Chapter 20

is the strategy of setting a low price for a new product to gain a significant market share quickly.

Penetration Pricing

is the temporary reduction of prices on a patterned or systematic basis (for example annual holiday sales

Periodic Discounting

is the strategy of charging the highest possible price for a product during the introduction stage of its life cycle.

Price Skimming

Sometimes a firm prices a few products below the usual markup, near cost, or below cost, which results in what are known as

Price leaders

means establishing and adjusting the prices of multiple products within a product line.

Product-Line Pricing

Marketers need competitive price information in industries dominated by price competition.

True

A marketer must be able to estimate the quantity of a product consumers will demand at different times and how demand will be affected by changes in the price.

Demand Based Pricing

If a firm is facing a market with multiple segments with different price sensitivities, which of the following pricing strategies is most appropriate?

Differential pricing

A marketer sets a low price for its products on a consistent basis, rather than setting higher prices and frequently discounting them.

Everyday low prices

In non-price competition industries, marketers do not need to worry about competitors' prices.

False

Information about competitors' prices is easily attainable.

False

Marketing research does not focus on obtaining information about competitors' prices.

False

Select the statement that is true regarding price objectives and the target market's evaluation of price.

For buyers, price is always important regardless of the purchase situation.

Which of the following statements is true with regard to setting prices?

Marketers must understand the importance of price to customers.

Which of the following statements is true about the price setting process and how marketers evaluate competitors' prices?

Marketing research should include a focus on competitors' prices.

Strategies encourage purchases based on consumers' emotional responses, rather than on economically rational ones.

Psychological Pricing

Means pricing a product at a moderate level and physically positioning it next to a more expensive model or brand in the hope that the customer will use the higher price as a comparison price.

Reference pricing

Is the development of a pricing objective that is compatible with the organization's overall marketing objectives.

Stage 1

Entails assessing the target market's evaluation of price

Stage 2

Involves evaluating competitors' prices, which help determine the role of price in the marketing strategy.

Stage 3

Requires choosing a basis for setting prices.

Stage 4

Is the selection of a pricing strategy, or the guidelines for using price in the marketing mix.

Stage 5

Determining the final price, depends on environmental forces and marketers' understanding and use of a systematic approach to establish prices.

Stage 6

Firms may set prices slightly above competitors' prices to create a perception of exclusivity.

True

Which of the following statements from the executive management team is accurate about pricing and setting pricing objectives?"

"Our pricing objectives must be consistent with our organizational and marketing objectives."

To attract customers, marketers may put a low price on one item in the product line with the intention of selling a higher-priced item in the line; this is known as

Bait Pricing

Based on the CEO's guidance, which of the following basis for pricing should you emphasize for next year's pricing strategy?

Competition Based Pricing

Is a common method among producers of relatively homogeneous products, particularly when the target market considers price to be an important purchase consideration

Competition Based Pricing

Is a factor in every pricing decision because it establishes a price minimum below which the firm will not be able to recoup its production.

Cost

Marketers calculate and apply a desired level of profit to the cost of the product and apply it uniformly.

Cost Based Pricing

Certain goods are priced on the basis of tradition.

Customary Pricing

Sets an effective price maximum above which customers are unlikely to buy the product.

Demand

means charging different prices to different buyers for the same quality and quantity of product.

Differential Pricing

To achieve the product quality pricing objective a manager might:

set prices to recover research and development expenditures and establish a high-quality image.