Marketing Exam 4 Chapter 9

You should always start with ______ _____?

Customer value

Costs that do not vary (also know as overhead costs)

Fixed costs

the sum of the fixed and variable costs for any given level of production.

Total costs

Costs that vary with production

Variable costs

Paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way

allowances

When dealing with vlaue based pricing, there are 4 steps. What is the first step?

asses customer needs and value preceptions

Seller selects a city as a "base" point

basing point pricing

Price is considered ______ the marketing program is set.

before

What does the right price impact? _________________ _______________

bottom line

If a company wishes to sell the exact number of units to cover both its variable and fixed​ costs, what type of pricing strategy is it​ using?

breakeven pricing

Setting price to break even on the costs of making and marketing a product, or setting price to make a target return (target return costing)

breakeven pricing

Which of the following is a​ cost-oriented pricing​ approach?

breakeven pricing

Is this the broad narrow def. of price: the sum of all the values that customers give up in order to gain the benefits of having/using the product/service?

broad

Bath​ & Body Works offers​ "three-fer" deals on its soaps and lotions​ (such as three antibacterial soaps for​ $10). This is an example of​ _______ pricing.

bundel pricing

refers to setting a price for by-products in order to make the main product's price more competitive.

by product pricing

The simplest pricing method

cost plus pricing

If it ________ ____ _________ than your competition, you need to _______ __ __________ ________ or make ______ ___ ___ ________.

costs you more, charge a higher price, less of a profit

is based on a buyer's perceptions of value rather than on the seller's cost.

customer based value pricing

different customers pay different prices for the same product or service (kids/seniors vs. others at movies)

customer segmented pricing

what customer's get for the prices they pay.

customer value

As a​ marketer, you decide to focus not on the cost of producing the​ product, but rather on the​ customer's perception of the value of the product. Which type of pricing are you engaged​ in?

customer value based pricing

Based on buyers' perceptions of value rather than on the seller's cost

customer value based pricing

setting a price based on a buyer's perceptions of value rather than on the seller's cost.

customer value based pricing

Competitive _________________?

disavantage

Offering just the right combination of quality and good service at a fair price is known as which type of​ strategy?

good value pricing

combination of quality and good service at a fair prices.

good value pricing

is offering just the right combination of quality and good service at a fair price.

good value pricing

What are the two types of value based pricing?

good value pricing and value added pricing

Several conditions must be met for this low-price strategy to work. First, the market must be highly price sensitive so that a low price produces more market growth. Second, production and distribution costs must decrease as sales volume increases. Finally, the low price must help keep out the competition, and the penetration pricer must maintain its low-price position. Otherwise, the price advantage may be only temporary.

market penetration pricing

is setting a low price for a new product in order to attract a large number of buyers and a large market share.

market penetration pricing

____________ may be based on price.

positioning

Selling below cost with the intention of punishing a competitor or gaining higher​ long-run profits by putting competitors out of business is an illegal practice called​ _______.

predatory pricing

What is the only element in the marketing mix that produces revenue?

price

is the sum of all the values that customers give up to gain the benefits of having or using a product or service? (broad definition)

price

one of the most important elements that determine a firm's market share and profitability

price

Discounts and special-event pricing, Limited-time offers and cash rebates, Low-interest financing and longer warranties, and Free maintenance are forms of ______ _____?

promotional pricing

Temporarily pricing products below the list price to increase short-run sales (build buyer excitement!)

promotional pricing

refers to temporary price reductions to spur on short-run sales.

promotional pricing

one seller

prue monopoly

The_______ impacts the bottom line.

right price

When dealing with cost based pricing, there are 4 steps. What is the third step?

set price based on cost

When dealing with value based pricing, there are 4 steps. What is the second step?

set target price to match customer precieved value

In ______ companies, prices are often set by top management rather than by the marketing or sales departments.

small

Determining cost that can be incurred is what step of value based priing?

third

Setting the price based on cost is the ________ step in cost-based pricing.

third

a firm varies its price by the season, the month, the day, and even the hour. (matinee vs. evening at the movies)

time based pricing

is/are the sum of the fixed and variable costs for any given level of production.

total costs

In class, _______________________________was the company we discussed in an article that gave us an example of customer-driven pricing.

trader joes

Here, the company charges the same price plus freight to all customers, regardless of their location. The freight charge is set at the average freight cost. (opposite of FOB)

uniform delivered pricing

__________ is attaching features and services to differentiate a company's offers and charging higher prices.

value added pricing

is attaching features and services to differentiate a company's offers and charging higher prices.

value added pricing

refers to attaching value-added features and services to differentiate a company's offers and charging higher prices.

value added pricing

​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, super-wide​ screens, and other amenities for which they charge a higher price. This is an example of which type of​ pricing?

value added pricing

is/are costs that vary directly with the level of production.

variable costs

What are the 3 types of costs?

variable, fixed, and total costs

One major objective associated with a​ market-penetration pricing strategy is to​ ________.

win a large market shares

If customers perceive that a product's price is greater than its value, they ______ buy it.

won't

Between FOB and Uniform-delivered pricing

zone pricing

Gillette charges a fairly low price for its razors​ (relative to​ costs) and a high price for razor blades. It is using a strategy of​ ___________ pricing.

captive product

refers to setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.

captive product pricing

setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console.

captive product pricing

What do you need to do If it costs you more than your competition?

charge a higher profit or make less of a profit

After researching products similar to yours in the​ industry, you decide that your product has superior value. As​ such, you decide to price your product above the other products in the same industry. Which type of pricing strategy are you most likely​ using?

competition based pricing

Based on competitors' strategies, prices, costs, and market offerings

competition based pricing

product costs, competition and other external factors, and consumers perception of value are three major pricing strategies of what chart?

considerations in setting price

When dealing with cost based pricing, there are 4 steps. What is the fourth step?

convince buyers of products value

Pricing decisions must __________ with packaging, promotion, and distribution decisions.

coordinate

Pricing decisions must _______________ with packaging, promotion, and distribution decisions.

coordinate

Adding a standard markup to the cost of the product (markup pricing)

cost plus pricing

What is the simplest type of cost-based pricing?

cost plus pricing

What are the 2 types of costs based pricing?

cost plus pricing and breakeven pricing

What do all elements in the marketing mix, except for price, represent?

costs

all other elements in the marketing mix represent ______?

costs

Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for the company's effort and risk.

costs based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.

costs based pricing

You paid 75 cents for a can of soda this morning.​ However, the​ seller's cost is only 50 cents. Which type of selling strategy is the soda company most likely​ using?

costs plus pricing

company is trying to grab a larger market share, Company is doing poorly and trying to boost its sales, and Company wants the whole industry to _____ ______ to increase total demand are reactions from the competitors perspective

cut prices

In this figure normal case, price and demand are inversely related.

demand curve

shows the number of units the market will buy in a given time period, at different prices that might be changed.

demand curve

When dealing with cost based pricing, there are 4 steps. What is the first step?

design a good product

When dealing with value based pricing, there are 4 steps. What is the fourth step?

design product to deliver desired value at target price

When dealing with value based pricing, there are 4 steps. What is the third step?

determine costs that can be incurred

When dealing with cost based pricing, there are 4 steps. What is the second step?

determine product costs

Reducing prices to reward customer responses such as paying early or promoting the product

discount pricing

Adjusting prices continually to meet the characteristics and needs of individual customers and situations

dynamic pricing

Prevalent online where Internet introduces fluid pricing

dynamic pricing

adjusts prices continually to meet the characteristics and needs of individual customers and situations.

dynamic pricing

Demand changes greatly with a small change in price.

elastic demand

Nature of the market and demand, Economy, and Parties in the external environment are ________ factors.

external

Assess customer needs and value perception is what step of value-based pricing?

first

Convincing buyers of a product's value is the _____ step in cost-based pricing.

fourth

Designing products to deliver the desired value at a target price is what step of value based pricing

fourth

goods are placed free on board a carrier, hence FOB. At that point the title and responsibility pass to the customer, who pays the freight from the factory to the destination.

free on board origin pricing

Seller pays it all to gain business

freight absorption pricing

Demand hardly changes with a small change in price.

inelastic demand

Wherever​ possible, the company should consider ways to meet higher costs or demand without raising prices is true regarding?

initiating price increases

Overall marketing strategy, objectives and mix and Organizational considerations are _______ factors.

internal

What are the two factors that could have some affect on the pricing decisions?

internal and external factos

Normal case, price, and demand are _________ related.

inversely

In _________ companies, pricing is typically handled by divisional or product managers. In industries in which pricing is a key factor, companies often have pricing departments to set the best prices or help others set them.

large

Dynamic pricing is _______ as long as companies do not discriminate based on age, gender, location, or other similar characteristics.

legal

Many state colleges and universities charge one price for​ in-state students and a higher price for​ out-of-state students. Which form of segmented pricing are these schools​ using?

location based pricing

a company charges different prices for different locations, even though the cost of offering each location is the same. (in-state vs. out-of-state tuition)

location based pricing

The price the company charges will fall somewhere between one that is too _____ to produce a profit and one that is too _____ to produce demand.

low, high

must decide who within the organization should set prices

management

A company has set a low price on a new product it introduced. It wants to maximize its market share and attract a large number of buyers quickly. Which new product pricing strategy should the company​ use?

market penetration pricing

Setting a low price to attract a large number of buyers and a large market share

market penetration pricing

setting a low price for a new product in order to attract a large number of buyers and a large market share.

market penetration pricing

When Apple Computer Company introduced its​ iPhone, its priced the new product at​ $599, considerably higher than either their iPod or competing cellular phones. Apple Computer was pursuing a​ ___________________ new product pricing​ strategy.

market skimming

pricing is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

market skimming

Setting a high price to skim maximum revenues layer by layer from the segments willing to pay the high price. Company makes fewer but more profitable sales (price skimming)

market skimming pricing

This strategy works only under certain conditions. First, the product's quality and image must support its higher price, and enough buyers must want the product at that price. Second, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Finally, competitors should not be able to enter the market easily and undercut the high price.

market skimming pricing

setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

market skimming pricing

Many sellers, many buyers, range of prices (can differentiate)

monopolistic competition

Under ___________ ______________, the market consists of many buyers and sellers trading over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers. Sellers try to develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising, and personal selling to set their offers apart.

monopolistic competition

Is this the broad narrow def. of price: amount of money charged for a product or service?

narrow

can be created to differentiate the marketing offer (de-emphasize price!)

non-price decisions

Few large sellers (AT&T, Verizon, T-Mobil, Sprint own 90%)

oligopolistic competition

Under ____________ _____________, the market consists of only a few large sellers. Because there are few sellers, each seller is alert and responsive to competitors' pricing strategies and marketing moves.

oligopolistic competition

Each seller is alert and responsive to​ competitors' pricing strategies and marketing moves is true statement about?

oligopolistic​ competition

A car buyer can choose a base model at one​ price, or one with a premium sound and navigation system at a higher price. This is an example of​ _______ pricing.

optional product

refers to the pricing of optional or accessory products along with a main product.

optional product pricing

the amount of money charged for a product or a service. (narrow definittion)

price

the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.

price

the only element in the marketing mix that produces revenue

price

no demands above this price

price celiling

Product's quality has been reduced and Company's image has tarnished are _____ _______ reactions from the buyers prespective

price cuts

Reasons for ________ _______: Excess capacity, Falling demand due to strong price competition or a, weakened economy, and Attempt to dominate the market

price cuts

If demand is​ elastic, sellers will consider lowering their price is true regarding?

price demand relationship

is a measure of the sensitivity of demand to changes in price.

price elasticity

refers to the measure of the sensitivity of demand to changes in price.

price elasticity

Over the​ years, U.S. air carriers have been accused numerous times of collusion when setting prices. This illegal practice is called​ _______.

price fixing

no profits below this price

price floor

Product is more exclusive or better made and Company is being greedy are _____ _______ reactions from the buyers prespective

price increases

Reasons for ________ _________: Cost inflation and Over-demand

price increases

Boom or recession, Inflation, and Interest rates are factors impacting what? (great recession of 2008-2009)

price strageties

Cost-based Pricing is based on the cost of ______________, _____________________, and _______________ the _______________ plus a fair rate of return for effort and risk.

producing, distributing, and selling the product

refers to combining several products and offering the bundle at a reduced price.

product bundle pricing

different versions of the product are priced differently but not according to differences in their costs. (first class ticket v. coach)

product form pricing

The Ford Mustang is offered in several different models. Ford will use​ __________ pricing to determine the price steps between the different models.

product line

is setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.

product line pricing

refers to determining the price steps to set between various products in a product line based on cost differences between the products,

product line pricing

refers to determining the price steps to set between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.

product line pricing

setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.

product line pricing

A retailer temporarily prices a few select items below cost to create excitement and pull consumers into the store. This is an example of​ _________ pricing.

promotional

With ________, the price is used to say something about the product.

psychological pricing

refers to pricing that considers the psychology of prices and not simply the economics. The price is used to say something about the product.

psychological pricing

Many sellers, many buyers, uniform commodity (wheat, cooper)

pure competition

Under _______ ___________, the market consists of many buyers and sellers trading in a uniform commodity. No single buyer or seller has much effect on the going market price. Sellers in these markets do not spend much time on marketing strategy.

pure competiton

In a _________ _________, the market is dominated by one seller. The seller may be a government monopoly, a private regulated monopoly, or a private unregulated monopoly. Pricing is handled differently in each case.

pure monopoly

Which of the following is a potentially effective action a company could take in response to a​ competitor's price​ cut?

reduce price

Prices that buyers carry in their minds and refer to when looking at a given product

reference prices

Determining product costs is the _______ step in cost-based pricing.

second

Setting target price to match customer percieved value is what step of value-based pricing?

second

________ ________, not price?

see value

In ___________ __________, the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs.

segmented pricing

refers to prices that allow for differences in customers, products, or locations.

segmented pricing

______% improvement in price can generate _____% increase in profitability.

small, large

__________% improvement in the price can generate __________% increase in profitability.

small, large

Start with an ideal selling price, then targets costs that ensure the price is met

target costing

____________ ___________: Start with an ideal selling price, then targets costs that ensure the price is met.

target costing

is/are pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.

target costing

​Geared2Beer, a craft beer​ brand, identifies a market segment that is willing to pay premium prices for its craft​ beer, and Geared2Beer managers select an ideal selling price. Managers then determine the costs to create craft beer that meets the ideal selling price. The​ company's pricing approach is referred to as​ ________.

target costing

UPS charges different prices for shipping depending on an​ item's destination. The more distant the city the package is being shipped​ to, the higher the price UPS charges. Which geographic pricing method is UPS​ using?

zone pricing