BAS 282: Pricing: SmartBook

The two primary strategies for pricing new products are price skimming to maximize ______ and penetration pricing to maximize ______.

profit; volume

Pricing decisions must be made with the goal of maximizing long-term, sustainable __________.

profits

Taxes on imports and exports between countries are called ___________.

tariffs

As it relates to evaluating demand, marginal revenue can be defined as ______.

the change in total revenue that results from selling one additional unit of product

Which pricing strategy gives price reductions to customers purchasing goods or services during traditionally slow business times?

Seasonal pricing

Which of the following is a true statement regarding dumping and the World Trade Organization (WTO)?

The WTO has not classified dumping as illegal.

When determining the cost of a product, what is the marketers' goal?

To make sure they will not lose money by pricing the product too low

Why are firms sometimes required to raise prices?

To recover their increasing costs and boost their profits

Before a firm can estimate how much revenue it must generate to earn a profit, it must first calculate the __________ point so it knows the sales volume needed to achieve a profit of zero.

break-even

In a competitive price environment, a marketer's pricing strategy involves setting prices based on ______.

competitors' prices

As a general rule, as the price for a product increases, consumer demand ______. On the other hand, as price decreases, consumer demand ______.

decreases; increases

The first step of the price-setting process is ______, and the last step is ______.

defining the pricing objectives; monitoring and evaluating the effectiveness of the price

A product's ______ is directly related to its price elasticity.

demand curve

A protectionist strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market is referred to as __________.

dumping

A firm that takes branded products and sells them through legal but unauthorized distribution channels is participating in the __________ market.

gray

Every year, Walter travels to China and legally buys large quantities of baseball caps related to MLB sports teams. He imports the caps into the United States, where he sells them for less than the normal market price at his storefront in New York City. The baseball caps are considered to be ______.

gray market goods

Prestige pricing involves pricing a product __________ than competitors.

higher

Under U.S. law, deceptive pricing practices are considered ______.

illegal

Under U.S. law, predatory pricing is considered ______.

illegal

Under U.S. law, price fixing is considered ______.

illegal

Although its name has a negative connotation, the practice of price discrimination is illegal only if it ______.

injures the competition

A pricing tactic in which a firm prices its products a few cents below the next dollar amount is known as ___________ pricing.

odd

The practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels, is known as ______.

predatory pricing

Companies determine how much their product or service is worth to consumers by setting a ______.

price

The amount of time, money, or effort a buyer exchanges with a seller to obtain a product is known as ___________.

price

The practice of charging different customers different prices for the same product is known as ______.

price discrimination

When two or more companies collude to set a product's price, they are engaging in ______.

price fixing

The degree to which a consumer's purchasing behavior is affected by price is referred to as ______.

price sensitivity

The degree to which the price of a product affects consumers' purchasing behavior is referred to as ______. This factor is ______.

price sensitivity; highly variable between consumers

For countries involved in a trade agreement, such as the United States, Canada, and Mexico are in NAFTA, transactions between countries are easier if ______.

the countries lower tariffs or agree not to impose them at all

Select all of the choices that are unique challenges related to global pricing for firms seeking to increase their revenue and profits.

* Dumping * Tariffs * The gray market

Select the two pricing strategies that are used specifically with new products.

* Penetration pricing * Price skimming

From the following list, select all of the pricing tactics marketers use to maintain profitability, create a positive brand image, attract customers, and reach their inventory and sales goals.

* Price Bundling *Markup pricing * Seasonal discounts * Odd pricing * Prestige pricing

Select all of the following choices that are ethical issues marketers may face as they seek to set prices for their products.

* Price Fixing * Price Discrimination * Predatory Pricing

The marketers for Crumb Muffins are eager to start marketing and selling their new line of natural fruit muffins. From the following list, select all of the questions marketers should ask themselves when setting prices in a competitive price environment.

* Should we price our muffins lower or higher than competitors' muffins? * How will our competitors respond to our pricing? * How many competitors are out there? * Should we match competitors' prices for muffins? * What do competitors charge for similar products?

From the following list, select all of the factors that have made global pricing more transparent and, in many cases, more competitive in recent times.

* Technological advancements * Increased Internet access

From the following list, select all of the factors marketers should consider when determining which pricing tactic to use.

* The value customers perceive the product to have * How customers intend to use the product * The customer's ability to pay

Select all of the guidelines that apply to a firm's pricing objectives.

* They should be measurable. * They should be specific. * They should reflect any market realities the firm faces.

Select the two factors that influence price but are often overlooked.

* Underpricing * Reference prices

List the steps in the price-setting process in order, with step 1 at the top and step 6 at the bottom.

1. Define Pricing Objectives 2. Evaluate Demand 3. Determine the Costs 4. Analyze the Competitive Price Environment 5. Choose a Price 6. Monitor and Evaluate the Effectiveness of the Price

Which of the following accurately describes the concept of dumping?

A company decides to sell its exports to another country at a lower price than it sells the same products in its domestic market.

Which type of costs remain constant and do not vary based on the number of units produced or sold?

Fixed

What type of pricing draws upon a basic human processing error?

Odd

Which marketing mix element is watched and regulated most closely because it directly impacts the financial viability of both organizations and individuals?

Price

Which pricing strategy packages two or more products together and sells them at a single price?

Price bundling

Which of the following accurately describes the concept of prestige pricing?

Pricing a product higher than competitors to signal that it is higher in quality

What is the main reason marketers use a price bundling strategy?

They can charge a higher price for the bundle than they can for the items individually.

In the past, how have companies set prices for products that are sold internationally compared to the same products sold domestically?

They have set prices higher for products sold internationally.

How should pricing strategies be addressed during the product life cycle?

They should evolve and be periodically reevaluated.

Which type of costs change depending on the number of units produced or sold?

Variable

The way a firm reacts to a competitor's pricing change depends on whether the competitor is ______ and if the reduction in pricing is ______.

a stronger or weaker rival; cost justified

The point at which the costs of producing a product equal the revenue made from selling the product is known as the ___________ point.

break-even

One of the most commonly used pricing tactics, largely because it is easy to implement and uses the same percentage across all products, is known as __________ pricing.

cost-plus

An illegal practice that involves intentionally misleading customers with price promotions is known as ______.

deceptive pricing

The removal of tariffs due to international agreements has caused countries to enact laws against __________ to protect their local industries.

dumping

Seasonal discounts are price reductions given to customers purchasing goods or services ______.

during slow times of the year

Marketers typically prefer targeting international markets with ______ tariffs.

low

Accurately calculating the costs to make a product sets a ______ and ensures that marketers will not lose money by ______.

lower price limit; pricing products too low

As an element of evaluating demand for a product, ______ cost can be defined as the change in total cost that results from producing one additional unit of product.

marginal

Pricing objectives should be an extension of a firm's __________ objectives.

marketing

Cost-plus pricing is also known as __________ pricing.

markup

When determining a pricing strategy for a firm that sells its goods internationally, the firm must take into account the potential taxes on imports and exports that foreign countries will place on its goods. These potential taxes are known as ______.

tariffs