chapter 18 Marketing
When Xbox sets a relatively low price on its game units to stimulate more demand for its games, it is implementing ______.
complementary product pricing
One of the drawbacks of using average-cost pricing is that ______.
it fails to take into account the effect of "economies of scale" on pricing
A dollar amount added to the cost of products to get the selling price is called a(n) _______.
markup
A(n) ______ is the percentage of the cost that is added to the cost to get the selling price.
markup
Multiplying the selling price times the BEP in units equals ______.
the BEP expressed in dollars
The break-even point is found by dividing total fixed costs by _____.
the fixed cost contribution per unit
Profit is calculated by determining the difference between ______.
total revenue and total cost
The sum of the changing expenses that are closely related to output is called total ______.
variable cost
Conducting an auction tells a company ______.
what customers are willing to pay
To create a demand estimate, managers often try to determine ____ quantity will be sold ____ a particular price is selected.
what, if
To create a demand estimate, managers often try to determine____quantity will be sold ____ a particular price is selected.
what, if
In order to determine a demand estimate for a product, a manager will need to try to answer _______ questions, which will allow him or her to conceptualize future outcomes of a number of different scenarios regarding the quantity and price of a product.
what-if
Given the following data, compute the BEP in units:Price per unit = $3.00Variable cost per unit = $0.50Total fixed cost = $500,000
$200,000
If a firm's total fixed cost is $200,000 and its fixed cost contribution per unit is $10, its break-even in units is ______.
20,000
Special Ts buys T-shirts for $8. After adding a $4 markup, they sell the T-shirts for $12. If the company determines the markup based on the selling price, then the markup on these T-shirts is _____.
33.3%
______ are a way to determine what a group of potential customer would pay.
Auctions
What cost decreases steadily as quantity increases?
Average fixed cost
Why do some companies use the same markup percent as each other?
Because their operating expenses are alike
______ evaluates whether the firm will be able to cover all of its costs with a particular price.
Break-even analysis
How does a manager determine the average cost per unit for a product?
By analyzing company documents from the previous year
How do the results of a marginal analysis help marketing managers determine the best price for a product?
By demonstrating how price affects costs, revenues, and profits
How is the average variable cost (per unit) determined?
By dividing the total variable cost by the related quantity
What are the two basic approaches to price setting?
Cost-oriented and demand-oriented
Which of these consumers is paying a company based on subscription pricing?
Jen pays a monthly fee for the daily newspaper to be delivered to her front door.
What type of pricing is being used when customers pay on a periodic basis for access to a product?
Subscription
Why do some companies use standard markup percent?
To simplify the pricing process
True or false: Even if a manager's estimate of a demand curve is not exact, there generally exists a profitable range surrounding the price that would maximize profit.
True
True or false: Markups are related to selling price mostly for convenience.
True
The Federal Trade Commission considers bait pricing _____.
a deceptive act
Dividing the total fixed cost by the related quantity equals the ______ fixed cost (per unit).
average
Dividing the total variable cost by the related quantity equals the ______ cost (per unit).
average variable
Adding a reasonable markup to the average cost of a product is called ______.
average-cost pricing
Extremely aggressive or dishonest ____-pricing advertising can be considered a deceptive act.
bait
A retail store advertises a laptop with an AMD Dual-Core C-50 processor for $325. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced laptop and try to convince them to trade up to a better, and more expensive, unit with an Intel Core i5-480M processor. This is an example of ______.
bait pricing
Setting some very low prices to attract customers, but trying to sell more expensive models or brands to the customer in the store is called _____.
bait pricing
Dividing the total fixed cost by the fixed cost contribution per unit equals ______ in units.
break-even point
The quantity where the firm's total cost just equals its total revenue is called the ______.
break-even point
Setting prices on several products as a group is called ______ product pricing.
complementary
Of the two basic approaches to setting prices, _____ is the most common.
cost-oriented
Setting an acceptable final consumer price and working backward to what a producer can charge is called ______ pricing.
demand-backward
A software manufacturing company set a suggested retail list price of $240.00 for its new data management software. From the suggested retail list price, the software company subtracted its usual chain of markups for wholesalers and retailers to obtain its own selling price of $102. This is an example of ______.
demand-backward pricing
One reason break-even analysis should be used cautiously is because most managers face ____ demand situations.
down-sloping
The sum of those costs that are fixed in total, regardless of how much is produced, is called the total ______.
fixed cost
The ______ contribution per unit is the assumed selling price per unit minus the variable cost per unit.
fixed-cost
Setting prices for a whole line of products is called ______.
full-line pricing
In order to use average-cost pricing, a marketing manager must make an estimate of _____.
future sales
While shopping for toothpaste at her local convenience store, Cassie was able to compare prices on all of the available products. This shows how access to substitutes ______ price sensitivity.
increases
In order to attract customers to visit a retail store, sellers may offer ______, or real bargain prices. Sellers hope that once customers are at the store they will purchase other items that are not priced so low.
leader pricing
Customers are ______ price sensitive when contemplating making a small expenditure of money.
less
For shopping products, it is common for all prices and value to be ______.
logically related
A pricing tool that focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity is called ______.
marginal analysis
A manager seeking profit ____ will select the highest spot on the total profit curve that has the longest vertical distance between the total revenue curve and total cost curve.
maximization
Aidan Haeger, marketing manager for Wilson Sporting Goods, wants to use marginal analysis to price new soccer balls. Unfortunately he does not know the exact shape of the firm's demand curve. Under these circumstances, marginal analysis ______.
may be useful anyway because a profitable region generally surrounds the best price
Royal Caribbean offers a New Year's Eve cruise for $1,800 per person. In its' advertising, the company focuses on four payments of $450 because customers are ______ price sensitive the greater the total expenditure.
more
Setting prices that end in certain number, such as $0.99 or $49, is called ______ pricing.
odd-even
Some retailers commonly use prices that end in certain numbers. These retailers think that their customers see prices with these numbers as considerably cheaper. This practice is called ______.
odd-even pricing
Deborah is considering finding a new cellphone service provider because her current provider is raising its prices. However, for Deborah the prospect of shopping around for a new provider that is cheaper and offers similar coverage sounds time-intensive and aggravating. Deborah ultimately decides to stay with her current provider because ______.
of the cost of switching providers
A basic problem with the average-cost approach is that it doesn't consider cost variations at different levels of .
output
In the marketplace, markups are generally expressed as a(n) ______.
percentage
Setting a rather high price to suggest high quality or high status is called ______ pricing.
prestige
A company may use ______ to lure customers who will purchase an item that is quite expensive because they believe that it has superior quality and represents an elevated social status.
prestige pricing
Setting one price for a set of products is called ______ pricing.
product-bundle
The difference between total revenue and total cost is called ____.
profit
A manager seeking ______ will select the highest spot on the total profit curve that has the longest vertical distance between the total revenue curve and total cost curve.
profit maximization
Setting prices that have special appeal to target customers is called ______ pricing. These prices just seem right to customers.
psychological
Setting prices that have special appeal to target customers is called ______ pricing. These prices just seemright to customers.
psychological
Cal believes that customers in his culinary supply shop find certain prices very appealing. He believes that customers do not really notice the difference in prices of products priced between $15.00 and $19.99. Therefore, Cal prices products at the top of this range. Cal's pricing approach is called ______.
psychological pricing
Eilysh, a student, is used to paying $1.50 for a 12-ounce bottle of water from various vending machines on campus, so she expects the new vending machine just installed outside her chemistry classroom to charge her the same amount for water. For Eilysh, the $1.50 price is a ______.
reference price
Jill hoped to buy tortilla chips at the store, but when she saw they were priced at $6 a bag she decided not to buy them because she thought the price was too high. Jill went into the store with a different idea of what the ____ of the chips should be.
reference price
The price customers expect to pay for a product is called the ______.
reference price
If you multiply the ______ by the BEP in units, you get the BEP in dollars.
selling price
Retail stores that use leader pricing attempt to attract customers by _____.
setting prices very low for some products
