370 ch 14

Price is the _____________ a consumer is willing to make to acquire a specific product or service. A. amount of money B. overall sacrifice C. fixed cost D. target return E. substitution

B. overall sacrifice

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as A. an indicator of quality. B. a reflection of status quo pricing. C. an indicator of the variety. D. a measure of scarcity. E. a measure of the income effect.

A. an indicator of quality.

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a _______ pricing strategy. A. customer-oriented B. target profit C. target return D. status quo E. maximizing profits

A. customer-oriented

Tess is the marketing manager for a fast-food restaurant chain. She uses a target return pricing strategy because her firm's primary objective is to A. increase profits. B. increase sales. C. decrease competition. D. build customer satisfaction. E. broaden the product line.

A. increase profits

Julia wants her firm's gourmet snacks to be the leading brand in the U.S. market. When adopting a pricing strategy designed to gain market share, she should remember that A. rarely is the lowest-price offering the dominant brand in a market. B. prestige products need to be competitively priced. C. companies can gain market share by offering low-quality products at a high price. D. total value equals total cost minus variable costs leading to price escalation. E. price wars are the way to become the dominant brand.

A. rarely is the lowest-price offering the dominant brand in a market.

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage. Earl perceived price as _______ for a good or service, while most consumers recognize price as the _______ made to acquire a good or service A. the money paid; overall sacrifice B. a variable cost; fixed cost C. a fixed cost; variable payment D. the overall sacrifice; monetary payment E. the break-even amount; total cost

A. the money paid; overall sacrifice

In developing marketing strategies, why is price often the most challenging of the four Ps to manage? A. because most managers feel it is the least important element of the marketing mix B. because it is the least understood element of the marketing mix C. because it has to be based on the promotion budget for the product D. because it is difficult to calculate markups for products E. because managers don't understand the relationship between benefits and costs

B. because it is the least understood element of the marketing mix

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.

B. is supported by consistent advertising and distribution strategies.

Gary is the marketing manager for an automobile dealership. His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent. His firm is using a ________ orientation. A. profit B. sales C. competitive D. customer satisfaction E. product development

B. sales

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard's job to examine the firm's pricing strategy to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard's effort? A. industry-oriented B. sales-oriented C. competitor-oriented D. innovation-oriented E. customer-oriented

B. sales-oriented

When firms set prices similar to those of competitors, they are following a strategy of A. me-too pricing. B. copycat pricing. C. competitive parity. D. market-broadening pricing. E. industry-standard pricing.

C. competitive parity.

Many years ago Honda's Accord and Ford's Taurus were the two top-selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a _______ pricing strategy. A. maximizing profits B. target profit C. sales orientation D. status quo E. target return

C. sales orientation

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______ pricing strategy. A. sales orientation B. target profit C. target return D. status quo E. competitive parity

C. target return

Which of the following is not one of the five Cs of pricing? A. customers B. channel members C. cost D. collaboration E. company objectives

D. collaboration

In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. When it comes to pricing, Westin tends to charge its guests similar rates to what the Crown Plaza hotels charge. Westin is using a _______ pricing strategy. A. maximizing profits B. target profit C. target return D. competitive parity E. sales oriented

D. competitive parity

When Ursula decides how to price new products in her gift store, she measures the value of her product offerings against those of the other stores in her area. Ursula uses a _______ pricing strategy. A. maximizing profits B. target profit C. target return D. competitor-oriented E. sales oriented

D. competitor-oriented

Traditional demand curve economic theory is used by marketers to understand _______ in the five Cs of pricing. A. competitors B. channel members C. cost D. customers E. company objectives

D. customers

Sharon knew that her established customers liked her product much better than her competitor's. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Sharon was considering A. a top of market strategy. B. the value of quality. C. advantageous pricing. D. premium pricing. E. differential pricing.

D. premium pricing.

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _______ pricing strategy. A. maximizing profits B. target profit C. target return D. status quo E. sales

D. status quo

Unlike product, promotion, or place, price is the only part of the marketing mix A. that offers the opportunity for an oligopoly. B. that is subject to gray market manipulation. C. that leads to competition. D. that generates revenue. E. that is determined by the consumer.

D. that generates revenue.

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.

D. the price of alternative products and services.

A customer orientation toward pricing implicitly invokes the concept of A. knowing the dimensions of the target market. B. positioning. C. the income effect. D. value. E. profit.

D. value.

According to your text, research has consistently shown that consumers usually rank which of the four Ps as one of the most important factors in their purchase decisions? A. Promotion B. Place C. Product D. Perception E. Price

E. Price

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n) _______ orientation to pricing. A. industry B. sales C. competitor D. production E. customer

E. customer

A "no haggle" pricing policy is a type of _____ pricing strategy. A. maximizing profits B. sales orientation C. target return D. status quo E. customer-oriented

E. customer-oriented

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

E. maximizing profits

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.

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

Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a _______ pricing strategy. A. maximizing profits B. target profit C. target return D. status quo E. sales orientation

E. sales orientation

A demand curve shows the relationship between income and demand

FALSE

At the break-even point, profits are maximized

FALSE

Brands that have developed loyal customers have a higher price elasticity of demand

FALSE

Costs related to supply and costs related to demand are the two primary cost categories

FALSE

Diana owns a boutique specializing in ball gowns. Sales are stable and Diana feels it is time she had a 20 percent increase in her salary. If Diana takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis

FALSE

Price is the cash expenditure plus taxes that consumers have to pay for a good or service

FALSE

Pure competition occurs when there are many firms competing for customers in a given market but their products are differentiated

FALSE

The demand curve for prestige products generally slopes downward due to higher prices

FALSE

When a firm has a particular profit goal as its overriding concern, it will use target return pricing to meet the profit objective.

FALSE

A gray market employs irregular but not necessarily illegal methods of distributing products

TRUE

American Airlines just reduced its fares for summer flights by $100. Delta Airlines changes its pricing structure and reduces its flights by $100 as well. Delta is employing status quo pricing

TRUE

Because consumers are generally more sensitive to price increases than to price decreases, it is easier to lose current customers with a price increase than it is to gain new customers with a price decrease

TRUE

Dynamic pricing is also referred to as individualized pricing

TRUE

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself

TRUE

In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high

TRUE

Price elasticity of demand measures how changes in a price affect the quantity of the product demanded

TRUE

Price is the only part of the marketing mix that does not generate costs

TRUE

Pricing strategies should be aligned with a firm's overall goals and objectives

TRUE

Rarely is the lowest-price product offering the dominant brand in a given market

TRUE

The key to successful pricing is to match the product with the consumer's perception of value

TRUE