Ch 19 Marketing Emery

The intent of unfair trade practice acts is to a. protect small local firms from giants, which operate very efficiently on razor-thin profit margins. b. impose high tax rates on the products that consumers buy on a periodic basis. c. give greater profits to well-established firms, which operate on low product costs and high discounts. d. allow sellers or manufacturers to sell perishable products below cost.

a. protect small local firms from giants, which operate very efficiently on razor-thin profit margins.

Which of the following statements is true of dynamic pricing? a. It is based on the idea that products or services do not expire at any point of time. b. It prices products based on markup pricing. c. It prices a firm's products largely or solely on the basis of costs and ignores demand. d. It helps brick-and-mortar stores compete with online alternatives.

d. It helps brick-and-mortar stores compete with online alternatives.

A(n) _____ is a private electronic network that links a company with its suppliers and customers. a. cloud collaboration b. yield management system c. filesystem d. extranet

d. extranet

Which of the following statements is true of price skimming? a. A successful skimming strategy enables management to recover its product development costs quickly. b. Firms often believe it is better to test the market at a lower price and then raise the price if sales are too slow. c. Successful skimming strategies are limited to products and do not extend to services. d. A skimming strategy will discourage competitors from entering a market.

a. A successful skimming strategy enables management to recover its product development costs quickly.

Which of the following statements is true of a rebate? a. It enables purchasers to borrow money to pay for new products with no interest charge. b. It is a temporary inducement that can be taken away without altering the basic price structure. c. It typically discourages or blocks competitors from entering a market. d. It can be enjoyed by purchasers all year round.

b. It is a temporary inducement that can be taken away without altering the basic price structure.

Which of the following is a variable cost? a. Executives' salaries b. The cost of raw materials c. Insurance for employees d. Rent for office spaces

b. The cost of raw materials

Demand for a product will be more elastic if a. the product has only one use. b. many substitute products are available in the market. c. consumers are insensitive to an increase or a decrease in price. d. the product cannot be repaired.

b. many substitute products are available in the market.

Unlike profit maximization, satisfactory profits a. might be high in a low-risk industry and low in a high-risk industry. b. strive for a level of profits consistent with the level of risk an organization faces. c. involve setting prices so that total revenue is as large as possible relative to total costs. d. depend on the competitive environment a firm faces.

b. strive for a level of profits consistent with the level of risk an organization faces.

The first step in the process of setting the right price is a. to choose a price strategy to help determine a base price. b. to establish pricing goals. c. to set an appropriate margin to recover operating costs. d. to estimate demand, costs, and profits.

b. to establish pricing goals.

A break-even point is reached when a. actual sales figures meet projected sales figures. b. total costs equal total revenue. c. total revenue is equal to total profit. d. an optimal price results in peak sales.

b. total costs equal total revenue.

Which of the following statements is true of profit maximization? a. Managers can try to maximize profits by compromising customer satisfaction. b. A firm's profit maximization is independent of the type of competitive environment. c. Profit maximization always signifies that products are priced unreasonably high. d. A firm cannot charge a price higher than the product's perceived value.

d. A firm cannot charge a price higher than the product's perceived value.

_____ is that which is given up in an exchange to acquire a good or service. a. Cost b. Value c. Revenue d. Price

d. Price

A _____ is defined as a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period. a. noncumulative quantity discount b. functional discount c. cumulative quantity discount d. trade discount

a. noncumulative quantity discount

Jurian Inc. and Gren Inc. are the only two companies that sell electronic components to large manufacturers of home appliances in a town. Managers from these two companies meet over dinner and agree on the prices they will charge for their products. These prices are 8 percent higher than what manufacturers would usually pay for the components. This illegal practice illustrates _____. a. price fixing b. status quo pricing c. penetration pricing d. price skimming

a. price fixing

Joan bought five beaded necklaces for $3 each. If she wants a 40 percent return, her retail price should be _____. a. $6 b. $1.95 c. $5 d. $3.17

c. $5

Which of the following pricing strategies helps companies adjust their prices? a. Status quo pricing b. Bait-and-switch pricing c. Dynamic pricing d. Premium pricing

c. Dynamic pricing

Elastic demand is a situation in which a. demand is created for new products by aggressive brand awareness campaigns. b. an increase or a decrease in price does not significantly affect the demand for a product. c. consumer demand is sensitive to price changes. d. consumer demand always exceeds the supply.

c. consumer demand is sensitive to price changes.

Jessica wants to buy a tube of lipstick on her way to a party. She finds that all the lipsticks at the outlet she stops at are priced higher than in other outlets. However, she buys a tube as it was the only outlet on her way. This scenario illustrates an effective _____. a. shopping bot b. trade allowance c. distribution network d. rebate

c. distribution network

Digich Inc., one among the first companies to manufacture digital watches in the 1970s, priced its products at a very high rate. Once other manufacturers also ventured into the market, the prices came down. In this scenario, Digich Inc. was using a price strategy called _____. a. bait-and-switch pricing b. status quo pricing c. price skimming d. penetration pricing

c. price skimming

Which of the following reflects the information effect of price? a. Mandy saves money by cutting down on her daily expenses to buy her dream car. b. Alice, an avid reader, spends most of her money buying books as she does not have much interest in spending on other items of leisure. c. Bryan always relies on the brand Woodens for buying his furniture as it offers the best warranty scheme. d. John, a businessman, wears watches exclusively from luxury brands as he feels it enhances his status and class among his peers.

d. John, a businessman, wears watches exclusively from luxury brands as he feels it enhances his status and class among his peers.

Which of the following statements is true of price? a. Price refers solely to the monetary value of a good or service. b. The information effect of price emphasizes the negative correlation between price and quality. c. Price means the same thing for both consumers and sellers. d. Organizations successfully manage prices by creating pricing infrastructure within a company.

d. Organizations successfully manage prices by creating pricing infrastructure within a company.

_____ means setting prices so that total revenue is as large as possible relative to total costs. a. Sales maximization b. Bait pricing c. Sales-oriented pricing d. Profit maximization

d. Profit maximization

Fournotts Corp. launched a new line of toothpastes last year. Even when the company significantly increased the toothpastes' price, its sales did not drop. In this scenario, which of the following is the reason behind this behavior of consumers? a. Other products can be used instead of toothpaste. b. The demand for common items like toothpaste is in equilibrium with its supply. c. Toothpaste is a perishable product. d. The price of toothpaste is inconsequential to the consumers who buy them.

d. The price of toothpaste is inconsequential to the consumers who buy them.

_____ prohibit wholesalers and retailers from selling below cost. a. Federal impeachment laws b. Usury laws c. Antitrust statutes d. Unfair trade practice acts

d. Unfair trade practice acts

Competition can be created by a. maintaining stable prices throughout a product's life cycle. b. practicing penetration pricing. c. matching the price of a product with the price charged by the competitors. d. charging high prices and inducing firms to enter a market.

d. charging high prices and inducing firms to enter a market.