mktg ch13

Which situation represents a consumer-driven pricing action?

A consumer goes to a store to examine a product then goes home an orders it online for a lower price.

What four factors must be taken into consideration to determine the "right" price for a product?

What are customers willing to pay for the product? Will enough money be made to pay for the development and production of the product? Will it generate enough sales dollars to pay for the marketing of the product? Will the product provide a profit for the company?

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 Blank______.

inelastic

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 Blank_

reference value

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

reference value

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

In an industry that has an oligopoly, price wars are likely to benefit only Blank______.

the consumer

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

value pricing

list the types of competitive markets from most competitive to least competitive

1 pure competition 2 monopolistic competition 3 oligopoly 4 pure monopoly

You sell picture frames at your business, and because they're flying off the shelves you decide to give your salaried managers a 5% raise. What does this do to your break-even point?

Fixed costs increase, so the break-even point does as well.

Which factor causes movement along a demand curve?

a change in price

If a consumer is likely to compare prices on the Internet, what is the best way to charge a consumer more for a product?

add in special fees or surcharges

the slope of a typical demand curve shows that

as price increases, demand decreases

Blake recently started a security system company. Blake gives Joe, a digital media consultant, a security system for his home if Joe will produce Facebook advertising for Blake's company. This is an example of

barter

the Internet has resulted in which two factors that affect the competitive environment for pricing?

companies' ability to change prices frequently consumers' access to pricing information from many competitors

In the long run, a firm's Blank______ 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

The relationship between price and quantity sold is called the Blank___

demand curve

Which three items would be subtracted from the list price in order to arrive at the final price of a product?

discounts trade-ins rebates

The typical relationship between price and demand is shown as Blank_

downwardsloping demand curve

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

elastic

cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. (one word)

fixed

With a social responsibility pricing objective a firm will Blank______.

forgo higher profits for other objectives

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 Blank______.

inelastic

Pricing objectives involves specifying the role of price in what two areas of an organization?

its marketing plans its strategic plans

Which product category is the best example of an oligopoly?

large jetliners, which consists of just Boeing and Airbus

When a firm sells more product than is necessary to cover its total costs, it will Blank___

make a profit

The unit variable cost is usually expressed

on a per unit basis

Which product is likely to be price inelastic?

open-heart surgery

According the the value equation, an increase or a decrease in Blank______ will affect value. Multiple choice question.

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

Because it influences both total revenue and total cost, Blank______ decisions are one of the most important decisions marketing executives have to make. Multiple choice question.

pricing

firms that set Blank______ objectives believe that increased revenues will in turn lead to increases in market share and profit.

sales

A target return objective can be described as Blank______.

setting a specific profit goal, say 20 percent

Market share can be measured as the ratio of Blank______ compared to the total industry units sold.

the firm's units sold

market share can be measured as the ratio of Blank______ compared to the total industry units sold.

the firm's units sold

The pricing objective based on the quantity of product sold by a firm is called Blank_

unit volume

you sell picture frames at your business, and because they're flying off the shelves you decide to give your salaried managers a 5% raise. What does this do to your break-even point?

Fixed costs increase, so the break-even point does as well.

When there are many substitute products available, the price elasticity of demand for a given product will likely be Blank______.

higher

According to the price equation, the actual price is the list price less Blank______, plus extra fees.

incentives and allowances

Why must a marketing manager consider pricing objectives and constraints?

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

Break-even analysis is a technique that analyzes the relationship between which two variables at various levels of output?

total rev and total cost

A consumer's near-instantaneous access to competitors' prices for the same offering through the use of websites, apps, and smartphones is known as

price transparency

Compared to other company objectives, the sales objective Blank___

can be translated more easily into meaningful targets for marketing managers

Selling via the Internet reduces which pricing constraint?

cost of changing prices

Place the steps of the price setting process in order. Note: The first step in the process should be the top item in your list.

1. identify 2. estimate 3. determine 4. select 5. set 6. make

According to the price equation, to find the actual price, you should do which two things to the list price?

Subtract incentives and allowances Add extra fees

Blake recently started a security system company. Blake gives Joe, a digital media consultant, a security system for his home if Joe will produce Facebook advertising for Blake's company. This is an example of Blank__

barter

Factors that limit the range of prices a firm may set are known as pricing Blank

constraints

The demand for a product class, a product, or a brand, or the newness of a product can act as pricing Blank______ to limit a firm's options.

constraints

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 Blank______.

demand

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

elastic

Price is the one element in the marketing mix that Blank

has a direct effect on profit

A product for which nostalgia or fad factors come into play is likely to Blank______

have higher prices later in its product life cycle

If a firm prices its products relatively low compared to the cost to develop, with the prospect of gaining a high market share, it is utilizing which profit-oriented pricing objective?

managing for long-run profits

American firms are sometimes criticized for using which profit-oriented pricing objective, because it results in a short-term orientation?

maximizing current profit

What two strategies can be used as part of a firm's profit objectives?

maximizing current profits target return

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

price elasticity of demand

a consumer's near-instantaneous access to competitors' prices for the same offering through the use of websites, apps, and smartphones is known as ______.

price transparency

A pricing objective of increasing sales can have the disadvantage of leading to price cuts that may

reduce the revenues of related products in the firm's line

The three elements influencing the demand curve are consumer Blank______, consumer Blank______, and the price and availability of similar products.

tastes; income

the newer a product and the earlier it is in its life cycle, Blank______.

the higher the price can usually be charged

A product is more likely to be price inelastic under which two circumstances?

the product is a necessity there are few substitutes

If a firm prices a product low, it may signal to a customer that Blank______. Multiple choice question.

the product is of questionable quality

The pricing objective known as ________ can be counterproductive if it is achieved by drastic price cutting that drives down profit.

unit volume

___is the ratio of a product's perceived benefits and its price.

value

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

value pricing