Marketing Chapter 14 Review Quiz

__________ price fixing occurs when competitors collude to control prices, and __________ price fixing occurs within a marketing channel to control prices passed on to consumers. a. Industry; supply chain b. General; specific c. Widespread; integrated d. Strategic; tactical e. Horizontal; vertical

Horizontal; vertical

The saying "leaving money on the table" is associated with a. a price skimming strategy that forces consumers to choose between products. b. a market penetration strategy when there is an opportunity for price skimming. c. vertical price fixing in markets where horizontal price fixing would be more appropriate. d. a predatory pricing strategy that results in excessive seasonal discounts. e. loss leader pricing that drives consumers to competitors' products.

a market penetration strategy when there is an opportunity for price skimming.

In general, prices should not be based on costs because a. consumers are cost-conscious. b. producers rarely know what their costs are. c. consumers make their purchase decisions based on perceived value. d. producers need to avoid creating a cost competitive parity debate. e. customers are always right.

consumers make their purchase decisions based on perceived value.

How can a company find its way out of a market characterized by pure competition? a. consistently offer the lowest price until other competitors leave the market b. increase prices and attract different, quality-oriented customers c. decrease the amount of available product until the market reacts c. increase the amount of available product to flood the market d. differentiate the product in some way, even by packaging, so customers will see it as distinct

differentiate the product in some way, even by packaging, so customers will see it as distinct

Break-even analysis is useful because it allows managers to a. quantify the relationship between price elasticity and product elasticity. b. reposition products based on their break-even positioning revenue. c. estimate the quantity they will need to sell at a given price to break even. d. determine the relationship between price and quantity demanded. e. analyze the different elements contributing to their variable costs.

estimate the quantity they will need to sell at a given price to break even.

Which of the following is the most logical example of complementary products? a. hot dogs and hamburgers b. VCRs and DVD players c. hot dogs and hot dog buns d. Honda cars and Toyota cars e. a university and a corporation

hot dogs and hot dog buns

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy, especially if the strategy a. leads the marketer to being the low-cost seller. b. is supported by consistent advertising and distribution strategies. c. challenges consumers to discard their perceptions of value. d. is consistent with a competitive target return strategy. e. is measured against the competition.

is supported by consistent advertising and distribution strategies

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that a. most consumers cannot remember what price they paid the last time they bought a particular product. b. it is easier to lose customers with a price increase than to gain customers with a price decrease. c. most consumers would rather skip buying a product than pay a higher price. d. most consumers are emotionally attached to their favorite products and are unlikely to change, even if the price changes. e. firms gain more customers with price decreases than they lose with price increases.

it is easier to lose customers with a price increase than to gain customers with a price decrease.

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen. a. sales orientation b. target profit c. target return d. status quo e. maximizing profits

maximizing profits

For a price skimming strategy to work, the product or service must a. be bundled with products or services already available on the market. b. be similar to what consumers are already comfortable with. c. have wide market appeal. d. have low production costs. e. offer consumers some new benefit currently unavailable in alternative products.

offer consumers some new benefit currently unavailable in alternative products.

The commercial airline industry is considered what type of market? a. duopoly b. monopoly c. monopolistic competition d. pure competition e. oligopolistic competition

oligopolistic competition

Cross-price elasticity is the a. percentage change in quantity of a product demanded divided by the percentage change in its price. b. percentage change in quantity demanded of product A compared to the percentage change in price of product B. c. change in price of product A divided by change in quantity demanded for product B. d. change in quantity of a product demanded divided by the change in its price. e. change in quantity of a product demanded divided by the change in its elasticity.

percentage change in quantity demanded of product A compared to the percentage change in price of product B.

For which of the following is demand likely to be least sensitive to price increases? a. spring break vacations b. a specific brand of cereal c. prescription drugs d. theater tickets e. restaurant meals

prescription drugs

Because there are only a few firms in markets with oligopolistic competition, a. everyone is a price taker. b. producers do not have to consider the reactions of rival firms. c. government often encourages consolidation to reduce the number of competitors. d. price wars may occur. e. the many competitors will focus on product differentiation

price wars may occur.

The major objectives associated with a market penetration pricing strategy are to a. capture the high end of the market demand curve and lower introduction costs. b. quickly build sales and market share. c. minimize customer dissatisfaction and maximize reference price value. d. provide an incentive to purchase a less desirable product to obtain a more desirable product. e. match competitors' prices and communicate high quality.

quickly build sales and market share.

Historically, prices were a. the center of attention in almost all marketing strategies. b. analyzed and changed constantly. c. calculated to minimize contribution per unit. d. allowed to vary seasonally as cross-shopping tendencies fluctuated. e. rarely changed except in response to radical shifts in market conditions.

rarely changed except in response to radical shifts in market conditions.

Which of the following is most likely to be characterized by pure competition in the United States? a. soybeans b. cereal c. soft drinks d. computer operating systems e. fast-food restaurants

soybeans

According to a typical demand curve, the higher the price, a. the greater the income effect. b. the lower the quantity consumers will buy. c. the lower the output of producers. d. the greater the production costs. e. the lower the cross-price elasticity.

the lower the quantity consumers will buy.

The more substitutes that exist in a market, a. the lower the price elasticity for each product. b. the greater the income elasticity for each product. c. the easier it will be to utilize a target profit pricing strategy. d. the more sensitive consumers will be to changes in the price of a particular product. e. the more likely the market will be characterized as an oligopoly.

the more sensitive consumers will be to changes in the price of a particular product.

The full price of a product or service includes all of the following except a. taxes. b. shipping. c. travel costs. d. the price of alternative products and services. e. value of the consumer's time.

the price of alternative products and services.