marketing test 3

fixed cost contribution equation

Price - Avg. Variable Cost

Anti- global

Skeptical about transnational companies

dual adaptation

adapt product, adapt communications

product adaptation

adapting a product to meet local conditions or wants in foreign markets

value oriented pricing

basing the price of a product on its value to its chosen customers

grey market

buying it cheaper in one place and reselling it for more in another place

A cruise line could control the availability of prices by offering deals to specific groups of buyers based on all of the following EXCEPT: competition information gathered via e-commerce location purchasing history coupon usage

competition

adaptation/polycentric pricing

decentralized, you pick

four components to calculating customer lifetime value

discount rate profit retention year or years

geocentric pricing

establishes a global price floor for a product but recognizes local conditions in setting the price in each market

All of the factors below affect why a company might customize prices EXCEPT: competition consumer tastes nature of use intensity of use fixed costs

fixed costs

Company Gamma is interested in entering a foreign market by wholly acquiring a business entity that is already operating in the region and they are willing to commit significant resources and take on all of the associated risk so that they can have total control over the operations and benefit fully from the profits produced.

foreign direct investment

Company Beta has created a very strong brand, business model, and set of operational practices in their home country and would like to duplicate the formula in international markets. They are not interested in direct ownership of entities in international regions, but they want total control of their trade names, trademarks, marketing plans, quality standards, and training, through contractual relationships with other entities, and expect to receive upfront fees and future royalty payments for the benefits they provide to these contracted entities.

franchising

communication adaptation

fully adapting their advertising messages to local markets

The functional value of a product to a customer is BEST understood by understanding the product's functional benefits emotional value economic value to the customer social benefits minimum thresholds

functional benefits

Global citizens 50%

global success of company signals high quality and innovation, but worry about social responsibility

New Balance offers a variety of types of shoes to its customers at various price points, typically in 3 basic tiers, based on the quality of the material and components of the shoe. This is an example of: controlling the availability of prices good/better/best strategy observable buyer characteristics pricing based on transaction characteristics

good/better/best strategy

free riders

high profitability, high customer experience

price elasticity of demand remember

ignore negatives

Company Delta would like to enter an international market, but they want to only take on the least amount of risk and commitment the fewest amount of resources.

indirect export

Which of the answer choices correctly ranks, from lowest risk to highest risk, the following methods of foreign market entry?

indirect export franchising product joint venture foreign direct investment

Company Alpha is interested in making a significant investment of resources in an international region by partnering with a local company in that region, so that they may learn about the new market and share the risk of ownership, including financial and political risk.

joint venture

When calculating elasticity of demand (E), a relatively inelastic demand (0 < E < 1) indicates that: small changes in price cause large changes in quantity demanded any change in price is matched by an equal change in quantity large changes in price cause small changes in quantity demanded

large changes in price cause small changes in quantity demanded

Which of the following is NOT one of the variables included a basic calculation of customer lifetime value? the period of time market capitalization of the company over a period of time profit or contribution margin during a period of time retention probability during a period of time a discount rate across a period of time

market capitalization of the company over a period of time

The process by which a firm understands the needs of its customers through market research is described as ________ ; by contrast, the process by which a firm creates its own products based on its own vision of the future is described as _______ .

market-driven, market driving

Extension or ethnocentric pricing

one price fits all

A customer's incentive to purchase is equal to: product price minus cost of goods sold perceived value (PV) minus price true economic value (TEV) minus product price true economic value (TEV) minus costs of goods sold

perceived value (PV) minus price

All of the following are price indicators of customer price sensitivity EXCEPT: performance as expected high in a relative sense the existence of reference prices easy comparability

performance as expected

If a brand is truly global, which of the following brand variables is typically the same across geographies?

positioning, product name and features, promotion

Cost-Oriented Pricing

pricing that considers the firm's desire to make a profit and its need to cover production costs

All of the following are inputs to any value-pricing analysis EXCEPT: true economic value costs of goods sold perceived value product price

product price

Customer value has two sides: capturing value through customer satisfaction profitability revenue share of wallet experience and delivering value through customer satisfaction revenue share of wallet experience profitability

profitability, experience

A customer is comparing two similar products online. One is made in the United States, one in a foreign country to her. She opts for the choice made in the United States, judging it to be better quality despite favorable online reviews for each. This instinctual bias is known as:

provenance paradox

Customer _________ is the percentage of customers who stay with a company in a given period, while customer _______is the percentage of customers who leave a company within a given period of time.

retention rate churn rate

four dimensions of customer value

social, functional, experiential, economic

Product indicators of sensitivity to price include all of the following EXCEPT: performance as expected easy comparability the ability to switch easily low differentiation of alternatives

the ability to switch easily

break-even quantity equation

total fixed costs/fixed cost contribution

IKEA has a breakeven volume of 100,000 units for their new AGUNNARYD lamp. The variable cost per unit is $75 and the revenue per unit is $99.99. The fixed costs are: $2,499,000 $2,799,000 $3,333,000 $5,000,000

$2,499,000

price elasticity of demand

%change in quantity demanded/ % change in price

precent change in price equation

(new price-old price)/ old price

precent change in quantity demanded equation

(new quantity-old quantity)/ old quantity

The demand curve suggests that an auto manufacturer will sell 20,000 Mercedes-Benz M-Class vehicles when they are priced at $50,800, but when the price is reduced to $45,000, that quantity will increase to 27,000 units. What is the resulting elasticity? 1.24 -4.38 6.73 -3.07

-3.07

Which of the following statements about economic value to the customers (EVC) is FALSE? (note, we could also call this total economic value or TEC - same thing) Any two customers will derive the same EVC for the same product. A firm generally charges less than EVC in order to provide some incentive to the customer to switch EVC is the maximum price that a customer should be willing to pay for a product. When comparing two products, it is important to compare them on the same time frame EVC is calculated as the total life cycle cost or cost of ownership over the entire life of the product

Any two customers will derive the same EVC for the same product

Marketers often use which of the following techniques to determine the impact of a price on volume required to reach profitability? Assessing Perceived Value Price Elasticity Breakeven Analysis Competitive Analysis

Breakeven Analysis

Which method for building experiential value is most likely to have the most variability for consumer-based service organizations such as hotels and restaurants? Features Design Functions Branding Customer Service

Customer Service

straight extension

Don't change product, don't change communications

Global agnostics

Global attributes do not matter

Global dreamers

Global success of company signals high quality and innovation, don't worry about social responsibility

star customers

High Customer Profitability, High Customer Experience

Vulnerable Customers

High profitability, low customer experience

Which of the following choices is NOT one of the reasons cost-plus pricing is so popular? It simplifies an otherwise complex pricing process. It captures the full price that customers might be willing to pay for a product. It is easy to measure or estimate. It is easy to justify to various stakeholders.

It captures the full price that customers might be willing to pay for a product.

lost causes

Low profitability, low customer experience