Chapter 14-marketing

The graph that shows how many units of a product or service consumers will want during a specific period at different prices is known as the ______ curve.

demand

If a company needs to raise the prices of some its products, it should choose to raise the prices of ______ products because relatively fewer customers will stop buying the product as a result.

inelastic

When a 10% decrease in price results in a less than 10% increase in quantity sold, the demand for the product or service is described as ______.

inelastic

When incomes drop, what happens to the demand for an elastic product?

it tends to decrease

Of the following, which best describes a monopoly?

one firm controls the market

Compared to other company objectives, a sales-oriented firm ______.

sales prices very low to generate new sales, even if profits suffer

Which strategy is used by firms that believe increasing volume of sales will help the firm more than increasing profits?

sales-oriented strategy

Compared to other company objectives, a sales-oriented firm ______

set prices very low to generate new sales, even if profits suffer

What term describes the ratio of change in a price and its effect on the quantity of the product demanded?

price elasticity of demand

A ________ _________ occurs when oligopolistic companies compete with each other by repeatedly lowering their prices.

price war

The overall sacrifice a consumer makes to acquire a product or service is known as _________.

pricing

By focusing on target profit pricing, maximizing profits, or target return pricing, a firm is implementing a ______ orientation.

profit

Horizontal axis

quantity demanded

Antitrust laws are designed to protect consumers from:

the high prices charged by monopolies for their products

Price is best defined as _____.

the overall sacrifice a consumer is willing to make to acquire a specific product or service

How is total cost calculated?

variable costs plus fixed costs

According to the cross-price elasticity of demand, when the price of DVD players drops, the demand for DVDs is likely to ______.

increase

Firms usually implement target _______ __________ to stimulate a certain level of sales at a certain profit per unit.

profit pricing

True or false: A firm with a primary objective of very high sales growth will have the same pricing strategy as a firm with a primary objective of being a quality leader.

False

price insensitive

Apple increases the price of the new iPhone by 25% and sales decrease less than 1%.

A demand curve shows that a company will sell 10,000 units if it prices its new product at $200 per unit, but it will sell 20,000 units if it reduces the price to $75. Where should the company set the price of the new product in order to maximize profits?

$200

Break-even analysis examines the relationships between which of the following?

- cost - price

Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following?

-As price decreases, demand increases -as price increases, demand decreases

Channel members include which of the following?

-retailers -wholesalers -manufacturers

Price sensitive

Pepsi drops the price of a six-pack by 50% and sales increase 78%

True or false: Customers are one of the five Cs of pricing.

True

A demand curve enables a firm to examine prices ______.

in terms of demand and the firm's objectives

Which of the following is another term for target return percentage?

markup

vertical axis

price

Sometimes firms selling a pioneering product will set a very low price in order to attract many customers before competitors enter the market. Which type of orientation does this demonstrate?

Sales

Firms that are less concerned with the level of profits and more interested in the rate at which profits are generated relative to their investments tend to use ______.

Target Return Pricing

When a firm is aiming for a particular amount of profit as its overriding concern, it usually implements ______.

Target profit pricing

Which of the following are strategies that can be used as part of the profit orientation?

-Maximizing profits -target profit pricing

Which of the following are types of strategies that could be implemented in a profit orientation strategy?

-Target Return Pricing -Maximizing Profits Strategy

A firm may set low prices to do which of the following?

-discourage new firms from entering the market -take market share away from competitors -encourage current firms to leave the market

If a restaurant reduces the price of a hamburger by 25% and sales increase by more than 50%, which of the following describe the demand for the hamburger?

-elastic -price sensitive

Which of the following do you need to know to calculate target return price?

-fixed costs -variable costs -expected unit sales

Which of the following accurately characterize demand curves?

-they relate demand to prices while assuming everything else remains unchanged -they show how much consumers will demand during a specific period at different prices

What are the five C's of pricing?

1. Company Objectives 2. Customers 3. Costs 4. Competition 5. Channel Members

Prestige products or services do not follow the ______ curve.

Downward-sloping demand

Which of the following types of theories is the maximizing profits strategy based on?

Economic

Which of the following is a firm implementing when it uses a mathematical model to identify the price at which the firm will make the most money possible?

Maximizing profits strategy

Competition, channel members, costs, customers, and company objectives are the five critical components of ______.

Pricing

How do managers use break-even analysis?

To find a production quantity where, for a given price, costs are equal to revenues

When firms compete by lowering prices, they are engaged in ______.

a price war

What term describes the point at which the number of units sold generates enough revenue to equal total costs?

break-even point

The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called _________-price elasticity.

cross

For most products, demand increases as the price decreases. Because of this general trend, demand curves usually have a(n) ______ slope.

downward

When a 10% decrease in price produces more than a 10% increase in quantity sold, the product or service is responsive to price changes and is considered to be ______.

elastic

Products that cost a lot of money but that people buy anyway because of the status and exclusivity that they project are called _____ products.

prestige

The equation for price elasticity of demand is the percentage change in quantity demanded divided by percentage change in ______.

price

What type of orientation is exemplified by target return pricing?

profit

What information is gained by adding variable and fixed costs together?

total cost

True or false: In general, customers are more sensitive to price increases than to price decreases.

true