Principles of Marketing Chapter 13

Order the types of competitive markets from most competitive to least competitive. NOTE: The most competitive market should be the top item in your list.

1. Pure competition 2. Monopolistic competition 3. Oligopoly 4. Pure monopoly

According to the price equation, to find the actual price, you should do which two things to the list price?

Add extra fees Subtract incentives and allowances

The Internet has resulted in which two factors that affect the competitive environment for pricing?

Companies' ability to change prices frequently Consumers' access to pricing information from many competitors

A pricing constraint firms face is the price that its ______ are currently charging and likely to charge in the future.

Competitors

Legal and regulatory issues and consumer demand are pricing _____ that limit what a company can charge for its products.

Constraints

The demand for a product class, a product, or a brand, or the newness of a product can act as pricing _______ to limit a firm's options

Constraints

When the New York Mets set higher ticket prices for games versus the popular New York Yankees than for those versus the less popular Pittsburgh Pirates, its pricing is based on

Demand

The relationship between price and quantity sold is called the

Demand curve

Generally, a seller can charge a higher price for a product when

Demand for the product is high

cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. (one word)

Fixed

Total cost is the sum of which of these?

Fixed cost Variable cost

A demand curve enables a firm to examine prices ______.

In terms of quantity sold

According to the price equation, the actual price is the list price less _____, plus extra fees.

Incentives and allowances

Pricing objectives involves specifying the role of price in what two areas of an organization?

Its strategic plans Its marketing plans

A demand curve is derived by measuring how many units of a product are sold at various ______.

Levels of price

If a firm prices its products relatively low compared to the cost to develop, with the prospect of gaining a high market share, it is utilizing which profit-oriented pricing objective?

Managing for long-run profits

Many Japanese car firms are willing to give up immediate profits for long-term penetration of the market. This is a pricing objective known as

Managing for long-run profits

Current profit ______ and target ______ are two strategies used by firms that are pursuing a profit pricing objective.

Maximization

Which profit-oriented pricing objective is common in many firms because the targets can be set and performance measured quickly?

Maximizing current profit

American firms are sometimes criticized for using which profit-oriented pricing objective, because it results in a short-term orientation?

Maximizing current profits

What two strategies can be used as part of a firm's profit objectives?

Maximizing current profits Target return

On a demand curve, one of the axes represents the price of a product while the other represents the

Maximum units sold

Pricing ______ involve specifying the role of price in an organization's marketing and strategic plans.

Objectives

Pricing ______ frequently reflect corporate goals, while pricing ______often relate to conditions existing in the marketplace.

Objectives; constraints

Value is defined as

Perceived benefits divided by price.

What element of the marketing mix has a unique role in that it is the place where all other business decisions come together?

Price

The percentage change in quantity demanded relative to a percentage change in price is known as

Price elasticity of demand

Break-even analysis can help evaluate the impact of changes in _____ and _______ on _______.

Price; costs; profit

Patents and limited competition reduce ________, making high prices possible for technology products early in their life cycles.

Pricing constraints

Match the type of competitive market to its correct description.

Pure competition ---> Many sellers who follow the market price for identical, commodity products Monopolistic competition ---> Many sellers who compete on nonprice factors Oligopoly ---> Few sellers who are sensitive to each other's prices Pure monopoly ---> One seller who sets the price for a unique product

Price elasticity of demand is expressed as percentage change in ______ divided by the percentage change in ______

Quantity demanded; price

Which three items would be subtracted from the list price in order to arrive at the final price of a product?

Rebates Discount Trade ins

Fixed costs _____

Remain at the same level despite changes in production

Total is equal to the unit price for a product times the quantity of it sold. (one word)

Revenue

A target return objective can be described as

Setting a specific profit goal, say 20 percent

When a board of directors determines a specific profit goal, marketing managers usually implement a(n) ______ objective.

Target return

The newer a product and the earlier it is in its life cycle, _______.

The higher the price that can usually be charged

Why must a marketing manager consider pricing objectives and constraints?

To narrow the range of choices among the variety of pricing strategies

Break-even analysis is a technique that analyzes the relationship between which two variables at various levels of output?

Total cost Total revenue

Unit price times quantity sold equals

Total revenue

According to the profit equation, profit equals ______.

Total revenue minus total cost

Profit = (____ x quantity sold) - (fixed cost + variable cost)

Unit price

The ratio of perceived benefits to price is a product's...

Value

______ is the ratio of a product's perceived benefits and its price.

Value

Total cost represents

Variable costs plus fixed costs

What four factors must be taken into consideration to determine the "right" price for a product?

Will enough money be made to pay for the development and production of the product? Will it generate enough sales dollars to pay for the marketing of the product? Will the product provide a profit for the company? What are customers willing to pay for the product?w