chapter 14 business marketing

Which of the following is an example of a monopoly?

A county water board that is the sole provider of water to the county

What is a manufacturer's suggested retail price (MSRP)?

A price set by manufacturers to pressure retailers to sell the product at that price

Which of the following does a break-even analysis provide?

An average price to charge under certain conditions

Drag each of the following examples to the type of price elasticity it represents. Price insensitive

Apple increases the price of the new iPhone by 25% and sales decrease less than 1%.

Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following? (Check all that apply.)

As price increases, demand decreases. As price decreases, demand increases.

What pricing tactic is used when companies advertise items for a very low price, even though they do not plan to sell anything at that price?

Bait and switch

Which of the following is one of the five Cs of pricing?

Channel members

What should channel members do when developing a pricing strategy?

Clearly communicate their pricing goals to one another

Which of the following are drawbacks of a market penetration pricing strategy?

Companies need to have a large production capacity. Setting the price lower than the item's value "leaves money on the table." Setting low prices may indicate to consumers that the product is not of high quality.

Which of the following is one of the five Cs of pricing?

Competition

What kind of pricing is being used when a firm sets prices similar to major rivals' prices?

Competitive parity

How does penetration pricing discourage rival companies from entering the market?

Competitors who enter the market will temporarily face higher unit costs. The profit potential in the market is relatively low.

Which of the following is included in the five Cs of pricing?

Cost considerations

Which of the following belong to the five Cs of pricing?

Costs Channel members Company objectives

What are drawbacks of price skimming?

Customers who buy the product may feel cheated when the price is eventually lowered. The unit costs of producing small volumes of products is relatively high.

In the customer orientation strategy, firms might sell their products or services at high prices in order to accomplish which of the following?

Enhance the value of the products in consumers' minds Enhance the company's reputation and image

Which of the following is an example of pure competition?

Essentially identical agricultural products like corn and soybeans provided by many sellers

What pricing strategy is Walmart using when it does not offer many sales but advertises that its average prices will usually be lower than the competition?

Everyday low pricing

Price discrimination is illegal under all conditions.

False

Which pricing strategy should retailers use to tap into consumer excitement about buying something at a special low price for a limited time?

High/low pricing

What is the role of price in a consumer's purchase decision?

It is one of the most important factors.

Which of the following are benefits of the high/low pricing strategy?

It serves two different market segments. It attracts consumers at both ends of the price sensitivity scale. It generates excitement due to the limited duration of sales.

A representative of a cosmetics company is determined to undercut rivals and win a prize for selling the most products door-to-door. To boost sales, the seller slashes prices below the cost of buying products from the manufacturer. What activity is this salesperson engaged in?

Loss-leader pricing

Which of the following is a firm implementing when it uses a mathematical model to identify the price at which the firm will make the most money possible?

Maximizing profits strategy

What type of competition occurs when only a few firms dominate a market?

Oligopolistic

Drag each of the following examples to the type of price elasticity it represents. Price sensitive

Pepsi drops the price of a six-pack by 50% and sales increase 78%.

What type of pricing is a firm using when it deliberately prices a product above the prices set for competing products to entice those customers for whom pricing does not matter?

Premium

What term describes a firm's actions when it sells the same product to different resellers?

Price discrimination

Which type of pricing is addressed by the Clayton Act and the Robinson-Patman Act?

Price discrimination

What term describes scheming with other companies to control prices?

Price fixing

Which of the following does the Sherman Antitrust Act address?

Price fixing

What pricing strategy should marketers adopt when selling to consumers who are willing to pay a premium price to be early adopters of a new product?

Price skimming

Why is it difficult to prove that a firm is engaged in predatory pricing?

Prosecutors must prove the firm's intent.

In what type of market is decommoditization most advantageous?

Pure competition

What type of competition occurs when consumers perceive that different companies sell products that are substitutable?

Pure competition

Which piece of legislation governs price fixing in the United States?

Sherman Antitrust Act

Which of the following is an example of monopolistic competition? (Note that monopolistic competition is NOT a monopoly.)

The apparel industry, with many providers that seek ways to differentiate themselves and claim market share

What is the premise behind the pricing of prestige products or services?

The higher the price, the greater the status

Which of the following is an example of an oligopoly?

The oil industry, with a limited number of providers

Which is the best definition of price?

The overall sacrifice a consumer is willing to make to buy a product or service

Which statement is true about fixed costs?

They remain at the same level despite changes in production.

Which of the following are reasons that firms implement a market penetration pricing strategy?

To discourage competitors To establish market share To build sales To earn profits

How do managers use break-even analysis?

To find a production quantity where, for a given price, costs are equal to revenues

What information is gained by adding variable and fixed costs together?

Total cost

Price discrimination is illegal under all conditions.

True

Variable costs Blank______ production volume.

change with

Status quo pricing Blank__

changes prices only to meet those of competition

Puffery is illegal in advertising.

false

A demand curve enables a firm to examine prices Blank____

in terms of demand and the firm's objectives

The contribution per unit is the ____ minus the variable cost per unit.

price

The equation for price elasticity of demand is the percentage change in quantity demanded divided by percentage change in Blank__

price

If a restaurant reduces the price of a hamburger by 25% and sales increase by more than 50%, which of the following describe the demand for the hamburger?

price sensitive elastic

The five Cs of pricing are examples of pricing

strategies

Price minus the variable cost per unit equals

the contribution per unit

Price times quantity equals ____

total revenue