Chapter 19 & 20 quiz

A retailer of Degree antiperspirant prices it at $4.00; it costs the retailer $3.50. What is the approximate markup as a percentage of selling price?

12.5

Which of the following bases for pricing is most commonly used by retailers?

Markup pricing

A major reason why retailers use markup pricing is that it is convenient.

True

To gain market share, when Kia first entered the U.S. car market it did so with a comparatively low pricing strategy. One of the negative side effects of making this pricing decision is

a negative impact on consumers' perceptions of quality.

The types of prices that appear most often in ads are ___, while the types of prices that occur least often in ads are ____ prices.

bargain; premium

Consumers may view relatively expensive products to have great value if the products

have desirable features or characteristics.

If Florida Gas and Electric increased its rates by 10% and experienced a 2% reduction in the demand for power, the demand would be

inelastic

Paperclips is an office supplies company that has just adjusted its price levels so that it can increase its sales volume to match its expenses. Paperclips is most likely employing a____ objective.

survival

At the breakeven point,

the money a company brings in from selling products equals the amount spent producing the products.

When Buick buys batteries from Delco (both of which are divisions of General Motors), ____ pricing occurs.

transfer

Hopper Industries determines that for its air compressors the following results are achieved at a price of $250: total costs = $250,000; variable costs per unit = $100; fixed costs = $175,000. Given these figures, Hopper would break even at ____ units.

1,167

The owner of Big Jim's Motorcycles is opening a new retail location. Which of the following is most likely to be a fixed cost for Big Jim's Motorcycles?

Building rent

What assumption does breakeven analysis make that limits its overall usefulness?

It relies on demand for a product being inelastic.

Which of the following is most likely to have an inelastic demand curve?

Nonelective surgery

When Frito-Lay introduced its Stax brand of potato chips. These chips were meant to compete directly against Pringles. The intent was to gain market share quickly. During the first few months they were on the market, Stax retailed for 69 cents. What type of pricing strategy is Frito-Lay likely using?

Penetration pricing

In its advertisement, Timberland gives a close-up of one of its boots to show its fine craftsmanship. At the bottom of the advertisement is "Est. 1973," followed by the phrase "Best Then. Better Now." What type of pricing objective is Timberland using?

Product quality

Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry?

Status quo

Cost-plus pricing is popular in periods of rapid inflation.

True

Price is the value that is exchanged for products in a marketing transaction.

True

Pricing objectives should be considered overall goals to aid the organization in its long-range plans.

True

Some stores employ comparison shoppers to learn what prices their competitors are charging.

True

Total costs are influenced by quantities sold.

True

A market share objective

can be used effectively whether total industry sales are rising or falling.

Epson sells some of its color printers for about $100, but the refill cartridges cost over $30 each. Epson's pricing strategy would be best labeled as

captive pricing.

The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ____ pricing.

differential

Lyft uses a pricing strategy based on real-time market conditions. It charges less in periods of low demand and more during periods of high demand. Sometimes these prices double or triple during periods of high demand. Lyft argues that these higher prices motivate more drivers to pick up passengers, thus increasing the supply of drivers needed to handle the additional demand. This demand-based pricing strategy is an example of

dynamic pricing.

A product is a price leader when

it is sold at less than cost in the hope that sales of other products will increase.

Price is considered to be the variable in the marketing mix that is

most flexible.

If Braun introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as

price skimming.

Sonya is a product manager for The Container Store, a retailer of storage containers, closet systems, and more. Sales have been declining in the past nine months and her management team is pressuring her to compete based on price discounts. However, Sonya is aware of the dangers associated with engaging in price competition. She knows that competitors can also change prices quickly and aggressively, which can result in a(n) ____ that will be harmful to both companies.

price war

If Umbro faces a standard demand curve that exists for most products, as it raises the price of its soccer balls, the

quantity demanded goes down.

Demand is best determined by a top management committee.

False

Department stores such as Kohl's and Macy's are interested in learning how much their competitors are charging for similar merchandise. Which of the following practices would these retailers most likely utilize to identify competitors' prices?

Employing comparative shoppers who systematically collect data on prices at competing stores

Gil orders 16 dozen fishing lures from Good Day Fishing for $375. When he gets the invoice, he is furious that $25 in freight charges has been tacked onto his bill because he thought the price included freight costs. Gil should have been certain that the order terms were

F.O.B. destination.

Marketers have more difficulty adjusting their prices than they do any other marketing mix variable.

False

Nonprice competition does not permit unique product features, higher product quality, and customer service.

False

Which of the following characteristics is unique to pricing more so than other variables of the marketing mix? ​

Flexibility

The Hawkins Candy Company is a small business located in the northeastern United States. The owner of Hawkins Candy is calculating the projected costs for the coming year. There is rent for the building; salaries for the retail employees; raw materials of sugar, chocolate, and other ingredients; wrappers for packaging of individual pieces of candy; boxes; and radio advertising. Hawkins' ______ are most likely to be the raw materials of sugar, chocolate, and other ingredients, as well as the wrappers.

variable costs

​To avoid the appearance of price fixing, marketers must develop independent pricing policies and set prices in ways that do not even hint at collusion.

True

If a local Texaco gasoline station looks at nearby Valero stations' prices as the primary source of determining its own prices, Texaco is using

competition-based pricing, which considers costs to be less important than competitor's prices.