the government, and the marketing mix E. The company's overall marketing strategy and marketing mix
Resellers, the government, and social concerns
What is target costing? A. Setting a price and then setting costs that will ensure that the price is met B. Designing a product, then determining its cost and price C. Basing price on customer perceptions of cost D. Pricing products without any consideration to costs E. Setting acceptable costs and then setting the price
Setting a price and then setting costs that will ensure that the price is met
How is price determined using cost-plus pricing? A. The price is set based on competitor's prices. B. The price is set by determining the customer's value perceptions. C. The price is set by adding a standard mark-up to the cost of the product. D. The price is set so that total revenue covers total costs. E. The price is set based on demand.
The price is set by adding a standard mark-up to the cost of the product.
Which of the following statements is correct regarding different types of markets? A. In a pure monopoly, the market consists of many buyers and sellers trading over a range of prices. B. Under oligopolistic competition, the market consists of many buyers and sellers trading in a uniform commodity and sellers do not spend much time on marketing strategy. C. Under oligopolistic competition each seller is alert and responsive to competitors' pricing strategies and marketing moves. D. Under monopolistic competition the market is dominated by one seller. E. Under pure competition sellers spend considerable time on marketing strategy and pricing decisions.
Under oligopolistic competition each seller is alert and responsive to competitors' pricing strategies and marketing moves.
New, premium movie theaters offer features such as online reserved seating, high-backed leather executive chairs with armrests and footrests, the latest in digital sound and super-wide screens, and other amenities for which they charge a higher price. This is an example of which type of pricing? A. High-low pricing B. Break-even pricing C. Cost-plus pricing D. Value-added pricing
Value-added pricing
On a break-even chart, the break-even volume is located __________. A. at the intersection of total revenue and variable costs B. at the intersection of total revenue and total costs C. at the intersection of total revenue and fixed costs D. at the intersection of target profit and total costs E. at the intersection of total revenue and target profit
at the intersection of total revenue and total costs
Two external factors which must be considered in pricing decisions are __________. A. the marketing mix and the economy B. company objectives and the marketing mix C. the marketing mix and the nature of the market D. demand and the nature of the market E. the marketing mix and demand
demand and the nature of the market
A(n) __________ shows the number of units the market will buy in a given time period at different prices. A. supply curve B. perceptual map C. value curve D. production schedule E. demand curve
demand curve
The strategy of __________ means that the firm attempts to offer the right combination of quality and good service at a fair price. A. everyday low pricing B. customer-based pricing C. value-added pricing D. cost-based pricing E. good-value pricing
good-value pricing
Retailers such as Macy's and JC Penney charge higher prices on an everyday basis, but run frequent promotions to lower prices temporarily on selected items. This is an example of __________. A. high-low pricing B. value-added pricing C. EDLP pricing D. break-even pricing E. cost-plus pricing
high-low pricing
The amount of money charged for a product is its __________. A. revenue B. price C. breakeven point D. cost E. profit
price
Price is the only part of the marketing mix that __________. A. incurs costs B. is defined by the consumer C. attracts buyers D. does not play a role in creating customer value E. produces revenue
produces revenue
Internal factors that affect pricing include __________. A. the company's overall marketing strategy, objectives, and the nature of the market B. the company's overall marketing strategy, objectives, and demand C. the company's overall marketing strategy, the nature of the market, and demand. D. the company's overall marketing strategy, objectives, and marketing mix E. the nature of the market, demand, and the economy.
the company's overall marketing strategy, objectives, and marketing mix
Luxury automobile manufacturers typically add quality, services, and other features to differentiate their offers and thus support their higher price. This is an example of __________. A. cost-based pricing B. value-added pricing C. good-value pricing D. everyday low pricing E. customer-based pricing
value-added pricing
Which of the following is a cost-based pricing approach? A. Value-added pricing B. High-low pricing C. EDLP pricing D. Break-even pricing E. Competition-based pricing
Break-even pricing