Chapter 11 Questions
Your text indicates that there are two factors that influence price that are often overlooked. What are they? (Check all that apply.)
-Reference prices -Underpricing
Which of the following are common pricing objectives a firm would seek to utilize? (Check all that apply.)
-Survival pricing -Profit maximization -Volume maximization
What factors have made global pricing more transparent and, in many cases, more competitive in recent times? (Check all that apply.)
-Technological advancements -Growing Internet access
What considerations should marketers take into account when determining which pricing tactic to use? (Check all that apply.)
-The customers' ability to pay -How customers' intend to use the product -The value customers perceive the product to have
In addition to technological and economic factors, which of the following are unique challenges related to global pricing for firms seeking to increase their revenue and profits? (Check all that apply.)
-The gray market -Tariffs -Dumping
Similar to a firm's marketing objectives, its pricing objectives should be _______. (check all that apply.)
-specific -measurable
Calculating the total cost of a product begins with an understanding of the two major types of costs: ____________ and ___________
fixed ; variable
A new 7-11 opened up across the street from Tanner's, a locally owned convenience store. 7-11 has drastically reduced the prices on many of the same items that Tanner's sells, forcing the store to go out of business. After Tanner's closed, the 7-11 began raising its prices to more normal levels. This is an example of _______.
predatory pricing
could be considered an attempt to create a monopoly and is, therefore, illegal under U.S. law.
predatory pricing
After determining the costs and analyzing the competitive price environment, the next step in the price-setting process is to choose a(n)
price
Regardless of the type of product, the __________ of a product typically factors into a consumer's decision on what to purchase and is part of almost every consumer decision a person makes.
price / cost
As a student, you are sometimes charged a lower price to gain entrance into a sporting event or a movie. By doing so, you are benefiting from the pricing practice known as
price discrimination
Jess owns a deli restaurant in a downtown area that is close to a college campus. Even though she gets a lot of her lunchtime business from the downtown merchants, she has decided to offer students a discount for the same menu items she sells to everyone else. This is an example of _______.
price discrimination
Used as a measure of price sensitivity, _______ gives the percentage change in quantity demanded in response to a percentage change in price.
price elasticity of demand
The two major electronic dealers in town conspired together to set the price of new high definition televisions. In doing so, they are engaging in _______.
price fixing
when two or more companies collude to set a product's price.
price fixing
If you were willing to pay $10 for a product, but the firm only charges you $8, the firm will most likely see a reduction in _______.
profit
The Robinson-Patman Act was passed in 1936 and _______.
requires sellers to charge the same price for a product
According to traditional economic theory, setting price is as simple as finding the point at which marginal _________ equals marginal ________
revenues ; cost
What is the final stage of the price-setting process?
Monitor and evaluate the effectiveness of the price
Websites like eBay and priceline.com are types of _______.
NYOP auctions
________ pricing is a strategy in which a firm prices a product a few cents below the next dollar amount.
Odd
A firm that takes branded products and sells them through legal, but unauthorized, distribution channels is participating in the ________ market.
gray
For marketers, which of the following are advantages of a price bundling strategy? (Check all that apply.)
-Bundled packaging can lead to reduced advertising costs. -Bundled packages can be sold for a higher price. -Bundled packaging can lead to reduced selling costs.
Which of the following price discrimination scenarios are legal under the Robinson-Patman Act? (Check all that apply.)
-Charging different prices as a result of a going-out-of-business sale -Charging different prices if it is part of a quantity discount program -Promising to match competitor's prices if the consumer produces proof of the lower price
Which of the following statements regarding the "gray market" are true? (Check all that apply.)
-Gray market goods allow consumers to obtain legally produced items for less than they could normally. -Gray market buying and selling often occurs when the price of an item is significantly higher in one country than another. -Gray market goods cut into a firm's revenue and profits.
Which of the following are ethical issues marketers may face as they seek to set prices for their products? (Check all that apply.)
-Price discrimination -Predatory pricing -Price fixing
According to recent research, approximately what percentage of consumers search for and purchase a low-priced product using an in-store shopping app or online search engine?
40%
There are _______ steps in the price-setting process
6
In which of the following strategies would companies most likely use data management systems to provide marketers with more data and enhanced ways of estimating price elasticity?
Dynamic pricing
What pricing tactic involves adding a certain amount to the cost of a product to set the final selling price?
Markup pricing
Which pricing tactic has grown explosively due to improving and readily available technological tools that facilitate the ease with which prices can be updated to reflect changes in supply, demand, or market conditions?
Dynamic pricing
True or false: The Robinson-Patman Act established the Federal Trade Commission in order to enforce laws aimed at prohibiting unfair methods of competition.
False
True or false: The World Trade Organization has classified the practice of dumping as illegal.
False
According to your text, what has been the outcome for marketers pricing products now that consumers have access to mobile applications while shopping?
Marketers must aggressively review the prices of online stores when setting the initial price of an item.
When it comes to setting prices, which of the following stakeholders would be most interested in setting prices high across all product lines in order to increase profits for the firm?
Marketing executives
Callie notices that most items sold in the "As Seen on TV" store are priced a few cents below the next whole dollar amount, i.e., $14.95 instead of $15.00, or $19.95 instead of $20.00. What type of pricing tactic does this represent?
Odd pricing
pricing is the practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels.
Predatory
Because it directly impacts the financial viability of both organizations and individuals, activities related to which marketing mix element are watched and regulated most closely?
Price
Which of the following accurately describes the concept of prestige pricing?
Pricing a product higher than competitors to signal that it is higher in quality
How should pricing strategies be addressed during the product life cycle?
Pricing strategies evolve and should be reevaluated throughout the product life cycle.
_______ are price reductions given to customers purchasing goods or services out of season.
Seasonal discounts
The Federal Trade Commission Act established the agency that was given the authority to enforce laws aimed at prohibiting unfair methods of competition. What is the name of this agency?
The Federal Trade Commission
Which of the following exemplifies the fact that technology has shifted the balance of power from companies to consumers?
The Internet has made it possible for customers to comparison shop for products from companies all over the world.
What is being measured by the price elasticity of demand?
The percentage change in quantity demanded in response to a percentage change in price
What is the most likely reason marketers utilize a price bundling strategy?
They can charge a higher price for the bundle than they could for the items individually.
In the past, how have companies set prices for products sold internationally compared to the same products sold domestically?
They have set the prices higher for products sold internationally.
The name-your-own-price strategy is best compared to a(n) _______.
auction
Price ________ is a strategy in which two or more products are packaged together and sold at a single price
bundling
Every year Walter travels to China where he legally buys large quantities of baseball caps related to MLB sports teams. He imports the caps back into the United States where he sells them for less than the normal market price at his storefront in New York City. The baseball caps are considered to be _______.
gray market goods
Prestige pricing involves pricing a product __________ than competitors.
higher
A pricing tactic that involves selling a product at a price that causes the firm a financial loss is called _______.
loss-leader pricing
Firms using _______ hope that customers will buy other items in the store that are more profitable.
loss-leader pricing
Marketers typically prefer targeting international markets with _________ (lower/higher) tariffs.
lower
Pricing objectives should be an extension of a firm's _______ objectives
marketing
In an industry in which a small number of firms compete, firms will typically _______.
match the price of competitors
What is the goal for marketers in determining the cost of a product?
To make sure they will not lose money by pricing the product too low
As a pricing tactic, a marketer decides to add 10% to the price of the product to arrive at the final selling price. This is an example of _______ pricing
cost-plus
The central focus of determining what pricing tactic to use should be the _______.
customer
The most common examples of _______ pricing involve firms that falsely advertise wholesale pricing or promise a significant price reduction on an artificially high retail price.
deceptive
A retailer inflated the price of its dining room sets so that when it put them on sale, it appeared to customers that they were getting a better deal than they really were. In doing so, the retailer was engaged in _______.
deceptive pricing
The removal of tariffs due to international agreements has caused countries to enact anti- __________ laws to protect their local industries.
dumping
A Broadway theater production that tries to fill empty seats by lowering the price as the day of the production draws closer is using _______.
dynamic pricing
Firms that want to promote an image of _______ to customers would most likely pursue a strategy of prestige pricing.
exclusivity
In a market structure in which there are a large number of buyers and sellers, the pricing impact of any single firm will be _______.
fairly small
A hotel resort in Florida prices its rooms differently for different times of the year. In particular, it promotes the months of August and September as its "value" months where the room prices are at their lowest rates. It does this, in part, because the weather in Florida is not as favorable as it is at other times of the year. The pricing tactic the hotel is using to promote hotel stays during the "value" months is most likely ______.
seasonal discounts
The effect that technology has had on pricing could be called _______.
significant
When determining a pricing strategy for a firm that sells its goods internationally, the firm must take into account the potential taxes on imports and exports that foreign countries will place on its goods. These potential taxes are known as _______.
tariffs
As it relates to evaluating demand, marginal revenue can be defined as _______.
the change in total revenue that results from selling one additional unit of product
