MKTG 300 Chapter 10

Compare the following statements and select the one that is accurate regarding a profit maximization strategy.

Profit maximization assumes that customers value a product's differentiating attributes and are willing to pay a higher price to take advantage of those attributes

If a resort wanted to promote visitors to come during its off-peak times, it would most likely choose which pricing tactic?

seasonal discounts

Sunny Pines campground, located in the Midwest, promotes the months of September and October as its value camping months. During this time, it offers reduced rates on camper rentals and campgrounds. It does this, in part, because the weather is not as favorable for camping at this time. The pricing tactic Sunny Pines is using to encourage camping during these months is most likely

seasonal discounts

What is marginal revenue?

the change in total revenue that results from selling one additional unit of a product

Which of the following accurately describes break-even analysis?

the process of calculating the sales volume needed to achieve a profit of zero

Scotts Fertilizer has a 4-step program for lawn care. Each step features a different product. Scotts sells the fertilizer as a set containing one bag of each of the 4-step products. If Scotts decided to sell each product individually rather than as a set, it would be an example of which pricing strategy?

unbundling

When booking a flight for your upcoming trip, you notice the airline company now charges extra fees for baggage, assigned seats, and early boarding. This pricing strategy is referred to as:

unbundling

Charging someone less than they are willing to pay is a practice referred to as

underpricing

Variable costs are defined as costs that

vary depending on the number of units produced or sold

Your internet provider offers the lowest price in town for internet service if you sign a two-year contract; however, the low price offer only last the first year. Which pricing strategy is the internet company using to attract customers?

volume maximization

A strategy in which two or more products are packaged together and sold at a single price is called price

bundling

A retailer inflated the price of its leather jackets so that when it put the jackets on sale, it appeared to customers that they were getting a better deal than they really were. This is an example of what pricing strategy?

deceptive pricing

The first step in the price-setting process is to

define the pricing objectives

The degree to which the price of a product affects consumers' purchasing behavior is referred to as

dynamic pricing

For the first quarter of the year, the price of the company's most popular e-reader was $129.00. The company sold 750,000 units at this price. For the second quarter, the company decided to reduce the price of the e-reader to $109.00. At this price point, the company sold 1.5 million units indicating that demand for the product is

elastic

A section in a contract that ensures that providers of goods and services do not encounter unreasonable financial hardship as a result of uncontrollable increases in the costs of or decreases in the availability of something required to deliver products to customers is referred to as a(n)

escalator clause

You are shopping at a luxury boutique shop, and notice all the prices of the products are listed as $200, $350, etc. This pricing strategy is considered:

even pricing

Deceptive pricing involves

intentionally misleading customers with price promotions

If luxury brands such as Versace clothing, Lexus automobiles, and Dom Perignon champagne wanted to promote an image of superior quality and exclusivity to customers, they would most likely use which pricing tactic?

prestige pricing

One of the most important strategic decisions a firm faces is ________ because it reflects the value the product delivers to consumers as well as the value it captures for the firm

pricing

Prestige pricing involves

pricing a product higher than competitors to signal that it is of higher quality

The amount a product sells for above the total cost of the product itself is called

profit margin

When Apple released its first iPhone in 2007, it charged customers $599. Shortly thereafter, it reduced the price to $399 for the exact same device. Apple's decision to set a relatively high price for a period of time after the product launched and then decrease the price to a level that would be more sustainable over time reflects which pricing strategy

profit maximization

A ________ is any price that a consumer uses as a basis for comparison in judging another price

reference price

Justine went to the specialty grocery store by her office after work. When looking at the offerings at the meat counter, she was surprised to see ground beef selling for $4.49/lb. At her normal grocery store, she can get the same quality beef for $3.29/lb., a price Justine feels is reasonable. $3.29/lb. for ground beef is Justine's

reference price

In November, the appliance store priced its front-loading washing machines at $899.00 and sold 50 units. In December they reduced the price to $799.00 and sold 53 units. Which of the following statements is accurate regarding this situation?

Demand is inelastic and total revenue fell from November to December

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

choose a price.

A pricing tactic in which a firm prices products a few cents below the next dollar amount is called

odd pricing

Bowman's shoe store just received a shipment of dress boots. The manufacturer's suggested retail price for the boots is $150.00, but Bowman's decides to price the boots at $149.95. What pricing tactic is Bowman's most likely using?

odd pricing

Since consumers have the tendency to compare prices on almost everything they buy, marketers setting prices should attempt to capitalize on this tendency by determining the price consumers will consider fair and reasonable for a product. This is known as the

reference price

A new Home Depot opened up down the street from Hank's Hardware and has drastically reduced prices on many of the same products that Hank sells, forcing him to go out of business. After Hank closed his store, he noticed that Home Depot began raising its prices to more normal levels. This is an example of

predatory pricing

According to your text, which of the elements of the marketing mix is one of the most watched and regulated activities?

price

The amount of something (money, time, or effort) that a buyer exchanges with a seller to obtain a product is referred to in marketing terms as a

price

When Sony launched its new PS4 gaming system, the product was sold as a package that included the game console, game controllers, wireless headset, and one video game. This is an example of

price bundling

Located on a college campus, Ben's Burger Barn charges $4.99 for its burger basket. However, students receive a 10% discount off the price for showing their student ID. This is an example of

price discrimination

The practice of charging different customers different prices for the same product is called

price discrimination

A measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price is known as

price elasticity of demand.