BA 370 MASTER FINAL EXAM

Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on. - A demand Curve - Law of Averages - Multiple regression analyses - Target Return Strategies - A sales Orientation

A demand Curve. A demand curve shows how many units of a product or service consumers will demand during a specific period of time at different prices. Demand curves evaluate how price changes affect consumers' purchase decisions, and in effect they measure consumers' different value perceptions.

When firms set prices similar to those of competitors, they are following a strategy of? - Me-too Pricing - Copycat pricing - Competitive Parity - Market Broadening Pricing - Industry Standard Pricing

Competitive Parity. A competitive parity strategy is a type of competitor-oriented strategy in which the firm sets prices similar to those of the major competition.

________ is/are one of the five Cs of pricing. Customers Communication Correlation Collaboration Contribution per unit

Customers. The five Cs of pricing are competition, costs, company objectives, customers, and channel members.

What situation is occurring if a 1 percent decrease in price results in more than a 1 percent increase in quantity demand? - Demand is cross-price elastic. - Demand is price inelastic. - Demand is price elastic. - Demand maintains the status quo. - Demand results in the income effect.

Demand is Price elastic. If a 1 percent price decrease results in, say, a 1.1 percent increase in demand, price elasticity is equal to 1.1 ÷ −1 = −1.1. Price elasticity of less than −1.0 reflects elastic demand.

Brands that have developed loyal customers have a higher price elasticity of demand. True or False

False. Brands with loyal customers have lower price elasticity of demand; in other words, demand will decrease more slowly as price goes up.

When a firm has a particular profit goal as its overriding concern, it will use target return pricing to meet the profit objective. True or False

False. Explanation: Target return pricing is used when firms want to produce a specific return on their investment; target profit pricing is implemented when a firm has a particular profit goal as its overriding objective.

Pricing strategies should be aligned with a firm's overall goals and objectives. True or False

True. Every firm has different goals and company objectives. Ideally, these goals should spill down to the pricing strategy, such that the pricing of a company's products and services should support and allow the firm to reach its overall goals.

When the price of milk goes up, demand does not fall significantly, because people still need to buy milk. However, if the price of T-bone steaks rises beyond a certain point, people will buy fewer of them because they can turn to the many substitutes for this cut of meat. This refers to price elasticity of demand. True or False

True. Explanation: The price elasticity of demand measures how changes in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price.

Price is the only part of the marketing mix that does not generate costs. True or False.

True. Product, place, and promotion all generate costs; price generates revenue.

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that - Most consumers cannot remember what price they paid the last time they bought a particular product - it is easier to lose customers with a price increase than to gain customers with a price decrease. -most consumers would rather skip buying a product than pay a higher price. - most consumers are emotionally attached to their favorite products and are unlikely to change, even if the price changes. - firms gain more customers with price decreases than they lose with price increases.

It is easier to lose customers with a price increase than to gain customers with a price decrease. Explanation: If consumers are more sensitive to price increases than to price decreases, this suggests that more customers will be lost as price rises than will be gained if it decreases.

There is often only one provider of cable television services in each region of the country: Time Warner is in New York, Comcast is in most of New England, and so forth. When Comcast recently proposed a plan to buy Time Warner, the purchase ultimately could not be completed, mostly due to concerns that it would have caused Comcast to become an overly large ________ with too much power. - Monopolist - Oligopolist - Pure Competitor - Predator - Icon

Monopolist. In a monopoly, one firm provides the product or service in a particular industry, which results in less price competition. For example, there is often only one provider of cable television services in each region of the country: Time Warner is in New York, Comcast is in most of New England, and so forth. When Comcast recently proposed a plan to buy Time Warner, the purchase ultimately could not be completed, mostly due to concerns that it would have caused Comcast to become an overly

What type of competition occurs when there are many firms competing for customers in a given market, but their products are differentiated? - monopolistic competition - monopoly competition - pure competition - predatory competition - oligopolistic competition

Monopolistic Competition. Monopolistic competition occurs when there are many firms competing for customers in a given market, but their products are differentiated.

Because there are only a few firms in markets with oligopolistic competition. -Everyone is a price taker - producers do not have to consider the reactions of rival firms. - government often encourages consolidation to reduce the number of competitors. - Price wars may occur - the many competitors will focus on product differentiation.

Price Wars May Occur. Explanation: In markets with a small number of firms, price wars may occur when two firms compete primarily based on price.

In ________ many firms provide similar products that are considered substitutes for each other. - Pure Competition - oligopolistic competition - monopolistic competition - a monopoly - a duopoly

Pure Competition. With pure competition, a large number of sellers offer standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals.

Dante always buys and uses Bridgestone brand golf balls. If he finds a Titleist or Callaway ball in the rough, he gives it away. Brand-loyal golfers like Dante allow Bridgestone to charge a higher price and not lose many sales. By building a strong brand, Bridgestone has effectively. increased the income effect for its products. -increased the cross-price elasticity for its products. -focused on the competitive parity point for its products. -shifted the golf ball market from a monopoly to pure competition. -reduced the price elasticity of demand for its products.

Reduced the Price elasticity of demand,

Firms using a ________ to set prices believe that increasing sales will help the firm more than one will increasing profits. sales orientation customer orientation competitive parity demand curve competitor orientation

Sales Orientation. Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits.

Abdul's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Abdul's job to examine the firm's pricing strategy to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Abdul's effort? - Industry Oriented - Sales-oriented - Competitor- Oriented - Customer Oriented

Sales Oriented. Abdul is interested in sales, not profits, which is a sales-oriented strategy. Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits.

There are many options available to consumers when it comes to breakfast cereals. So, if Kellogg's significantly increases the price of Rice Krispies, consumers are more apt to buy alternate cereals instead. This illustrates which concept? - Income Effect - Substitution Effect - Break-even point - Target return Effect - Cross- Price elasticity

Substitution Effect. This is an example of the substitution effect, which refers to consumers' ability to substitute other products for the focal brand. The greater the availability of substitute products, the higher the price elasticity of demand for any given product will be. In this example, there are many close substitutes in the breakfast cereal category. If the price of Rice Krispies significantly increases, many consumers will turn to competing brands.

Unlike product, promotion, or place, price is the only part of the marketing mix. -that offers the opportunity for an oligopoly. - that is subject to gray market manipulation. -that leads to competition. - that generates revenue. - that is determined by the consumer.

The Generates Revenue

_______ are included in the full price of a product or service. - Delivery Cost - Extended warranties - Travel Costs - The prices of alternative products - Market Perceptions

Travel Costs. Taxes, shipping, travel costs, and the value of the consumer's time are all elements of the full price of a product.