Marketing Chapter 14
Which of the following is included in the five Cs of pricing?
cost considerations
Some specialty retailers attempt to compete not by setting low prices but by justifying higher prices through high levels of personalized service. This is an example of a ______ orientation to pricing.
customer
In a pure competition market, firms are advised to ______ to differentiate products.
decommoditize products
The graph that shows how many units of a product or service consumers will want during a specific period at different prices is known as the ______ curve.
demand
Profit alone ______ how many units should be sold before a firm breaks even.
does not indicate
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?
elastic and price sensitive
A occurs when oligopolistic companies compete with each other by repeatedly lowering their prices.
price war
Competition, channel members, costs, customers, and company objectives are the five critical components of
pricing
A break-even analysis graph shows curves for which of the following?
revenue fixed costs total costs
Sometimes firms selling a pioneering product will set a very low price in order to attract many customers before competitors enter the market. Which type of orientation does this demonstrate?
sales
Compared to other company objectives, a sales-oriented firm
sets prices very low to generate new sales, even if profits suffer
When a firm is aiming for a particular amount of profit as its overriding concern, it usually implements
target profit pricing
Which of the following are strategies that can be used as part of the profit orientation?
target profit pricing maximizing profits
Firms that are less concerned with the level of profits and more interested in the rate at which profits are generated relative to their investments tend to use
target return pricing
Antitrust laws are designed to protect consumers from
the high prices charged by monopolies for their products
Pricing is difficult to manage because it is the least ______ of the four Ps.
understood
Even if other elements in the marketing mix may be perfect, if the price is wrong, revenue
will not accrue
A firm may set low prices to do which of the following?
Discourage new firms from entering the market Take market share away from competitors Encourage current firms to leave the market
A demand curve shows that a company will sell 10,000 units if it prices its new product at $200 per unit, but it will sell 20,000 units if it reduces the price to $75. Where should the company set the price of the new product in order to maximize profits?
$200
Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following?
As price increases, demand decreases. As price decreases, demand increases.
Which of the following are limitations to break-even analysis?
It must be conducted several times at different quantities. It uses an average price rather than specific prices. It cannot predict how many units will sell.
Which of the following is an example of monopolistic competition?
The apparel industry, with many providers that seek ways to differentiate themselves and claim market share
Which of the following accurately characterize demand curves?
They show how much consumers will demand during a specific period at different prices. They relate demand to prices while assuming everything else remains unchanged.
Which of the following does a break-even analysis provide?
an average price to charge under certain conditions
Which of the following best describes how managers have historically treated pricing?
as an afterthought
What is a useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales?
break-even analysis
According to the cross-price elasticity of demand, when the price of DVD players drops, the demand for DVDs is likely to
increase
Which of the following is another term for target return percentage?
markup
What type of competition occurs when many firms with differentiated products compete for customers in a given market?
monopolistic competition
Under competitive _______ , companies set their prices close to those of their major competitors.
parity
A firm that opens new stores in a community and sets artificially low prices with the sole purpose of driving competing stores in the area out of business is said to engage in a type of behavior called ______ pricing.
predatory
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
The equation for price elasticity of demand is the percentage change in quantity demanded divided by percentage change in ______
price
The overall sacrifice a consumer makes to acquire a product or service is known as
price
Price times quantity equals
total revenue
Which of the following do companies take into account when engaging in dynamic pricing?
type of customer level of demand time of day
