Chapters 13 & 14: The Pricing P

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

Selling via the Internet reduces which pricing constraint?

cost of changing prices

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

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

demand for the product is high

Demand-oriented pricing approaches weigh which factors most heavily?

expected customer tastes and preferences

Price is the one element in the marketing mix that ______.

has a direct effect on profits

To increase customer value for a given price, the market must ______.

increase perceived benefits

In penetration pricing, the initial price of the product is set ______.

low, to appeal to the mass market

The ability to attract price sensitive customers and discourage competitors from entering a market make which pricing strategy appealing?

penetration

According the the value equation, an increase or a decrease in ______ will affect value.

perceived benefits

Value is defined as ______.

perceived benefits divided by price.

Which element of the marketing mix is part of the profit equation and therefore, has a direct effect on a firm's profits?

price

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

price elasticity of demand

A firm must know its competitors' ______ in order to best set its own.

prices

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

quantity demanded; price

Kendra always buys a certain brand of shampoo for which she normally pays $7.99 a bottle. She saw an advertisement for a different brand of shampoo that seemed to offer additional benefits, but the price for that brand was $12.99. Kendra thinks that $12.99 is too much to pay for shampoo and that $7.99 is a more reasonable price. For Kendra, $7.99 represents a ______.

reference value

For______ pricing to be effective, there must be sufficient customers willing to buy the product at a high initial price, they should interpret the high price as signifying high quality, and the high price should not attract competition.

skimming

In what pricing strategy are prices lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices?

skimming pricing

Cost-plus pricing entails Blank______.

summing total units costs and adding a fixed percentage or fee to arrive at a price

What is a characteristic of bundle pricing?

Consumer value is enhanced by not having to make separate purchases.

------oriented approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision.

Demand

Organizations can be most effective using skimming pricing under which two conditions?

The product is protected by patent. The customer understands and highly values the product.

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

VAlue

The cost of changing prices is a pricing constraint; as a result, most firms ______.

change the prices of their products more often if they sell online

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

competitors

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are Blank______ approaches.

cost-oriented

Adding a fixed percentage or fixed fee to the total costs for a product is known as Blank______ pricing.

cost-plus

In the long run, a firm's ______ and those of its distributors set a baseline for a product's price, allowing the firm to both survive and get its product to consumers.

costs

A manufacturer that uses coupons and other small price decreases to create large changes in demand is relying on a(n) ______ demand for the product

elastic

When a 1 percent decrease in price produces more than a 1 percent increase in quantity sold, the product or service is Blank______.

elastic

Freeze Ice Cream Shop sells its specialty shakes for $3.50 each. In the summer months, the shop typically sells 200 shakes a day. The shop's owner thinks if he reduces the price to $3 he will increase sales significantly. However, when he reduced the price, he only sold about 15 more shakes per day. This represents demand that is ______.

inelastic

When a 1 percent decrease in price results in less than a 1 percent increase in quantity sold, demand for the product or service is ______.

inelastic

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

objectives; constraints

When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ______ pricing strategy.

overhead production costs profit

Organizations using ______ pricing set the initial price low for the introduction of the new product to appeal immediately to the mass market.

penetration

Select all of the benefits of a penetration pricing strategy.

potential to gain market share discourages competitors production costs drop with increased volume

When a consumer is comparing the costs and benefits of substitute items, he or she is developing a ______.

reference value

For Blank______ pricing to be effective, there must be sufficient customers willing to buy the product at a high initial price, they should interpret the high price as signifying high quality, and the high price should not attract competition.

skimming

How do a firm's channel members affect the price a firm can charge for its products?

the channel members must earn a profit, which raises the price

Bundle pricing refers to Blank______.

the marketing of two or more products in a single package price.

If a firm prices a product low, it may signal to a customer that ______.

the product is of questionable quality

To many consumers, price provides information about ______.

the quality of the product

Why must a marketing manager consider pricing objectives and constraints?

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

According to the profit equation, profit equals ______.

total revenue minus total cost

In the profit equation, what is multiplied by quantity sold?

unit price

At McDonald's, you can get several items together as a meal, for less than purchasing those items separately. This is an example of ______.

value pricing

Creative marketers engage in ______ when they increase product and service benefits while maintaining or decreasing price.

value pricing