MAR3023 SmartBooks Chapter 11

The name-your-own-price strategy is best compared to a(n) _______.

auction

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

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.)

-Tariffs -The gray market -Dumping

The central focus of determining what pricing tactic to use should be the _______.

customer

Your text indicates that there are two factors that influence price that are often overlooked. What are they? (Check all that apply.)

-Underpricing -Reference prices

What are the two most common and effective strategies for raising prices?

-escalator clauses -unbundling

For marketers, which of the following are advantages of a price bundling strategy? (Check all that apply.)

-Bundled packages can be sold for a higher price. -Bundled packaging can lead to reduced advertising costs. -Bundled packaging can lead to reduced selling costs.

According to your text, which of the following are considered variable costs for a firm? (Check all that apply.)

-Delivery costs -Sales commissions -Raw material

Which of the following statements regarding the "gray market" are true? (Check all that apply.)

-Gray market goods cut into a firm's revenue and profits. -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.

What considerations should marketers take into account when determining which pricing tactic to use? (Check all that apply.)

-How customers' intend to use the product -The customers' ability to pay -The value customers perceive the product to have

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 -Price fixing -Predatory pricing

Which of the following factors affect price sensitivity? (Check all that apply.)

-Price-quality perceptions -Size of the expenditure -Perceived risk

Which of the following price discrimination scenarios are legal under the Robinson-Patman Act? (Check all that apply.)

-Promising to match competitor's prices if the consumer produces proof of the lower price -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

According to your text, which of the following are considered fixed costs for a firm? (Check all that apply.)

-Salaries -Insurance -Rent

Lucy is the owner of a full-service pet grooming salon. For the month of May, she will pay $1,500 in rent, $3,200 in salaries, and $100 on advertising. A full-service pet grooming costs $30.00. Unit variable costs per grooming are $7.50. Approximately how many full-service pet groomings does Lucy need to perform to break-even for the month?

213 Reason: Fixed costs = 4,800 (rent, salaries, and advertising); Unit contribution margin = 22.50($30-7.50); Break-even point = 4,800/22.5= 213

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%

If the cost to produce a widget is $10 and the firm sells the widget for $15, the firm's profit margin will be ____ dollars.

5

Which of the following accurately describes the concept of dumping?

A company decides to sell its exports to another country at a lower price than it sells the same product in its domestic market.

The Wheeler-Lea Act of 1938 is also known as the _______ Act.

Advertising

_______ pricing tactics can lead to price confusion, where customers have difficulty discerning what they are actually paying because they have been misled by price promotions.

Deceptive

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

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

What is the biggest disadvantage to using markup pricing?

It is not effective at maximizing profits.

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.

What pricing tactic involves adding a certain amount to the cost of a product to set the final selling price?

Markup pricing

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 (name-your-own-price)

______ pricing is a strategy in which a firm prices a product a few cents below the next dollar amount.

Odd

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? Multiple choice question.

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

_______ ________ could be considered an attempt to create a monopoly and is, therefore, illegal under U.S. law.

Predatory pricing

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

_______ is common in B2B settings in which different customers might be charged different rates due to the quantities they buy or the differing terms of a negotiated contract.

Price discrimination

_______ _______ is when two or more companies collude to set a product's price.

Price fixing

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

_______ are price reductions given to customers purchasing goods or services out of season.

Seasonal discounts

What takes place in an unbundling strategy?

Separating out the individual goods that make up a product and pricing each one separately

Which of the following was passed to eliminate monopolies and guarantee competition?

Sherman Antitrust Act

What is the process of items shrinking in size or quantity while their price remains the same or increase?

Shrinkflation

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

When identifying reference prices, which of the following would provide marketers with the best information regarding the price sensitivity of customers?

The sales staff

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.

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

_______ involves separating out the individual goods, services, or ideas that make up a product and pricing each one individually.

Unbundling

______ is the practice of charging someone less than they are willing to pay.

Underpricing

______ costs are costs that can change depending on the number of units produced or sold.

Variable

Which of the following broadened the FTC's powers to include protecting consumers from false advertising?

Wheeler-Lea Act

A firm that takes branded products and sells them through legal, but unauthorized, distribution channels is participating in the ______ market.

gray

Once a firm has estimated fixed and variable costs, it can incorporate them into a(n) _____-_____ analysis to determine how much it would need to sell to make the product profitable.

break-even

The _______ point is the point at which the costs of producing a product equal the revenue made from selling the product.

break-even

When a firm is trying to determine what sales volume is needed to achieve a profit of zero, it is engaged in _______.

break-even analysis

Price _______ is a strategy in which two or more products are packaged together and sold at a single price.

bundling

The amount a product sells for above the total cost of the product itself is its _____ _____.

profit margin

According to your text, one of the most common mistakes made when pricing products is to _______.

charge someone less than they are willing to pay

Technology has helped to shift the balance of power from _____ to ______.

companies ; customers

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

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

In the price-setting process, after demand has been evaluated, the next step is to _______.

determine the costs

Price _____ is only illegal if it injures the competition.

discrimination

The removal of tariffs due to international agreements has caused countries to enact anti- ______ laws to protect their local industries.

dumping

The biggest advantage of markup pricing is that it is ________.

easy

In April, a company priced its product at $59.95 and sold 10,000 units. In May, it priced the same product at $52.95 and sold 15,000 units, indicating that demand for the product is _______.

elastic

When demand changes significantly due to a small change in price, demand is said to be _______.

elastic

In terms of demand, prices are generally more ______ in the early stages of the product life cycle and increasingly ______ in the later stages of the product life cycle

elastic ; inelastic

As a landlord, Jason wants to protect himself in the event that taxes on his apartment complex increase. To do so, he most likely will add a(n) _____ clause to his rental agreements.

escalator

Manufacturers of luxury products often use ______ (odd/even) pricing.

even

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

Calculating the total cost of a product begins with an understanding of the two major types of costs:

fixed and variable

If a company prices its products significantly lower in foreign countries than in the domestic market, they may be subject to _______ _______ buyers who will purchase the products internationally and then sell them in the United States for a much lower price than the normal market price.

gray market

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

An escalator clause in an agreement provides for price ______ depending on certain conditions.

increases

Tony sells hot dogs from a cart for $2.50 each. In the summer months, he typically sells 200 hot dogs a day. Tony thinks if he reduces the price to $2 he will increase sales significantly. However, when he reduced the price, he only sold about 15 more hot dogs per day. This represents demand that is ______

inelastic

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

In order to encourage a greater volume of purchases, a volume maximization strategy sets prices ________ to lower the level of involvement for the consumer.

low or lower

Marketers typically prefer targeting international markets with _______ (lower/higher) tariffs.

lower

In an industry in which a small number of firms compete, firms will typically _______.

match the price of competitors

Passed in 1890, the Sherman Antitrust Act sought to guarantee competition by eliminating ______.

monopolies

After determining the costs and analyzing the competitive price environment, the next step in the price-setting process is to choose a(n) _______.

price

While shopping for cable television services, Brett found that if he ordered the package that included basic cable, HBO, Showtime, Redzone, and the MLB Network he could get a better price than if he just ordered basic cable alone. This strategy of packaging products together and selling them at a single price is called

price bundling

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

For years Darius has always purchased the same brand of coffee for which he normally pays $10.99 a can. He wants to try a new type of coffee that he saw advertised, but this new brand sells for $16.99 a can. Darius doesn't want to try the new brand because he thinks that $10.99 is a more reasonable price for coffee. For Darius, $10.99 represents his _______ price.

reference

The Robinson-Patman Act was passed in 1936 and _______.

requires sellers to charge the same price for a product

Yield management is a strategy for maximizing a firm's _______.

revenue

After Christmas, when the holidays are over, stores will often reduce the price of remaining Christmas trees and decorations because demand for these products is at its lowest. This is an example of a(n) ______ ______.

seasonal discount

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

Sosoft Company has increased the price of its hand soap, but sells it in a smaller bottle. This is an example of

shrinkflation

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

For countries involved in a trade agreement, such as the United States, Canada, and Mexico, transactions between these countries are easier if _______.

there is an absence of tariffs between the countries

Dynamic pricing helps marketers emphasize _____ ______, which is a strategy for maximizing revenue even when a firm has only a fixed amount of goods or services.

yield management

Whereas odd pricing often ends in "9," even pricing often ends in _______.

zero