Combo with "marketing test 3" and 12 others
The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?
$30
What is the variable cost per person for Highland?
$30
Tim O'Brien gets the invoice for a load of gravel he purchased last week. The price of the gravel was $55, and the terms are 2/10, n/45. If Tim pays the invoice in five weeks, he will owe
$55.00.
Tim O'Brien gets the invoice for a load of gravel he purchased last week...If Tim pays the invoice in five weeks, he will owe
$55.00.
What equation shows organizations the relationship between price and profit?
(Price x Quantity sold)-Total costs=Profits
What equation shows organizations the relationship between price and profit?
(Price × Quantity Sold) Total Costs = Profits
If a company increased its price from $100 to $120 and the percentage change in quantity demanded was 40 percent, the price elasticity of demand for this product is
-2
If a company increased its price from $100 to $120 and the quantity demanded fell by 40 percent, the price elasticity of demand for this product is
-2
Markum Industries determines that for its air compressors the following results are achieved at a price of $250: total costs = $250,000; variable costs per unit = $100; fixed costs = $175,000. Given these figures, Markum would break even at ___________ units.
1,167
Markum would break even at ___________ units.
1,167
What are the Three types of Non-store Retailing:
1. Direct Selling 2. Direct Marketing 3. Automatic Vending
What are the five product mix pricing strategies?
1. Product line pricing 2. Optional- product pricing 3. Captive-product pricing 4. Product bundle pricing 5. Bait Pricing
dealer loader
A gift, often part of a display, given to a retailer that purchases a specified quantity of merchandise
free merchandise
A manufacturer's reward given to resellers that purchase a stated quantity of products
Below the breakeven point, a firm is operating
At a loss
Which of the following pricing objectives sets prices to recover cash as quickly as possible?
Cash flow
recruiting
Developing a list of qualified applicants for sales positions
What do all of the following have in common: tuition, fee, premium, retainer, dues?
Different terms for the concept of price
premium money (push money)
Extra compensation to salespeople for pushing a line of goods
Which of the following is most likely to have an inelastic demand curve?
Nonelective surgery
The types of prices that appear least often in ads are ___________ prices.
Premium
What is comparison discounting?
Pricing of a product at a specific level & comparing it to a higher price.
Discount Stores
Self-service, general merchandise stores offering brand names and private brand products at a low price. Discounters accept lower margins than conventional retailers do in exchange for high sales volume. Most discount stores carry a wide, but carefully selected assortment of products.
When marginal cost is equal to marginal revenue, the firm should
Stop producing additional units to maximize profits
a
The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called a) price lining. b) odd-even pricing. c) price skimming. d) prestige pricing. e) customary pricing.
closing
The stage in the personal selling process when the salesperson asks the prospect to buy the product
b
When determining markup as a percentage of cost, divide the markup amount by a) price. b) cost. c) quantity. d) revenue. e) 100.
Which of the following statements about price elasticity is false?
When price is raised on a product that has an inelastic demand, then total revenue will decrease
coupons
Written price reductions used to encourage consumers to buy a specific product
Which of the following pricing strategies often results in a retailer losing money on the product? a) Price leader b) Psychological discounting c) Penetration pricing d) Special-event pricing e) Ethical pricing
a
Which of the following statements about markup pricing is correct? a) The use of similar markups reduces price competition. b) Markup pricing is inconvenient to use. c) Markup pricing results in a high price when demand is high and a low price when demand is low. d) Markup pricing is a demand-based pricing method. e) Using markups makes pricing a time-consuming, difficult process.
a
Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry? a) Status quo b) Return on investment c) Market share d) Survival e) Cash flow
a
Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products? a) Status quo b) Market share c) Survival d) Cash flow e) Return on investment
a
Customers who purchase encyclopedias from door-to-door salespeople are acquiring products through
a direct marketing channel
One advantage of nonprice competition is that
a firm can build customer loyalty
One advantage of nonprice competition is that
a firm can build customer loyalty.
Dealer loader
a gift given to a retailer that purchases a specified quantity of merchandise. Dealer loaders are often used to coerce special display efforts out of retailers by offering parts of the display to the retailers.
Mary's profits would equal
a loss of $32,000
In conducting an assessment of her accounting firm, Pauline Santana discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Mary's profits would equal
a loss of $32,000.
Merchandise allowance
a manufacturer's agreement to pay resellers certain amounts of money for providing special promotional efforts such as advertising or displays, although manufacturers should verify a retailers' performance before paying them. This is best suited to high-volume, high-profit, easily handled products.
Scan-back allowance
a manufacturer's reward to retailers based on the number of pieces moved through their scanners during a specific time period. Retailers are expected to pass savings to consumers through special pricing.
Buying allowance
a temporary price reduction offered to resellers for purchasing specified quantities of a product.
Advertising, personal selling, sales promotion, and public relations are called a) promotion mix ingredients. b) marketing mix components. c) characteristics of a product. d) advertising tools. e) nonpersonal communication.
a) promotion mix ingredients.
When a company promotes its position on a public issue, this is specifically referred to as___ advertising.
advocacy
When Anheuser-Busch ran an advertising campaign featuring the slogan "Know when to say when," it was using:
advocacy advertising
The three major ways to modify a product include
aesthetic, quality, and functional changes
Determining Sales Force Size
affects the firm's ability to generate sales and profits, the compensation methods used, salespeople's morale, and overall sales force management.
A concession in price in business markets to achieve a desired goal is called a(n)
allowance
Cooperative advertising
an arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products. The amount usually allowed is based on the quantities purchased.
Overcoming Objections
anticipate a prospect's objections in order to address and counter them before the prospect has an opportunity 2 raise them
Trade Sales Promotion Methods
attempt to persuade wholesalers and retailers to carry and aggressively market a producer's product.
If Roberts Electronics finds that the average total cost of its radar detectors and the marginal cost of its radar detectors are both $85, then
average total cost is at its lowest level.
Research indicates that both market share and ___________ are good indicators of profitability. a) low pricing b) product quality c) limited competition d) sales growth e) ROI pricing
b
When determining markup as a percentage of cost, divide the markup amount by a) price. b) cost. c) quantity. d) revenue. e) 100.
b
When establishing prices, a marketer's first step is to a) determine demand. b) develop pricing objectives. c) select a pricing policy. d) evaluate competitors' prices. e) determine a pricing method.
b
Which of the following would be used in setting the price of a new product if considerable competition is expected? a) Psychological pricing b) Penetration pricing c) Odd-even pricing d) Price skimming e) Prestige pricing
b
The World Trade Organization accomplishes all of the following except a) educating companies about international trade rules. b) lending money to businesses interested in developing international markets. c) serving as a forum for trade negotiations. d) helping settle trade disputes. e) providing legal ground rules for international commerce.
b) lending money to businesses interested in developing international markets.
In contrast to extended problem solving, routinized response behavior requires a) careful deliberation before making a choice. b) less information about products. c) more time. d) considerable thought. e) more money.
b) less information about products.
The type of prices most likely to appear in advertising are
bargain.
The trade alliance that includes Brazil, Argentina, Chile, and other countries is known as a) OPEC. b) APEC. c) MERCOSUR. d) NAFTA. e) the Common Market.
c) MERCOSUR.
Creating a favorable impression and developing rapport with prospective customers is a critical part of the ______ step of personal selling. a) following up b) making the presentation c) approach d) prospecting e) preapproach
c) approach
Maintaining or increasing market share
can be achieved even if industry sales are flat or decreasing
Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called
comparison discounting
A deduction from list price for purchasing large quantities aggregated over a stated period of time is a
cumulative quantity discount.
Which of the following is not one of the major categories of consumer market segmentation variables? a) Demographic characteristics b) Geographic variables c) Psychographic dimensions d) Situational variables e) Behavioristic characteristics
d) Situational variables
Which product listed would most likely be purchased through routinized response behavior? a) Car b) Desk c) Shirt d) Soft drink e) Television set
d) Soft drink
The Common Market of the Southern Cone (MERCOSUR) includes countries from a) Africa. b) Asia. c) Central America. d) South America. e) the Pacific Islands.
d) South America.
In which of the following does the salesperson join with people from the firm's financial, engineering, and other functional areas to engage in the personal selling process? a) Trade selling b) Missionary selling c) Relationship selling d) Team selling e) Technical selling
d) Team selling
If the ads include both the Venza and the Ford Edge, they would be examples of a) institutional advertising. b) public relations. c) product advertising. d) comparative advertising. e) competitive advertising.
d) comparative advertising.
A marketer that targets customers based on marital status and the presence and age of children is using a) behavioristic segmentation. b) lifestyle variables. c) psychographic variables. d) family life cycle. e) phase of life segmentation.
d) family life cycle.
The stage of the personal selling process in which the salesperson attempts to make a favorable impression, gather information about the customer's needs and objectives, and build a rapport with the prospective customers is called a) prospecting. b) preapproach. c) approach. d) making the presentation. e) overcoming objections.
d) making the presentation.
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ___________ cost. a) average b) fixed c) variable d) marginal e) average variable
d) marginal
Both the Federal Trade Commission Act and the Wheeler-Lea Act prohibit
deceptive pricing.
Amtrak prices its tickets so that it is less expensive to travel on weekends than during the week when there is heavy business travel. This illustrates ___ pricing
demand-based
The final stage of the selling process is:
follow-up.
The first stage in the development of any advertising campaign is:
identifying the target audience.
Immediately after the breakeven point, a firm starts to
make profits.
Selective demand is demand for a:
particular brand
The types of prices that appear least often in ads are ___________ prices.
premium
For customers, value is function of the product's
quality attributes
If Ralph Lauren offers to reduce the price of its women's blazers when retailers buy more than 100 pieces, the designer is offering a ____________ discount.
quantity
If Wilson Sporting Goods faces a standard demand curve that exists for most products, as it raises the price of its tennis rackets, the
quantity demanded goes down.
A marketer is most likely to set prices according to a cash-flow objective when a
quick return on investment is desired
If a business decides to reduce its prices once in a while on unsystematic basis, it is using
random discounting
The percentage of consumers in the target audience actually exposed to a particular advertisement in a stated period of time is the definition of:
reach
Alton is reading a magazine ad for a new cologne. In the ad, he sees little more than a photo of a man riding horseback on a beach, and the name of the new cologne, Rugged. In this situation, Alton is a ___, one who ___.
receiver, decodes
Coupons
reduce a product's price and aim to prompt consumers to try new or established products, increase sales volume quickly, attract repeat purchasers, or introduce new package sizes or features.
Factors such as climate, seasons, and holidays tend to lead to the promotional objective of:
reducing sales fluctuations.
Dial Soap's advertising slogan "Aren't you glad you use Dial? Don't you wish everybody did?" exemplifies the use of ___ advertising.
reinforcement
The degree to which the price of a product enhances a customer's satisfaction with the purchase experience and with the product after the purchase is part of their
response.
Walmart, Macy's Nordstrom's and Toys R Us are examples of:
retailers.
Direct selling, direct marketing, and vending machines are all examples of:
retailing.
A person, group, or organization that has a meaning it intends and attempts to share with a receiver or an audience is a:
source.
A sale at The Bon Marche the day after Thanksgiving to kick off the Christmas season would be considered
special-event pricing
Reinforcement advertising is primarily targeted at:
the current users of a particular product.
Price is a key element in the marketing mix because it relates directly to
the generation of total revenue.
Two trends that have caused consumer-generated information to gain importance is:
the increase of consumers sharing their opinions through digital media and the consumer's mistrust of information from corporations.
A price-skimming strategy assumes that
the initial demand is highly inelastic
Approach
the manner in which a salesperson contacts a potential customer
At the breakeven point,
the money a company brings in from selling products equals the amount spent producing the products.
Which of the following is a requirement for setting pricing objectives?
the objectives should be explicitly stated
A salesperson finds and analyzes information about each prospect's specific product needs, current use of and feeling about brands, and personal characteristics during:
the preapproach.
Closing the Sale
the stage n the selling process when the salesperson asks the prospect 2 buy the product(s).
Sales force objectives are generally established for:
the total sales force and each salesperson.
Price is
the value that is exchanged for products in a marketing transaction
Price is
the value that is exchanged for products in a marketing transaction.
Consumers are changing ____ and consumption behaviors as a result of emerging technologies.
their information searches
Generally, customers are most likely to rely on the price-quality association when
they cannot judge the quality of the product for themselves.
Marketers improve their ability to establish prices appropriately when
they know prices charged for competing brands
Bundle pricing may be perceived to be of value by customers because
they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money
Monopolies usually keep their prices at a level that generate a reasonable, but not excessive, return primarily because
they want to avoid government regulations on their pricing.
Having products available when the customer wants them is called
time utility
Missionary Salespeople
usually employed by manufacturers, assist the producer's customers in selling 2 their own customers.
When consumers are making do with less expensive products and shopping more selectively, manufacturers and retailers must focus on the ___ of their products
value
Price is
value that is exchanged for products in a marketing transaction
Costs that vary directly with changes in the number of units produced or sold are called
variable costs.
Marginal analysis involves examining
what happens to a firm's costs and revenues when production is changed by one unit.
The amount of profit a channel member expects depends on
what the intermediary could earn if it were handling a competing product instead.
Name the Five Characteristics of a Warehouse Showroom:
1.Minimal services 2.Large on-premise inventory 3.Vertical merchandise displays 4.Warehouse materials handling technology 5.Large, low cost buildings
There are Three kinds of Specialty Retailers:
1.Traditional Specialty Retailers 2.Off-price retailers 3. Category Killers
Vocabulary from Chapter 17 are:
2 - 42
If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?
2,000 units
A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate markup as a percentage of selling price?
30 percent
A certain location of O'Charley's Restaurant has annual fixed costs of $200,000. If an average tab at the restaurant is $60 and the variable costs per tab is $20, how many groups of customers must O'Charley's serve per year in order to break even?
5,000
How many groups of customers must O'Charley's serve per year in order to break even?
5,000
J.C. Penny's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately ___ percent for this product
57
The new-product development process is a______ phase process for introducing products
7
What is the growth stage of the product life cycle?
: is a period of rapid market acceptance and increasing profits. During this stage of a product's life cycle sales rise rapidly and profits reach a peak and then start to decline
e
A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish? a) Everyday low prices strategy b) Odd-even pricing strategy c) Prestige pricing strategy d) Special-event pricing strategy e) Reference pricing strategy
b
A certain location of O'Charley's Restaurant has annual fixed costs of $200,000. If an average tab at the restaurant is $60 and the variable costs per tab is $20, how many groups of customers must O'Charley's serve per year in order to break even? a) 2,000 b) 5,000 c) 10,000 d) 3,333 e) 2,500
b
A company trying to position itself as value oriented should not a) set prices that are reasonable relative to product quality. b) use premium pricing for its products. c) set prices similar to those of its competitors. d) use any advertising for its products. e) consider costs when determining the price of products.
a
A concession in price in business markets to achieve a desired goal is called a(n) a) allowance. b) objective-oriented discount. c) cash discount. d) trade discount. e) cumulative discount.
e
A cost-based pricing method commonly used in retail is called a) value pricing. b) cost-plus pricing. c) cost discounting. d) differential pricing. e) markup pricing.
e
A customer who is ___________ is likely to say, "People notice when you buy the most expensive brand of a product." a) price-conscious b) quality-conscious c) value-conscious d) socially conscious e) prestige-sensitive
b
A danger associated with engaging in price competition is that competitors can also change prices quickly and aggressively, which can result in a(n) _____ that will be harmful to both companies. a) reduction in cost b) price war c) competitive draw d) industry collapse e) advertising battle
c
A deduction from list price for purchasing large quantities aggregated over a stated period of time is a a) noncumulative quantity discount. b) additive cash discount. c) cumulative quantity discount. d) cumulative discount allowance. e) additive quantity reduction.
d
A firm establishes which of the following pricing objectives to maintain or increase its product's sales in relation to total industry sales? a) Cash flow b) Sales potential c) Product quality d) Market share e) Status quo
What is a Catalog Showrooms?
A form of a warehouse showroom where consumers shop from a catalog and products are stored out of the buyer's reach. In a catalog showroom, one item of each product is put on display and all others are out of the buyer's reach. Customers can place orders by phone or in person using catalogs that have been mailed to the house or are on store counters.
e
A graph of the quantity of products marketers expect to sell at various prices if other factors remain constant is a a) price graph. b) supply curve. c) price/quantity graph. d) marginal revenue curve. e) demand curve.
d
A manager at JC Penney discovers that Sears has reduced the price of its children's Levi's from $31.99 to $24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing strategy? a) Secondary-market pricing b) Bait-pricing c) Reference pricing d) Random discounting e) Comparison discounting
merchandise allowance
A manufacturer's agreement to pay resellers certain amounts of money for providing special promotional efforts, such as setting up and maintaining a display
scan-back allowance
A manufacturer's reward to retailers based on the number of pieces scanned
e
A market share objective a) is not recommended when sales for the total industry are declining. b) is not especially useful when sales for the total industry are increasing. c) is not especially useful when sales for the total industry are flat. d) is useful primarily in an industry where total sales are increasing. e) can be used effectively whether total industry sales are rising or falling.
c
A marketer is most likely to set prices according to a cash-flow objective when a a) trial-and-error approach to the market is acceptable. b) certain market share must be maintained. c) quick return on investment is desired. d) higher price is acceptable to the firm. e) product is expected to have a long life cycle.
b
A marketer sometimes uses temporary price reductions to a) increase the number of competitors. b) gain market share. c) decrease volume sold. d) increase revenue per item. e) control demand.
d
A measure of sensitivity of demand in relation to changes in price is a) a demand curve. b) a prestige graph. c) marginal analysis. d) price elasticity of demand. e) quantity elasticity.
To gain market share, when Hyundai first entered the U.S. car market it did so with a comparatively low price strategy. One of the negative side effects of making this pricing decision is
A negative impact on the consumers' perception of quality
b
A penetration pricing strategy is particularly appropriate when demand is a) increasing. b) highly elastic. c) highly inelastic. d) decreasing. e) inefficient.
e
A price developed in the consumer's mind through experience with the product is called a(n) a) external reference price. b) value-price guideline. c) frame of reference. d) internalized price. e) internal reference price.
e
A price-skimming strategy assumes that a) the initial demand is highly elastic. b) the product is efficient. c) it will be difficult to recoup development costs. d) all consumers have homogeneous tastes. e) the initial demand is highly inelastic.
e
A problem associated with _____ is that consumers can predict when prices will be lowered and delay purchases until that time. a) random discounting b) penetration pricing c) reference pricing d) everyday low pricing e) periodic discounting
d
A product is a price leader when a) it is sold at the highest price. b) its price maximizes profits. c) an increase or decrease in price leads to increased revenue or lower costs. d) it is sold at less than cost in the hope that sales of other products will increase. e) its price leads the industry in sales.
c
A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy? a) Custom pricing b) Special-event pricing c) Premium pricing d) Price lining e) Bait pricing
b
A product under nonprice competition would most likely not succeed in the market if a) a new advertising campaign is established for it. b) it is easy to duplicate. c) it is packaged differently from similar products. d) it is priced near the competitors' price. e) its quality has been upgraded.
What is a General Merchandise Retailer?
A retail establishment that offers a variety of product lines that are stocked in depth. The types of customer service, products offered, and operating styles of these retailers vary widely. The types of stores that fall under this category are department stores, discount stores, supermarkets, superstores, hypermarkets, warehouse clubs, and warehouse and catalog showrooms.
c
A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate markup as a percentage of selling price? a) 3 percent b) 14.3 percent c) 30 percent d) 70 percent e) 20 percent
d
A sale at The Bon Marche the day after Thanksgiving to kick off the Christmas season would be considered a) psychological pricing. b) comparison discounting. c) customary pricing. d) special-event pricing. e) captive pricing.
a
A sale that advertised prices "up to 65 percent off" the original price uses a) tensile pricing. b) random discounting. c) periodic discounting. d) bait pricing. e) psychological pricing.
consumer sweepstakes
A sales promotion in which entrants submit their names for inclusion in a drawing for prizes
sales contest
A sales promotion method used to motivate distributors, retailers, and sales personnel through recognition of outstanding achievements
What is a seasonal discount -
A seasonal price is a price reduction to buyers who buy merchandise or services out of seasons. For example, lawn and garden equipment manufacturers offer seasonal discounts to retailers during the fall and winter months to encourage early ordering in anticipation of a heavy spring and summer selling seasons. Seasonal discounts allow the seller to keep production steady during the entire year.
What is discount pricing?
A straight reduction in price on purchases during a stated period of time. The many forms of discounts include cash discount, a price reduction to buyers who pay their bills promptly.
buy-back allowance
A sum of money given to a reseller for each unit bought after an initial promotion deal is over
buying allowance
A temporary price reduction to resellers purchasing specified quantities of a product
What is Catalog Marketing:
A type of marketing in which an organization provides a catalog form which customers make selections and place orders by mail, telephone, or the Internet.
What is Direct Response Marketing:
A type of marketing that occurs when a retailer advertises a product and makes it available through mail or telephone orders. Examples of direct response marketing include a billboard promoting floral services by calling 1-800-FLOWERS. Direct response marketing is also conducted by sending letters, brochures, samples, or booklets to consumers on a mailing list. Usually the product price must be at least $20.00 in order to justify the advertising and distribution costs.
What are Category Killers
A very large specialty store concentrating on a major product category and competing on the basis of low prices and product availability. These stores are known as category killers because they expand rapidly and gain sizeable market shares. Examples of category killers include Home Depot, Office Depot, Toys "R" Us, and Best Buy.
c
ACE Electronics introduces a new voice-activated personal computer that no longer requires a keyboard. ACE charges the high price of $11,000 per unit, thus generating large profits because it has a 20 percent market share. ACE's major problem in the future will most likely be a) survival. b) cash flow. c) competition. d) return on investment. e) profit.
If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen?
Above some price level, the quantity demanded would begin to decrease
If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen?
Above some price level, the quantity demanded would begin to decrease.
Selection of a Basis for Pricing: Cost Based Pricing
Adding a dollar or % amount to the cost of the product Doesn't really take into account economic conditions of supply and demand There are two types: cost plus pricing & markup pricing
Which of the following characteristics distinguish online media from traditional marketing?
Addressability, interactivity, accessibility, connectivity, and control
Pricing Objectives: Survival
Adjust price levels so the firm can increase sales volume to match organizational expenses Tolerate some set back its it means that the company will survive A&F ex. lower prices in recession to survive
Pricing Objectives: Market Share
Adjust price levels so the firm can maintain or increase sales relative to competitor's sales Also to maintain or increase a product's share relative to the total industry sales, market share High relative market shares often translate into higher profits Can increase market share even when total industry sales are flat or declining Sales volume may increase while it's market share decreases, if the overall market is growing
Promotional Pricing: Special Event Pricing
Advertised sales or price cutting linked to a holiday, a season, or an event When a sales lag occurs this should be considered Requires a lot of coordination between production, scheduling, storage, and physical distribution
c
Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of a) service. b) market share. c) price. d) selection. e) packaging.
dealer listings
Advertisements that promote a product and identify the names of participating retailers that sell the product
Which of the following products is most likely to have an elastic demand curve?
Airline tickets for vacation travel
e
All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except a) premium pricing. b) price lining. c) captive pricing. d) bait pricing. e) penetration pricing.
e
All of the following are psychological techniques except a) customary pricing. b) prestige pricing. c) reference pricing. d) odd-even pricing. e) price skimming.
A concession in price in business markets to achieve a desired goal is called a(n)
Allowance
b
Amtrak prices its tickets so that it is less expensive to travel on weekends than during the week when there is heavy business travel. This illustrates ___________ pricing. a) cost-plus b) demand-based c) competitive d) secondary markup e) seasonal
sales promotion
An activity and/or material intended to induce resellers or salespeople to sell a product or consumers to buy it
cooperative advertising
An arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products
Retail
An organization that purchases products for the purpose of reselling them to ultimate consumers.
a
At the breakeven point, a) the money a company brings in from selling products equals the amount spent producing the products. b) the total fixed costs are exactly equal to the total variable costs. c) profits are exactly equal to the difference between revenue and total variable costs. d) the marginal revenue of a product is exactly equal to the marginal cost of producing one more unit. e) the marginal cost curve and the average cost curve will be identical for a particular product.
a
At what point does a firm maximize profit? a) The point at which marginal cost equals marginal revenue b) The point at which the firm sells its product at the highest price c) The breakeven point plus the adjusted marginal cost d) The point at which marginal profits equal marginal revenue e) The point at which marginal cost equals marginal profits
Selection of Pricing Strategy: Psychological Pricing
Attempts to influence a customer's perception of price to make a product's price more attractive Help to prevent "sticker shock" This includes reference pricing, bundle pricing, multiple unit pricing, everyday low prices (EDLP), odd even pricing, customary pricing, and prestige pricing
If Roberts Electronics finds that the average total cost of its radar detectors and the marginal cost of its radar detectors are both $85, then
Average total cost is at its lowest level
What is bait pricing?
Bait pricing occurs when a marketer prices an item in the product line low with the intention of selling a higher-priced item in the line. The lower-priced item will attract customers into the store, while the marketer hopes that once in the store, the customer will purchase the higher-priced one.
The type of prices most likely to appear in advertising is
Bargain
The oldest form of exchange—trading of products—is known as
Barter
e
Below the breakeven point, a firm is operating a) with fixed costs only. b) with minimal variable costs. c) with no revenue. d) profitably. e) at a loss.
c
Both the Federal Trade Commission Act and the Wheeler-Lea Act prohibit a) freezing prices. b) independent pricing policies. c) deceptive pricing. d) price fixing. e) price differentials.
Suppose managers at Caterpillar have determined the costs associated with producing hay balers are equal to the price that they charge for the hay balers. This indicates that Caterpillar is producing at the ___________ point.
Breakeven
c
Breyer's produces a variety of ice cream flavors and lines of varying qualities. The higher quality ice cream varieties are priced higher than the basic ones. Breyer's is using _____ to price its ice cream. a) captive pricing b) price baiting c) premium pricing d) bait pricing e) differential pricing
b
Bundle pricing may be perceived to be of value by customers because a) they always pay a lower price per item than they would have if they bought each item separately. b) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money. c) the companies selling the products can sell them at a lower price because their costs of packaging are lower. d) they are purchasing complementary products, which is convenient for them. e) they can purchase items that are consumed frequently in larger quantities.
In this stage: The product idea is evaluated to determine its potential contribution to the firm's sales, costs, and profits.
Business Analysis
d
Buyers who focus on purchasing products that signify prominence and status are a) value-conscious consumers. b) price-conscious consumers. c) socially elite buyers. d) prestige-sensitive buyers. e) brand aware consumers.
Which of the following pricing objectives sets prices to recover cash as quickly as possible?
Cash-flow
New Product Pricing: Price Skimming
Charging the highest possible price that buyers who most desire the product will pay Most flexible approach bc prices can always be lowered Helps keep demand low enough to be consistent with firm's production capability Provides needed initial cash flows to offset product development costs May make the market seem attractive to a competitor bc of high prices
Provisions of the Robinson-Patman Act, as well as those of the ___________, limit the use of price differentials.
Clayton Act
What is by-product bundle pricing?
Combining several products and offering the bundle at a reduce price.Using product bundle pricing, sellers often combine several of their products and offer the bundle at a reduced price.
In this stage: Plans for full-scale manufacturing and marketing must be refined and settled and budgets for the project is prepared
Commercialization
Cost Based Pricing: Markup Pricing
Commonly used by retailers. A product's price is derived by adding a predetermined % of the cost, called a markup, to the cost of the product ex. Costco has set their's to 11% markup Using this rigid % markup makes pricing a very routine task that can be easily performed Markup can be stated as a % of cost or as a % of the selling price Important to know which one you're being told ex. retailer pays 45 cents, adds 15 cents and sells for 60 cents Markup as % of cost: Markup/Cost-> (15/45)=33.33% Markup as % of selling price: Markup/Selling Price-> (15/60)=25% This method is convenient which is why it is so often used by retailers who face many pricing decisions
b
Companies that focus on particular product categories and rely on everyday low pricing to acquire a large market share through aggressive and competitive pricing strategies are often referred to as a) pioneers. b) category killers. c) comparison discounters. d) price leaders. e) category leaders.
Which of the following statements about nonprice competition is false?
Companies that use nonprice competition do not need to keep track of their competitor's prices
Which of the following statements about nonprice competition is false?
Companies that use nonprice competition do not need to keep track of their competitor's prices.
The manager at Best Buy puts a sign up next to a Pioneer audio system that reads, "Only $199.99! $60 less than Circuit City." This is an example of what type of pricing strategy?
Comparison Discounting
If PepsiCo sets its 12-pack at $3.99 to match the price charged by Coca-Cola, Pepsi is using which pricing method?
Competition-based
a
Competition-based pricing is a) used when costs and revenues are secondary to competitors' prices. b) not useful as a method of increasing market share. c) not useful if the competing products are homogeneous. d) not able to increase sales. e) used when competing products are heterogeneous.
e
Competitors' prices, along with the marketing variables they emphasize, are determining factors in a) the instability of prices in a particular industry. b) using markup pricing for consumer goods. c) how much marketing research a firm needs to collect. d) using differential pricing to demonstrate quality differences. e) how important price will be to customers.
In this stage - A small sample of potential buyers is presented with a product idea through a written or oral description to determine their attitudes and initial buying intentions regarding a product
Concept Testing
What can Consolidated conclude?
Consolidated mustard is a prestige good
When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude?
Consolidated mustard is a prestige good.
Marketers generally view _____ as the minimum price a product can be sold for.
Costs
a
Costs that do not vary with changes in the number of units produced and sold are called ____ costs. a) fixed b) total c) invariable d) variable e) set
b
Costs that vary directly with changes in the number of units produced or sold are called a) changeables. b) variable costs. c) direct costs. d) fixed costs. e) marginal costs.
A deduction from list price for purchasing large quantities aggregated over a stated period of time is a
Cumulative quantity discount
Both the Federal Trade Commission Act and the Wheeler-Lea Act prohibit
Deceptive pricing
A graph of the quantity of products marketers expect to sell at various prices if other factors remain constant is a
Demand curve
prospecting
Developing a database of potential customers
Six Stages for Price Establishment
Development of Pricing Objectives Assessment of Target Market's Evaluation of Price Evaluation of Competitor's Price Selection of a Basis For Pricing Selection of a Pricing Strategy Determination of a Specific Price
Which of the following is not a discount provided to business customers?
Differentiated
____ uses the Internet, mobile, and interactive channels to develop communication and exchanges with customers.
Digital marketing
. How can Direct marketing occur?
Direct marketing can occur in five ways: 1. Catalog Marketing 2. Direct-Response Marketing 3. Telemarketing 4. Television Home Shopping 5. Online retailing
Which of the following is not a method used to determine transfer prices?
Discounted standard cost
e
Dividing the percentage change in quantity demanded by the percentage change in price gives the a) prestige demand curve. b) breakeven point. c) marginal cost curve. d) price sensitivity curve. e) price elasticity of demand.
For most firms in the United States, demand curves are
Downward sloping
d
During July and August, Lakewood Links Golf Course, located in South Carolina, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of a) differential pricing. b) incentives. c) competition-based pricing. d) demand-based pricing. e) random discounting.
Stage For Establishing Prices: Evaluation of Competitor's Prices (3)
Easier to set your prices when you know the prices charged for competing products Discovering competitor prices may be a function of marketing research ex. comparative shoppers do this for co's all day Can buy purchase price lists Not always easy to find out this info; especially in producer and resell markets (closely guarded) If price competition prevails then you need to know competitor prices so you can price, just at, below, or above their prices Above comp's prices: try to give products an exclusive image Below comp's prices use it as a competitive tool
Managing the Sales Force
Effective sales force management is an important determinant of a firm's success because the sales force is directly responsible for generating an organization's primary inputs—sales revenue. A firm's reputation is often determined by the ethical behavior of its sales force, making a positive ethical corporate culture imperative.
If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be
Elastic
What are Specialty Retailers?
Emphasize narrow and deep assortments. Despite their name, specialty retailers do not sell specialty items. Instead they offer substantial assortments in a few product lines.
Psychological Pricing: Odd Even Pricing
Ending the price with certain numbers to influence buyers' perceptions of the price or product Assumes more will be sold at 99.95 than at 100 Customers may think retailer cut price as much as it could Women are more likely to respond to this type of pricing Pricing at even prices, gives the product an upscale feel/image (ex. 100)
Selection of Pricing Strategy: Product Line Pricing
Establishing and adjusting prices of multiple products within a product line Goal is to maximize profits for the entire product line rather than just one individual product Need to evaluate relationship among the products in the line before making a decision Complementary products; sales increases in one product raise demand for other items (ex. printers and print toners) Substitute Products: buyers of one product in the line are unlikely to purchase one of the other products in the same line ex. Tide, Cheer, Bold, an Gain -> All P&G Several strategies for this: captive pricing, premium pricing, bait pricing, price lining
a
Executives in Japan decided to price Lexus luxury cars in the United States at $55,000 while pricing them at $66,000 in their own country. This is an example of a) secondary-market pricing. b) price skimming. c) bait pricing. d) prestige pricing. e) random discounting.
When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on
External reference prices
Lucy buys a new dress at T.J. Maxx that has a price tag with "Compare at $50.00. Our Price $29.99." This is an example of the use of
External references prices
Rob Johnson orders 16 dozen fishing lures from Strike Right for $375. When he gets the invoice, he is furious that $25 in freight charges has been tacked onto his bill because he thought the price included freight costs. Rob should have been certain that the order terms were
F.O.B. destination.
If a retailer orders a quantity of merchandise to be delivered to his store in Phoenix and is quoted a price that does not include shipping charges, the retailer is paying a(n) ___________ price.
F.O.B. factory
Rob Johnson orders 16 dozen fishing lures from Strike Right for $375. When he gets the invoice, he is furious that $25 in freight charges has been tacked onto his bill because he thought the price included freight costs. Rob should have been certain that the order terms were
FOB destination
If a retailer orders a quantity of merchandise to be delivered to his store in Phoenix and is quoted a price that does not include shipping charges, the retailer is paying a(n) ___________ price.
FOB factory
Selection of Pricing Strategy: Professional Pricing
Fees set by people with great skill or experience in a particular field Ex. Doctors, lawyers fees etc. This strategy carries with it the idea that professionals have the ethical responsibility not to overcharge customers Drug companies (especially life giving drugs ex. insulin)-> ethical prices
Stage For Establishing Prices: Development of Pricing Objectives (1)
First step is to set pricing objectives: goals that describe what a firm wants to achieve through pricing Important tool bc its used as the basis for decisions in other stages of the pricing process Should be stated explicitly and should include the time frame by which you plan to have them accomplished
Costs that do not vary with changes in the number of units produced and sold are called ____ costs
Fixed
Which of the following is not a concern of the practice of price competition?
Focus on product features
The final stage of the selling process is:
Follow-Up
e
For custom-made equipment or commercial construction projects, which pricing method is most likely used? a) Prestige b) Premium c) Differential d) Return-on-investment e) Cost-plus
a
For customers, value is a function of the product's a) quality attributes. b) price. c) price and durability. d) quality and functional attributes. e) quality relative to the quality of competing brands.
a
For most consumers, there is an assumed relationship between a) price and quality. b) value and cost. c) internal and external reference prices. d) value and price consciousness. e) prestige prices and value.
e
For most firms in the United States, demand curves are a) upward sloping. b) completely horizontal. c) completely vertical. d) c-shaped. e) downward sloping.
b
For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded. a) inelastic b) inverse c) positive d) unknown e) elastic
e
French Quarter Inns drops the price of a suite from $225 to $195 per night and experiences a reduction in the quantity of rooms demanded of an average of five per night. This is an indication that suites at this hotel are apparently an example of a(n) ___________ product. a) reverse-demand b) inferior c) standard d) secondary-demand e) prestige
A marketer sometimes uses temporary price reductions to
Gain market share
b
Gambrell Designs thinks its new product, the Automatic Dog Walker, will have a short product life cycle; therefore, its marketing department sets its primary pricing objective as a) market share. b) cash flow. c) profit. d) product quality. e) status quo.
a
Generally, customers are most likely to rely on the price-quality association when a) they cannot judge the quality of the product for themselves. b) the product is a well-known brand. c) customers can judge the product's quality for themselves. d) the product is purchased through the use of the Internet. e) products are being purchased from well-established retailers that are familiar to customers.
Price is a key element in the marketing mix because it relates directly to
Generation of total revenue
Reductions for transportation and other costs related to the physical distance between buyer and seller are known as
Geographic pricing
What are Superstores
Giant retail outlets that carry food and non-food products found in supermarkets, as well as most routinely purchased consumer products. Superstores originated in Europe. In addition to food, they carry hardware, small appliances, housewares, clothing, personal care, and shoes. Superstores typically carry 4 times as much merchandise as supermarkets do.
Which of the following products is most likely to have an inverted C-shaped demand curve?
Giorgio perfume
e
Goods that are priced primarily based on the way they have always been priced are examples of a) traditional pricing. b) professional pricing. c) everyday low prices. d) price lining. e) customary pricing.
In this stage: Businesses and other organizations seek product ideas that will help them to achieve their objectives
Idea Generation
If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would be needed to make this a true pricing objective?
Identification of a time period for accomplishment
Pricing Objectives: Profit
Identify price and cost levels that allow the firm to maximize profit Profit objectives may be stated in dollar amounts or percentage of sales revenues Often difficult to know how much, so tend to be set at levels that owner and top management agree as satisfactory
Pricing Objectives: Return on Investment
Identify price levels so the firm can maintain or increase sales relative to competitor's sales Most objective setting based on ROI is done via trial and error bc not all cost and revenue data needed to project the ROI are available when projecting prices
Pricing Objectives: Status Quo
Identify price levels that help stabilize demand and sales Good for orgs in a favorable positions; desire nothing more and may set this as their goal Can focus on maintaining market share, meeting competitor prices, maintaining favorable image etc. Status quo pricing can reduce risk by helping to stabilize demand for its product Accountants and attorneys often operate in this environment
c
If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be a) steady. b) inelastic. c) elastic. d) prestige. e) marginal.
d
If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where a) total costs and total revenues are equal. b) marginal revenue is at its highest level. c) marginal revenue exceeds marginal cost. d) marginal revenue equals marginal cost. e) demand is most elastic.
e
If General Mills looks at Kellogg's cereal prices as the primary method of determining its own prices, General Mills is using a) price fixing. b) price discrimination. c) demand-based pricing. d) market share pricing. e) competition-based pricing.
e
If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it knows that at that price it will reach that goal, the firm would be using a ___________ pricing method. a) cost-plus b) competition-based c) psychological d) comparison e) demand-based
b
If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using a) reference pricing. b) a price leader. c) special-event pricing. d) comparison discounting. e) professional pricing.
b
If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on a) cash flow. b) market share. c) survival. d) return on investment. e) dollar sales volume.
d
If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as a) penetration pricing. b) psychological pricing. c) price lining. d) price skimming. e) odd-even pricing.
e
If Pacific Power and Light increased its rates 10 percent and experienced only a 2 percent reduction in the demand for power, the demand would be a) elastic. b) prestige. c) common. d) horizontal. e) inelastic.
d
If PepsiCo sets its twelve-pack price at $3.99 to match the price charged by Coca-Cola, Pepsi is using which of the following pricing methods? a) Demand-based b) Cost-based c) Reference pricing d) Competition-based e) Price leader
d
If REVO sets the price for its sunglasses at $240, it is using psychological pricing to convey a) thrift. b) cost cutting. c) value. d) prestige. e) availability.
a
If Ralph Lauren offers to reduce the price of its women's blazers when retailers buy more than 100 pieces, the designer is offering a ____________ discount. a) quantity b) cash c) seasonal d) trade e) complementary
e
If Roberts Electronics finds that the average total cost of its radar detectors and the marginal cost of its radar detectors are both $85, then a) its marginal costs are falling. b) average total cost is at its maximum. c) average total costs are rising. d) demand is elastic. e) average total cost is at its lowest level.
c
If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen? a) The quantity demanded would immediately fall. b) The quantity demanded would always increase. c) Above some price level, the quantity demanded would begin to decrease. d) The demand curve for the product would always shift to the right. e) The demand curve for the product would always shift to the left.
a
If Wilson Sporting Goods faces a standard demand curve that exists for most products, as it raises the price of its tennis rackets, the a) quantity demanded goes down. b) demand remains constant. c) quantity demanded increases. d) demand increases. e) breakeven increases.
d
If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would be needed to make this a true pricing objective? a) Statement of demand elasticities b) Identification of cost structure c) Breakeven analysis d) Identification of a time period for accomplishment e) Establishment of a subsequent pricing policy
b
If a business decides to reduce its prices once in a while on an unsystematic basis, it is using a) price reduction planning. b) random discounting. c) bait pricing. d) periodic discounting. e) penetration pricing.
d
If a company increased its price from $100 to $120 and the quantity demanded fell by 40 percent, the price elasticity of demand for this product is a) 2. b) 1/2. c) -1/2. d) -2. e) 4.
a
If a company provides price differentials that harm competition by giving one or more buyers a competitive advantage, it is committing a) price discrimination. b) price-consciousness. c) functional discounting. d) price competition. e) price fixing.
d
If a firm currently produces 2,500 products per month and decides to produce 2,501, it will incur a) more fixed costs. b) higher average fixed costs. c) fewer variable costs. d) a marginal cost. e) higher average variable costs.
a
If a product has an inelastic demand and the manufacturer raises its price, a) total revenue will increase. b) quantity demanded will decrease. c) the demand schedule will shift. d) the demand will become more inelastic. e) total revenue will decrease.
b
If a product is priced based on how many or how few people want it at a particular time and place, ______ pricing is being used. a) markup b) demand-based c) competitive d) peak e) differential
b
If a retailer orders a quantity of merchandise to be delivered to his store in Phoenix and is quoted a price that does not include shipping charges, the retailer is paying a(n) ___________ price. a) F.O.B. destination b) F.O.B. factory c) transfer d) postage-stamp e) base-point
d
If an organization sets prices to recover research and development expenses and establish a premium quality image for its product, it would be using a _________ pricing objective. a) survival b) return on investment c) market share d) product quality e) cash flow
b
If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point? a) 500 units b) 2,000 units c) 1,200 units d) 300 units e) 3,000 units
e
If the terms of a business exchange are 2/10 net 30, this means that the transaction a) involves a cumulative discount if paid in 30 days. b) involves a noncumulative discount. c) offers a discount if the buyer lives within a ten-mile radius. d) price does not include the cost of freight. e) involves a cash discount if paid within ten days.
b
In conducting an assessment of her accounting firm, Pauline Santana discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Mary's profits would equal a) a loss of $20,000. b) a loss of $32,000. c) $28,000. d) $40,000. e) $222,000.
What does the marketing strategy and development stage consist of?
In the Marketing Strategy and Development stage the company designs an initial marketing strategy for a new product based on the product concept
c
In the long run, the J. F. Smucker Company must view ___________ as the absolute lowest price for its Jif brand peanut butter. a) a 10 percent return on investment b) product development costs c) total costs d) advertising expenditures e) Nestlé's prices
If Pacific Power and Light increased its rates 10 percent and experienced only a 2 percent reduction in the demand for power, the demand would be
Inelastic
A price developed in the consumer's mind through experience with the product is called a(n)
Internal reference price
What a price means or what it communicates to customers is called
Interpretation
What is the first stage of the product's life cycle?
Introduction-, The 1st stage in a product's life cycle- beginning with its first appearance in the marketplace- when sales start at zero and profits are negative
For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.
Inverse
What is psychological Pricing?
It attempts to influence a customer's perception of price to make the product's price more attractive
What does the demand curve for a prestige product look like?
It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases.
A product under nonprice competition would most likely not succeed in the market if
It is easy to duplicate
What assumption does breakeven analysis make that limits its overall usefulness?
It relies on demand for a product being inelastic
What assumption does breakeven analysis make that limits its overall usefulness?
It relies on demand for a product being inelastic.
premiums
Items offered free or at a minimal cost as a bonus for purchasing a product
d
J.C. Penney's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately ___________ percent for this product. a) 64 b) 36 c) 18 d) 57 e) 45
b
Justin Caprese phones Ben Kirkland of Southside Furniture to inform him that if he will increase his recent order of 15 mattress sets to 20, he will receive a 14 percent price reduction. This offer is due to a recent overstock condition at the factory and will not be available in the future. The discount offered here is a) cash. b) noncumulative. c) seasonal. d) trade. e) cumulative.
What are Department Stores?
Large retail organizations characterized by wide product mixes and employing at least 25 people. Related product lines are organized into separate departments such as cosmetics, toys, home furnishings, appliances, and apparel. They are service oriented. Total product tends to include credit, delivery, personal assistance, merchandise returns, and a pleasant atmosphere. Department stores are considered retailing leaders in a community and are found in places with over 50,000 people. Examples of such stores are Macys, JC Penney, Sears, Marshall Field's, and Neiman Marcus.
What areWarehouse Clubs?
Large scale, members only establishments that combine features of cash and carry wholesaling with discount retailing. Use of a warehouse club includes an annual fee of about $35.00. Small retailers and ultimate consumers affiliated with government agencies, credit unions, banks, schools, and hospitals can also shop at warehouse clubs.
What are Supermarkets?
Large, self-service stores that carry a complete line of food products, along with some non-food products (cosmetics and nonprescription drugs). Supermarkets are arranged for maximum efficiency in stocking and handling products. They offer lower prices than smaller neighborhood grocery stores, usually provide free parking, and some cash checks.
d
Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson's Entertainment by 10 percent to allow for expenses associated with Robertson's promoting the games to consumers. This is an example of a ___________ discount. a) quantity b) cash c) seasonal d) trade e) complementary
b
Lexmark sells some of its color printers for about $100, but the refill cartridges cost over $30 each. Lexmark's pricing strategy would be best labeled as a) bait pricing. b) captive pricing. c) customary pricing. d) price lining. e) complementary pricing.
To maintain market share and revenue in an increasingly price-sensitive market, companies have focused on quality, used labor-saving technologies, and used efficient manufacturing processes. These tactics have provided gains in productivity that have translated into ___________ for the consumer.
Lower costs for the company and lower prices
e
Lucy buys a new dress at T.J. Maxx that has a price tag with "Compare at $50.00. Our Price $29.99." This is an example of the use of a) internal referencing. b) cumulative discounts. c) seasonal discounts. d) base-point pricing. e) an external reference price.
At what point does a firm maximize profit?
MC = MR
e
Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and achieving price stability are all associated with a _____ pricing objective. a) product quality b) market share c) survival d) profit e) status quo
a
Maintaining or increasing market share a) can be achieved even if industry sales are flat or decreasing. b) is an infrequently used pricing objective in most industries. c) depends upon the overall growth of the total industry. d) is a profit-related objective based on price. e) is directly tied to leading an industry in product quality.
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ___________ cost.
Marginal
a
Marginal analysis involves examining a) what happens to a firm's costs and revenues when production is changed by one unit. b) the extra revenue produced by the sale of one more product. c) the extra cost incurred by the production of one more unit. d) the difference between marginal revenue and total revenue. e) the difference between marginal cost and total cost.
If a firm currently produces 2,500 products per month and decides to produce 2,501, it will incur
Marginal cost
Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's
Marginal revenue
c
Maria recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell the house, she may have to use a) secondary-market pricing. b) reference pricing. c) negotiated pricing. d) price lining. e) professional pricing.
A firm establishes which of the following pricing objectives to maintain or increase its product's sales in relation to total industry sales?
Market share
Suppose that the watchband department of Timex sells completed watchbands to the finished watch department. The finished watch department is charged the price it would have to pay an outside watchband manufacturer less a discount to reflect low sales and transportation costs. This method of pricing is called _______ pricing.
Market-based cost
What is market penetration pricing?
Market-penetration pricing is setting a low-price for a new product in order to attract a large number of buyers and a large market share
c
Marketers at organizations engaged in nonprice competition a) are more concerned about knowing competitors' prices than are marketers in organizations that are engaged in price competition. b) are not concerned about the prices of competing brands. c) need competitive price information to make sure that their products are priced at approximately the same level as the prices of competing brands. d) rely on customers to help them gather information regarding the prices of competing brands. e) experience high levels of price instability.
d
Marketers generally view _____ as the minimum price a product can be sold for. a) fixed costs b) variable costs c) profits d) costs e) moderate losses
c
Marketers have no flexibility in setting prices under conditions of a) a monopoly. b) an oligopoly. c) perfect competition. d) monopolistic competition. e) no competition.
b
Marketers improve their ability to establish prices appropriately when a) there is nonprice competition. b) they know prices charged for competing brands. c) their products are of better quality than the competition's. d) the main objective is image building. e) using psychological pricing.
b
Marketers must take steps to make sure that the pricing objectives they set are consistent with the organization's ___________ objectives and ___________ objectives. a) advertising; marketing b) overall; marketing c) marketing; promotional d) overall; promotional e) overall; revenue
a
Markum Industries determines that for its air compressors the following results are achieved at a price of $250: total costs = $250,000; variable costs per unit = $100; fixed costs = $175,000. Given these figures, Markum would break even at ___________ units. a) 1,167 b) 1,000 c) 1,750 d) 2,500 e) 700
a
Markup is measured either as a percentage of _____ or a percentage of _____. a) selling price; cost b) cost; profit c) revenue; contribution margin d) resources used; cost e) demand; competition
Selection of Pricing Strategy: Differential Pricing
Means charging different prices to different buyers for the same quality and quantity of a product Single price has many advantages, the primary of which is simplicity Challenge is that it may leave some people out of the market or causes the org to lose some revenue bc it could have charged more for some people (a solution is differential pricing) Customers who are paying lower prices must not be able to resell the product to those paying a higher price A segmented market must exist each with different price sensitivities There are several types of differential pricing: negotiated pricing, secondary-market discounting, periodic discounting, and random discounting
trade sales promotion methods
Methods intended to persuade wholesalers and retailers to carry a producer's products and market them aggressively
b
Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's a) average revenue. b) marginal revenue. c) price elasticity. d) average variable revenue. e) average total cost.
b
Monopolies usually keep their prices at a level that generate a reasonable, but not excessive, return primarily because a) they want to avoid new competitors entering their market. b) they want to avoid government regulations on their pricing. c) they try to satisfy the demands of value-conscious consumers. d) firms can increase market share more rapidly this way. e) customers will discontinue use of these products if prices rise.
c
Most pricing objectives based on ___________ are achieved by trial and error because not all cost and revenue data are available when prices are set. a) market share b) cash flow c) return on investment d) survival e) profit
Stage For Establishing Prices: Assessment of the Target Market's Evaluation of Price (2)
Must assess target market's evaluation of price Price is important but it depends on the type of product, the type of target markets, and the purchase situation That is, price isn't end all, be all Ex. Purchase situation-> pay much more at movies for concessions and you wouldn't do it at most other places Many companies are focusing on value (bc consumers are shopping more selectively and looking for less expensive items) Value combines a product's price and quality attributes-helps customer differentiate among competing brands Highly desirable attributes, ex. organic milk, can command higher prices Low prices and high quality companies, like Target have altered perceptions of quality & price
Stage For Establishing Prices: Selection of Pricing Strategy (5)
Need to select a pricing strategy; an approach or course of action designed to achieve pricing and marketing objectives This helps marketers solve the problem of setting prices
Justin Caprese phones Ben Kirkland of Southside Furniture to inform him that if he will increase his recent order of 15 mattress sets to 20, he will receive a 14 percent price reduction. This offer is due to a recent overstock condition at the factory and will not be available in the future. The discount offered here is
Noncumulative
Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing
Nonprice competition
Differential Pricing: Negotiated Pricing
Occurs when the final price is established through bargaining between seller and customer happens often with homes, cars, and used equip etc.
d
Odd-even pricing is a) a cost-based strategy. b) competition-based. c) a rarely used technique. d) a psychological pricing strategy. e) a form of unethical pricing.
c
One advantage of nonprice competition is that a) a firm can react quickly to competitive efforts. b) market share becomes less important. c) a firm can build customer loyalty. d) marketing efforts are completely eliminated. e) pricing is no longer a factor.
Psychological Pricing: Bundle Pricing
Packaging together two or more complementary products and selling them at a single price Ex. combo meals Single bundled price is usually considerably less than the sum of the prices of the individual products Opportunity to purchase combo of products in one transaction may be valued by customers too Can help stimulate sales and increase revenues (bundle slow moving products with higher turnover products)
Psychological Pricing: Multiple Unit Pricing
Packaging together two or more identical products and selling them at a single price Lower per-unit price ex. 4 packs of light bulbs or twin packs of chips Can increase consumption and exposure to new brands When bought in larger quantities, consumption might increase Won't work for some products like salt (can't increase its consumption) Discount stores and warehouse clubs really use this strategy
personal selling
Paid personal communication that attempts to inform customers and persuade them to buy products in an exchange situation
combination compensation plan
Paying salespeople a fixed salary plus a commission based on sales volume
straight salary compensation plan
Paying salespeople a specific amount per time period, regardless of selling effort
straight commission compensation plan
Paying salespeople according to the amount of their sales in a given period
Which of the following would be used in setting price of a new product if considerable competition is expected? -psychological pricing -penetration pricing -odd-even pricing -price skimming -prestige pricing
Penetration pricing
Marketers have no flexibility in setting prices under conditions of
Perfect competition
Breyer's produces a variety of ice cream flavors and lines of varying qualities. The higher quality ice cream varieties are priced higher than the basic ones. Breyer's is using ___ to price its ice cream
Premium pricing
e
Premium-priced products are usually marketed through a) complex marketing channels. b) intensive or selective distribution. c) exclusive or intensive distribution. d) exclusive distribution only. e) selective or exclusive distribution.
French Quarter Inns drops price...This is an indication that suites at this hotel are apparently an example of a(n) ___________ product.
Prestige
Which of the following is not a major factor for firms making price decisions?
Previous sales
Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of
Price
The tuition and fees each student paid for this semester of college are both terms for
Price
Which of the following is the most flexible variable in the marketing mix?
Price
To determine the breakeven point in units, divide the fixed costs by
Price - VC
For most consumers, there is an assumed relationship between
Price and quality
Safe Auto advertises its low-cost automobile insurance as "minimum coverage for minimum budgets." Safe Auto is engaging in
Price competition
When marketers emphasize price as an issue and match or beat the prices of other companies, they are using
Price competition
If a company provides price differentials that harm competition by giving one or more buyers a competitive advantage, it is committing
Price discrimination
A measure of sensitivity of demand in relation to changes in price is
Price elasticity of demand
Dividing the percentage change in quantity demanded by the percentage change in price gives the
Price elasticity of demand
e
Price is a) money paid in a transaction. b) not important to buyers. c) of limited interest to sellers. d) the most inflexible marketing mix decision variable. e) the value that is exchanged for products in a marketing transaction.
d
Price is a key element in the marketing mix because it relates directly to a) the size of the sales force. b) the speed of an exchange. c) quality controls. d) the generation of total revenue. e) brand image.
Selection of Pricing Strategy: Promotional Pricing
Price is often coordinated with promotion Price leaders, special event pricing, and comparison discounting are promotional pricing strategies
e
Price leaders, comparison discounting, and special-event pricing are applications of a) psychological pricing. b) professional pricing. c) product-line pricing. d) bait-and-switch. e) promotional pricing.
d
Price skimming and penetration pricing are both strategies used for a) product-line pricing. b) business products only. c) psychological pricing. d) new-product pricing. e) promotional pricing.
A danger associated with engaging in price competition is that competitors can also change prices quickly and aggressively, which can result in a(n) _____ that will be harmful to both companies.
Price war
New Product Pricing: Penetration Pricing
Prices are set below those of competing brands to penetrate a market and gain a large market share quickly Less flexible bc it's hard to raise prices later if ou need to Good if you think competitors may come into the market-> you build up market share and make it unattractive to other firms
Psychological Pricing: Reference Pricing
Pricing a product at a moderate level and displaying it net to a more expensive model or brand. The hope is that customers will use the higher price as a reference and view the moderate price more favorably
What is reference pricing?
Pricing a product at a moderate level and positioning it next to a more expensive model or brand
Product Line Pricing: Bait Pricing
Pricing an item in a product line low with the intention o selling a higher priced item in the line This is an acceptable strategy so long as retailer has enough quantities of the advertised product Bait and switch is similar but retailers have no intention of selling the bait product, they use the low price to bring in customers and then sell them higher priced products Considered unethical and is illegal in some states
Selection of a Basis for Pricing: Demand Based Pricing
Pricing based on the level of demand for the product Customers pay a higher price when demand for the product is strong and a lower price when demand is weak ex. hotels, airlines, cell minutes use this Another method is to sell a certain number of tickets at a set price then increase the price to reflect the demand for popular shows The effectiveness of this method depends on the marketer's ability to estimate demand accurately Does place firms in a better position to reach higher profit levels (as compared with cost based pricing)
What is premium pricing?
Pricing higher quality or more versatile products higher than other models in the product line.
Selection of a Basis for Pricing: Competition Based Pricing
Pricing is primarily influenced by competitor's prices Organization considers costs to be secondary to competitor's prices Important method when products are pretty homogeneous and the org is serving markets in which price is a key purchase consideration This method may necessitate frequent price adjustments ex. competitive airline routes use this
Psychological Pricing: Customary Pricing
Pricing on the basis of tradition ex. candy bars selling at a consistent rate
Psychological Pricing: Everyday Low Prices
Pricing products low on a consistent basis as opposed to setting higher prices and frequently discounting them Walmart does this Problem: Marketers have "trained" consumers to expect and seek out deeply discounted prices. So failure to provide deep discounts makes EDLP hard to believe and easy to see as a marketing gimmick
a
Pricing strategies and methods a) help direct and structure the selection of a final price. b) are the last decisions made for a new product. c) are the same for all of a company's products. d) are the most important decisions made for a product. e) require limited planning on the part of management.
Stage For Establishing Prices: Determination of Specific Price (6)
Pricing strategies should help in setting a final price Pricing remains a flexible and convenient way to adjust the marketing mix Flexibility is unique to this component of the marketing mix
c
Pricing the basic product in a product line low while pricing related items at a higher level is called a) premium pricing. b) bait pricing. c) captive pricing. d) price skimming. e) price lining.
What is captive pricing?
Pricing the basic product in a product line low, but pricing related items at a higher level.
Product Line Pricing: Premium Pricing
Pricing the highest quality or most versatile products higher than other models in the product line Ex. Corvette ZR1 which is more powerful and pricier than their other models If this strategy is used, a significant portion of their profits may come from these products
What is professional pricing?
Pricing used by people who have great skill or experience in a particular filed of activity.
In this stage: The organization determines if it is technically feasible to produce the product and if it can be produced at costs low enough to make the final price reasonable.
Product Development
Promotional Pricing: Price Leaders
Product priced below the usual markup, near cost, or below cost Hope is that sales of regularly priced products will more than offset reduced revenues from price leaders
What is product line pricing?
Product-line pricing is the process of setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices. Setting prices across an entire product line. •For example, think of a mattress compan: Stearns and Foster: •Traditional mattress •Estate Mattress •Lux Estate Mattress/Luxury latex mattress/ Silver Drum Mattress, etc. You may charge a base price for a basic mattress, the next product up might have more features or be a better quality - it would be a higher price, and so on throughout the line.
Customary pricing?
Products are priced primarily on the basis of tradition. I.e. Gum, candy bars, etc.
a
Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using a) multiple-unit pricing. b) reference pricing. c) price lining. d) bundle pricing. e) odd-even pricing.
What is allowance pricing?
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's product in some way. Allowance are another type of reduction from the list price. For example, trade-in-allowances are price reductions given for turning in al old item when buying a new one. goods
cents-off offers
Promotions that allow buyers to pay less than the regular price to encourage purchase
d
Provisions of the Robinson-Patman Act, as well as those of the ___________, limit the use of price differentials. a) Simpson-Marshall Act b) Federal Trade Commission Act c) Wheeler-Lea Act d) Clayton Act e) Sherman Antitrust Act
____ is a broad set of communication efforts used to create and maintain favorable relationships between a company and its stakeholders.
Public relations
If Ralph Lauren offers to reduce the price of its women's blazers when retailers buy more than 100 pieces, the designer is offering a ____________ discount.
Quantity
If Wilson Sporting Goods faces a standard demand curve that exists for most products, as it raises the price of its tennis rackets, the
Quantity demanded goes down
Temporary price reductions through sales, rebates, and special discounts are often used to
Raise cash quickly
A manager at JC Penney discovers that Sears has reduced the price of its children's Levi's from $31.99 to $24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing strategy?
Random discounting
e
Reductions for transportation and other costs related to the physical distance between buyer and seller are known as a) base-point pricing. b) freight absorption pricing. c) price zoning. d) location pricing. e) geographic pricing.
d
Reference pricing is a) listing the manufacturer's suggested retail price on the price tag along with the store's lower price. b) mentioning the price that other retailers charge for the same product on the display for the product. c) using a consumer's internal perceptions of what the appropriate price should be to help price a firm's products. d) pricing a product at a moderate level and positioning it next to a more expensive model or brand. e) using prices in advertising so that customers will have a point of reference when they come to the retail facility.
A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99What is the manager attempting to accomplish?
Reference pricing strategy
Which of the following involves building mutually beneficial long-term associations with a customer⎯usually a business customer⎯through regular communications over prolonged periods of time?
Relationship selling
Which of the following is most likely to be a fixed cost?
Rent
b
Research indicates that both market share and ___________ are good indicators of profitability. a) low pricing b) product quality c) limited competition d) sales growth e) ROI pricing
The degree to which the price of a product enhances a customer's satisfaction with the purchase experience and with the product after the purchase is part of their
Response
What are Warehouse Showrooms?
Retail facilities in large, low-cost buildings with large on-premise inventories and minimal services. Showrooms keep costs low by having the consumer transport, finance, and store merchandise. Most consumers carry their product home in the manufacturer's box. Examples include Wickes Furniture, and IKEA.
What is Online Retailing:
Retailing that makes products available to buyers through computer connections. Most retailers have an Internet site. Hard to find items can usually be found somewhere on eBay. Online buying will escalate due to increases in computer technology and consumers lack of time to shop. Security is still the number 1 reason why consumers won't buy online.
Which of the following products is most likely to involve personal selling?
Riding lawn mowers
e
Rob Johnson orders 16 dozen fishing lures from Strike Right for $375. When he gets the invoice, he is furious that $25 in freight charges has been tacked onto his bill because he thought the price included freight costs. Rob should have been certain that the order terms were a) F.O.B. origin. b) F.O.B. factory. c) C.O.D. d) 2/10, n/30. e) F.O.B. destination.
d
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ___________ cost. a) average b) fixed c) variable d) marginal e) average variable
Which of the following prohibits price discrimination that lessens competition among wholesalers and retailers?
Robinson-Patman Act
c
Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm's primary pricing objective is a) status quo. b) profit. c) survival. d) market share. e) recovery.
e
Safe Auto advertises its low-cost automobile insurance as "minimum coverage for minimum budgets." Safe Auto is engaging in a) non-price competition. b) demand-based pricing. c) prestige pricing. d) price differentiation. e) price competition.
demonstrations
Sales promotion methods a manufacturer uses temporarily to encourage trial use and purchase of a product or to show how a product works
consumer contests
Sales promotion methods in which individuals compete for prizes based on their analytical or creative skills
consumer games
Sales promotion methods in which individuals compete for prizes based primarily on chance
rebates
Sales promotion techniques in which a consumer receives a specified amount of money for making a single product purchase
consumer sales promotion methods
Sales promotion techniques that encourage consumers to patronize specific stores or try particular products
money refunds
Sales promotion techniques that offer consumers a specified amount of money when they mail in a proof of purchase, usually for multiple product purchases
support personnel
Sales staff members who facilitate selling but usually are not involved solely with making sales
trade salespeople
Salespeople involved mainly in helping a producer's customers promote a product
order takers
Salespeople who primarily seek repeat sales
order getters
Salespeople who sell to new customers and increase sales to current customers
free samples
Samples of a product given out to encourage trial and purchase
In this stage, the ideas with the greatest potential are selected.
Screening
Stage For Establishing Prices: Selection of a Basis for Pricing(4)
Select a basis of price: cost, demand, and/or competition Is affected by the type of product, the market structure of the industry, the brand's market share position relative to competing brands and customer characteristics An organization typically considers two or all of the following dimensions
Premium-priced products are usually marketed through
Selective or exclusive distribution
Cost Based Pricing: Cost-Plus Pricing
Seller's costs are determined (during or after a project is completed) and then a specified dollar amount or % of the cost is added to the seller's cost to establish a price This is a good method when costs are difficult to predict ex. custom made goods Problem: overhead (a cost) may be hard to determine
b
Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing a) product competition. b) nonprice competition. c) brand differentiation. d) price competition. e) competitor differentiation.
What is segmented pricing?
Selling a product or service at two or more prices, even though the difference in prices in not based on differences in costs. Segmented pricing takes several forms:
Pricing Objectives:Cash Flow
Set price levels to encourage rapid sales Allows recovery of cash as quickly as possible May be useful, but it oversimplifies the contribution of price to profits If this results in high price sets, then lower priced competitors may take market share
Pricing Objectives:: Product Quality
Set prices to recover research and development expenditures and establish a high quality image Normally a high price; need to cover R&D When both product quality and market share exist for a firm, its a good indicator of profitability
Product Line Pricing: Price Lining
Setting a limited number of prices for selected groups or lines of merchandise ex. have various styles of similar quality shirts sell for $15 and higher quality lines of shirts sell at $22 This method simplifies customers' decision making by holding constant one key variable in the final selection of style and brand within a line Basic assumption is that demand is inelastic for various groups or sets Demand curve looks like a series of steps ex. 85, 55, and 35 dollar products Subscription services often use this method
What is EveryDay Low Prices (EDLP)?
Setting a low price for products on a consistent basis.
Promotional Pricing: Comparison Discounting
Setting a price at a specific level and comparing it with a higher price Higher price could be a competitor's price, price at another retailer, a previous price, or a manufacturer's suggested retail price Can be very informative and have significant impact on customer purchases FTC guidelines to prevent deceptive practices: higher price must be similar to the price at which a reasonable proportion of the product was sold Previous price needs to have been made available for a reasonable period of time
What is Captive-product pricing?
Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera. Captive pricing also involves pricing the basic product in a product line low, but pricing related items at a higher level. Pricing products that must be used with the main product is known as captive-product pricing.
Selection of Pricing Strategy: New Product Pricing
Setting base price for a new product is vital Base price is easily adjusted (so long as no govt. price controls) an its establishment is is one of the most fundamental decisions in the marketing mix
Differential Pricing: Secondary Market Pricing
Setting one price for the primary target market and a different price for another market Price in the secondary market is usually lower (unless costs for serving this market are higher than normal) Good for isolated markets, off peak times, etc. Ex. Matinee movie discounts, textbooks and pharmaceuticals are sold for less in other countries than in US
Psychological Pricing: Prestige Pricing
Setting prices artificially high to convey prestige or a quality image Often used for perfumes, liquor, jewelry, and cars Appliances too; Whirlpool, Viking, Subzero
The ___________ prohibits price fixing among firms in an industry.
Sherman Antitrust Act
Which factor is least likely to affect pricing decisions?
Shifting stock values
c
Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called a) competition-based pricing. b) reference pricing. c) comparison discounting. d) captive pricing. e) psychological pricing.
point-of-purchase (POP) materials
Signs, window displays, display racks, and similar devices used to attract customers
Which of the following acts does not directly affect pricing decisions?
Simpson-Marshall Act
e
Some grocery stores collect data on competitive prices a) by calling their competitors. b) on a quarterly basis. c) through stores' purchase data. d) from their resellers. e) by using full-time comparison shoppers.
b
Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not a) generate capital to cover research and development costs. b) discourage competitors from entering the market. c) provide flexibility in the introductory base price. d) protect the firm from covering costs if prices are set too low. e) reduce the stress that may be placed on the firm's production capabilities.
c
Steinway produces concert grand pianos, often using the custom materials and designs desired by a specific customer. The average price of these pianos runs about $50,000 depending on the exact piano. What type of pricing does Steinway most likely use for these pianos? a) Markup b) Competition-based c) Cost-plus d) Demand-based e) Secondary-market
What is a Traditional Specialty Retailers?
Stores that carry a narrow product mix with deep product lines. These stores may also be referred to as single line retailers and limited line retailers. The products most commonly found in a traditional specialty store are apparel, jewelry, sporting goods, fabric, computers, and pet supplies. Examples of this type of specialty store are The Limited, Hickory Farms, the Gap, and Footlocker.
What are Hypermarkets?
Stores that combine supermarket and discount shopping in one location. Larger than superstores, hypermarkets vary in size from 225,000 to 325,000 square feet. They usually offer 45,000-60,000 different types of low-priced products. They commonly allocate 40-50% of their space to grocery products and the remainder goes to general merchandise, including, athletic shoes, designer jeans, appliances, cameras, toys, hardware, jewelry, and automotive supplies.
technical salespeople
Support salespeople who give technical assistance to a firm's current customers
missionary salespeople
Support salespeople, usually employed by a manufacturer, who assist the producer's customers in selling to their own customers
e
Suppose Tommy Hilfiger is introducing a new line of men's ties. The designer believes that the target market for these ties comprises men who are very status-conscious. In keeping with this assessment, department stores selling the ties should a) charge a price based on their cost. b) charge prices consistent with their existing ties. c) discount the ties. d) negotiate the price with individual tie shoppers. e) use price symbolically.
a
Suppose managers at Caterpillar have determined the costs associated with producing hay balers are equal to the price that they charge for the hay balers. This indicates that Caterpillar is producing at the ___________ point. a) breakeven b) marginal revenue less than marginal cost c) profit margin d) competitive price e) profit maximizing
d
Suppose that the frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called a) zone pricing. b) base-point pricing. c) business-unit pricing. d) transfer pricing. e) price discrimination.
e
Suppose that the watchband department of Timex sells completed watchbands to the finished watch department. The finished watch department is charged the price it would have to pay an outside watchband manufacturer less a discount to reflect low sales and transportation costs. This method of pricing is called _______ pricing. a) zone b) actual full cost c) standard full cost d) cost plus investment e) market-based cost
Differential Pricing: Random Discounting
Temporarily reduce prices on an unsystematic basis (to combat consumers predicting when discounts will come) Since it is random and impossible to predict, consumers will not delay their purchase This method is also used to atract new customers
What is Periodic discounting?
Temporary lowering of prices on a patterned or systematic basis
a
Temporary price reductions through sales, rebates, and special discounts are often used to a) raise cash quickly. b) decrease costs. c) increase profitability. d) run off the competition. e) create a value image.
Differential Pricing: Periodic Discounting
Temporary reduction of prices on a patterned or systematic basis ex. annual holiday sales The problem with this for marketers is that the discounts follow a pattern and customers can predict when the reductions will come and delay purchase till then Placing a time limit on periodic discounts doesn't seem to affect customer's perception of value or purchase behavior
In this stage: The company introduces the product on a limited basis to measure the extent to which potential customers will actually buy it.
Test marketing
c
The "White Sale" that many department stores have every year a few weeks after Christmas is an example of a) secondary pricing. b) off-peak pricing. c) periodic discounting. d) random discounting. e) captive pricing.
c
The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland? a) $45 b) $50 c) $30 d) $25 e) $40
a
The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____________ discounts. a) trade b) cumulative c) noncumulative d) push e) intermediary
a
The ___________ prohibits price fixing among firms in an industry. a) Sherman Antitrust Act b) Federal Trade Commission Act c) Wheeler-Lea Act d) Robinson-Patman Act e) Clayton Act
c
The amount of profit a channel member expects depends on a) the amount of discounts for large orders provided by the producers. b) the number of channel support activities provided by the producers. c) what the intermediary could earn if it were handling a competing product instead. d) the type of distribution channels involved. e) the amount of effort required to carry the product.
What is meant by the level of quality?
The amount of quality a product possesses. How high should the level of quality be?
relationship selling
The building of mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time
a
The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo shirt is an application of odd-even pricing, and even prices are often used to a) give a product an upscale or exclusive image. b) show customers products are priced based on tradition. c) coordinate efforts with a promotional campaign. d) indicate prices have been cut to the last penny. e) facilitate comparison to competitors' prices.
a
The degree to which the price of a product enhances a customer's satisfaction with the purchase experience and with the product after the purchase is part of their a) response. b) reference. c) interpretation. d) price satisfaction. e) price-consciousness.
Personal selling is changing in today's marketplace due to several factors. Which of the following is not a factor that impacts today's promotion through personal selling?
The difficulty in keeping customers because they are fickle.
Managing Sales Territories
The effectiveness of a sales force which must travel to its customers depends on sales management's decisions regarding sales territories.
e
The fact that a gas station in Texas pays less for fuel than a gas station in Maine from a producer in Louisiana suggests that refineries are using which of the following pricing methods? a) Price differentiation b) Base-point pricing c) Freight absorption pricing d) Transfer pricing e) Zone pricing
d
The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ___________ pricing. a) price-line b) promotional c) professional d) differential e) psychological
d
The federal government often uses _____ pricing when it grants defense contracts. a) markup b) differential c) breakeven d) cost-plus e) competition-based
Routing and Scheduling Salespeople
The geographic size and share of a sales territory are the most important factors
c
The manager at Best Buy puts a sign up next to a Pioneer audio system that reads, "Only $199.99! $60 less than Circuit City." This is an example of what type of pricing strategy? a) Random discounting b) Periodic discounting c) Comparison discounting d) Penetration pricing e) Everyday low prices
approach
The manner in which a salesperson contacts a potential customer
What is direct selling?
The marketing of products to ultimate consumers through face to face sales presentations at home or in the workplace. Traditionally called "door to door selling."
d
The oldest form of exchange—trading of products—is known as a) credit. b) buying. c) purchasing. d) barter. e) pricing.
What is Quality?
The overall characterustucs of a product that allow it to perform as expectes in satisfying customers needs.
a
The perception of price depends on a a) product's actual price and consumers' expectations regarding price. b) consumer's analysis of competitive prices. c) consumer's reference price. d) consumer's expectation of price. e) product's actual price in comparison with the manufacturer's suggested price.
What is Telemarketing:
The performance of marketing-related activities by phone. Some companies cold call consumers, while others have a prescreened calling list. Telemarketing can help generate sales leads, improve customer service, speed up payment on past due accounts, raise funds for non-profit organizations and gather marketing data. Telemarketing is usually joined with other marketing methods and is used by retailers and non-retailers alike
At what point does a firm maximize profit?
The point at which marginal cost equals marginal revenue
b
The point at which the costs of producing a product equal the revenue earned from selling the product is a) elasticity of demand. b) the breakeven point. c) variable costs. d) price elasticity. e) the sum of fixed and variable costs.
b
The pricing of Clinique makeup considerably higher than brands such as Cover Girl, Revlon, and Maybelline is used to communicate ______, which is the company's primary pricing objective. a) market share b) product quality c) status quo d) profitability e) cash flow
What is Optional-Product Pricing?
The pricing of optional or accessory products along with a main product. Many companies use optional-product pricing offering to sell optional or accessory products along with their main product. For example: a car buyer may choose to order a GPS navigation system and Bluetooth wireless communication. Refrigerators come with optional ice makers, water dispenser, or just basic. A Stove can be self-cleaning, convection, gas or electric.
What is Nonstore Retailing:
The selling of products outside the confines of a retail facility. There are three factors that are contributing to the increase in this type of selling.
What is product mix pricing strategies?
The strategy for setting a product's price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes the profits on the total product mix.
c
The three primary bases for developing prices are a) profit, demand, and competition. b) supply, demand, and marketing objectives. c) demand, competition, and cost. d) markup, cost, and cost-plus. e) negotiation, periodicity, and randomness.
d
The tuition and fees each student paid for this semester of college are both terms for a) expenses. b) charges. c) bills. d) price. e) exchange valuations.
c
The type of prices most likely to appear in advertising is a) prestige. b) future. c) bargain. d) internal reference. e) cost-plus.
c
The types of prices that appear least often in ads are ___________ prices. a) reference b) discount c) premium d) comparison e) sale
team selling
The use of a team of experts from all functional areas of a firm, led by a salesperson, to conduct the personal selling process
Which of the following statements about markup pricing is correct?
The use of similar markups reduces price competition
What is direct marketing?
The use of the telephone and non-personal media to introduce products to consumers, who then can purchase them via mail, telephone, or the Internet
What are the 3 factors that contribute to nonstore retailing?
There are three factors that are contributing to the increase in this type of selling. They are: 1.Consumers, especially women, because of their increased participation in the workforce, have less time to shop in retail stores. 2.Some retail store salespeople are poorly informed. This makes them less able to assist customers. 3.The number of older consumers, who tend to shop less in large stores, is rising.
New-Business Sales
These sales personnel are responsible 4 locating prospects & converting them into buyers.
Inside Order Takers
These salespeople work n sales offices & receive orders by mail, telephone, & the Internet. That does not mean, however, that inside order takers never communicate w/customers face 2 face. Retail salespeople are classified as inside order takers
What do all of the following have in common: tuition, fee, premium, retainer, dues?
They are different terms for the concept of price.
Generally, customers are most likely to rely on the price-quality association when
They cannot judge the quality of the product themselves
e
Tim O'Brien gets the invoice for a load of gravel he purchased last week. The price of the gravel was $55, and the terms are 2/10, n/45. If Tim pays the invoice in five weeks, he will owe a) a penalty. b) $53.90. c) $56.10. d) $58.30. e) $55.00.
e
To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called a) price lining. b) special-event pricing. c) differential pricing. d) comparison discounting. e) price leader pricing.
c
To determine the breakeven point in units, divide the fixed costs by a) total costs. b) variable costs time price. c) price minus variable costs. d) price per unit. e) total revenue minus fixed costs.
a
To gain market share, when Hyundai first entered the U.S. car market it did so with a comparatively low price strategy. One of the negative side effects of making this pricing decision is a) a negative impact on consumers' perceptions of quality. b) competitive matching. c) a high return on investment level affecting tax balances owed. d) poor survival chances. e) higher developmental costs.
c
To maintain market share and revenue in an increasingly price-sensitive market, companies have focused on quality, used labor-saving technologies, and used efficient manufacturing processes. These tactics have provided gains in productivity that have translated into ___________ for the consumer. a) higher costs for the company and higher prices b) higher costs for the company and lower prices c) lower costs for the company and lower prices d) lower costs for the company and higher prices e) no change in the costs for either the company or
What is the overall role of promotion?
To stimulate product demand.
In the long run, the J. F. Smucker Company must view ___________ as the absolute lowest price for its Jif brand peanut butter.
Total costs
If a product has an inelastic demand and the manufacturer raises its price,
Total revenue will increase
Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson's Entertainment by 10 percent to allow for expenses associated with Robertson's promoting the games to consumers. This is an example of a ___________ discount.
Trade
The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____________ discounts.
Trade
What type of discount is given to a business purchaser for performing activities such as transporting, storing, and selling?
Trade
What is retailing?
Transactions in which ultimate consumers are the buyers. It includes all transactions that are being used for personal and household purposes
When Cadillac buys headlights from Delco (both of which are divisions of General Motors), ___________ pricing occurs.
Transfer
Suppose that the frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called
Transfer pricing
New products may also arise from sources outside the firm, customers, competitors, consultants agencies and private research organizations
True
`A product can be viewed as new when it is brought to one or more markets from another market
True
Tensile Pricing
Type of pricing often used with Random an Periodic Differential Discounting. Refers to a broad statement about price reductions as opposed to detailing specific price discounts ex. 20-50% off
A company trying to position itself as value oriented should not
Use premium pricing for its products
Tommy Hilfiger, in keeping with this assessment, department stores selling the ties should
Use price symbolically
___________ consumers are concerned about both the price and the quality aspects of a product.
Value-conscious
Costs that vary directly with changes in the number of units produced or sold are called
Variable costs
d
Westin Inc. has an objective of achieving a 25 percent return from its overall sales. This is an example of a ______ pricing objective. a) market share b) cash flow c) return on investment d) profit e) status quo
c
What a price means or what it communicates to customers is called a) reference. b) response. c) interpretation. d) internalization. e) signaling.
c
What assumption does breakeven analysis make that limits its overall usefulness? a) It focuses on how to achieve a price objective. b) It assumes a company wants to gain a certain market share. c) It relies on demand for a product being inelastic. d) It focuses only on competitive factors and not costs. e) It assumes demand is elastic for the product.
d
What do all of the following have in common: tuition, fee, premium, retainer, dues? a) They all must be paid in cash. b) They are forms of exchange similar to, but not identical with, money. c) They are forms of exchange similar to, but not identical with, barter. d) They are different terms for the concept of price. e) They have nothing in common.
c
What does the demand curve for a prestige product look like? a) It is a straight line where the quantity sold continues to increase as the price of each product increases. b) It is a curve where the highest and the lowest prices yield the greatest quantity sold and mid-range prices produce the fewest sales. c) It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases. d) It forms a straight vertical line because of the prestige of the product, and quantity sold will remain stable regardless of the price. e) It slopes from left to right at a very mild slope; that is, as quantity increases, price decreases slowly.
c
What equation shows organizations the relationship between price and profit? a) Total Variable Costs + Total Fixed Costs = Sales - Profit b) Price = Profit per Item × Number of Units Sold c) (Price × Quantity Sold) - Total Costs = Profits d) (Price - Profits) × Total Costs = Sales e) Total Costs = (Price × Quantity Sold) - Profits
Marginal analysis involves examining
What happens to a firm's costs and revenues when production is changed by one unit
e
What type of discount is given to a business purchaser for performing activities such as transporting, storing, and selling? a) Quantity b) Cash c) Geographic d) Service e) Trade
d
What type of pricing objective would an organization use if it were in a favorable position and desired nothing more? a) Return on investment b) Cash flow c) Profit d) Status quo e) Survival
c
What type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client? a) Price lining b) Prestige pricing c) Professional pricing d) Customary pricing e) Price skimming
c
When Cadillac buys headlights from Delco (both of which are divisions of General Motors), ___________ pricing occurs. a) base-point b) zone c) transfer d) uniform geographic e) matrix
e
When Gabriella logs on to Dell's website, she sees a notebook model priced well below $1,000. As she continues through the site to view the other options, she realizes the first one she saw was the cheapest model available, but she of course wants more features. Dell is utilizing a) bait and switch. b) price lining. c) captive pricing. d) penetration pricing. e) bait pricing.
b
When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of a) multiple-unit pricing. b) bundle pricing. c) prestige pricing. d) price lining. e) price packaging.
d
When Sharp first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Sharp is called a) customary pricing. b) odd-even pricing. c) penetration pricing. d) price skimming. e) prestige pricing.
d
When a company adjusts price levels so that it can increase sales volume to levels that match the organization's expenses, it is said to employ a _________ objective. a) market share b) cash flow c) return on investment d) survival e) profit
e
When a company attempts to influence a consumer's perception of price to make a product's price more attractive and reduce "sticker shock," it is using a ______ pricing strategy. a) competition-based b) professional c) promotional d) comparison e) psychological
a
When a company prices one item in a line low with the intention of selling a higher-priced item in the same line, it is using a) bait pricing. b) a price leader. c) penetration pricing. d) price lining. e) captive pricing.
e
When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on a) internal reference prices. b) symbol prices. c) high value products. d) discounted reference prices. e) external reference prices.
d
When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using _____ pricing. a) markup b) demand-based c) differential d) cost-plus e) expensed-based
b
When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as a) prestige pricing. b) price lining. c) customary pricing. d) odd-even pricing. e) ethical pricing.
d
When businesses charge the highest possible price that customers who really want the new product will pay, they are using a) premium pricing. b) prestige lining. c) captive pricing. d) price skimming. e) penetration pricing.
d
When consumers are making do with less expensive products and shopping more selectively, manufacturers and retailers must focus on the ___________ of their products. a) price b) quality c) availability d) value e) image
b
When establishing prices, a marketer's first step is to a) determine demand. b) develop pricing objectives. c) select a pricing policy. d) evaluate competitors' prices. e) determine a pricing method.
c
When marginal cost is equal to marginal revenue, the firm should a) produce more to increase profits. b) produce less to decrease total costs. c) stop producing additional units to maximize profits. d) provide discounts to encourage purchases. e) intensify distribution to increase sales.
d
When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude? a) Consolidated did poor market demand research. b) Consolidated has an elastic product. c) Consolidated has an inelastic product. d) Consolidated mustard is a prestige good. e) Consolidated mustard has a normal demand curve.
a
When marketers emphasize price as an issue and match or beat the prices of other companies, they are using a) price competition. b) nonprice competition. c) comparative pricing strategies. d) demand-based pricing. e) supply-based pricing.
Which of the following statements about price elasticity is false?
When price is raised on a product that has an inelastic demand, then total revenue will decrease.
a
When products in an industry are relatively homogeneous and price is a key purchase consideration, a) competition-based pricing becomes more important. b) demand-based pricing dominates pricing decisions. c) firms tend to use secondary-market pricing. d) cost-based methods like markup pricing are dominant. e) customary pricing is often used.
e
Which factor is least likely to affect pricing decisions? a) Competitive prices b) Legal and regulatory issues c) Organizational and marketing objectives d) Customers' interpretation and response e) Shifting stock values
e
Which of the following acts does not directly affect pricing decisions? a) Sherman Antitrust Act b) Federal Trade Commission Act c) Wheeler-Lea Act d) Clayton Act e) Simpson-Marshall Act
e
Which of the following is a requirement for setting pricing objectives? a) The objectives should be short-term oriented. b) There should be only one pricing objective. c) An evaluation of competitors' prices should be made. d) The cost structure should be identified. e) The objectives should be explicitly stated.
c
Which of the following is most likely to be a fixed cost? a) Component parts b) Raw materials c) Rent d) Electricity e) Transportation
e
Which of the following is most likely to have an inelastic demand curve? a) Automobile b) Vacation c) Nonelective surgery d) Recreational vehicle e) Computer
e
Which of the following is not a discount provided to business customers? a) Trade b) Cumulative c) Cash d) Seasonal e) Differentiated
c
Which of the following is not a major factor for firms making price decisions? a) Costs b) Competition c) Previous sales d) Channel member expectations e) Legal and regulatory issues
a
Which of the following is not a method used to determine transfer prices? a) Discounted standard cost b) Actual full cost c) Standard full cost d) Cost plus investment e) Market-based cost
b
Which of the following is the most flexible variable in the marketing mix? a) Product b) Price c) Advertising d) Personal selling e) Distribution
c
Which of the following pricing objectives sets prices to recover cash as quickly as possible? a) Market share b) Profit c) Cash flow d) Return on investment e) Product quality
a
Which of the following pricing strategies often results in a retailer losing money on the product? a) Price leader b) Psychological discounting c) Penetration pricing d) Special-event pricing e) Ethical pricing
b
Which of the following products is most likely to have an inverted C-shaped demand curve? a) Levi jeans b) Giorgio perfume c) Maxwell House coffee d) Pillsbury cake mix e) Ford Taurus
b
Which of the following products is most likely to involve personal selling? a) Blenders b) Riding lawn mowers c) Fresh peaches d) Picture frames e) Footballs
b
Which of the following prohibits price discrimination that lessens competition among wholesalers and retailers? a) Sherman Antitrust Act b) Robinson-Patman Act c) Lanham Trademark Act d) Federal Trade Commission Act e) Wheeler-Lea Act
a
Which of the following statements about markup pricing is correct? a) The use of similar markups reduces price competition. b) Markup pricing is inconvenient to use. c) Markup pricing results in a high price when demand is high and a low price when demand is low. d) Markup pricing is a demand-based pricing method. e) Using markups makes pricing a time-consuming, difficult process.
a
Which of the following statements about nonprice competition is false? a) Companies that use nonprice competition do not need to keep track of their competitor's prices. b) A company must be able to distinguish its brand through some unique feature in order to successfully engage in nonprice competition. c) A firm using nonprice competition can build loyalty to both its company and its products. d) When using nonprice competition, a company should promote the distinguishing characteristics of its brand. e) Buyers must view the distinguishing characteristics of a product offered through nonprice competition as being important.
d
Which of the following statements about price elasticity is false? a) Steak is an example of a product that has an elastic demand for most people, because when price goes up quantity demanded goes down proportionally more. b) Elasticity of demand is the relative responsiveness of a change in quantity demanded to changes in price. c) If marketers can determine price elasticity, then setting prices at optimum levels is much easier. d) When price is raised on a product that has an inelastic demand, then total revenue will decrease. e) A product like electricity has an inelastic demand.
b
Which of the following would be used in setting the price of a new product if considerable competition is expected? a) Psychological pricing b) Penetration pricing c) Odd-even pricing d) Price skimming e) Prestige pricing
a
Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry? a) Status quo b) Return on investment c) Market share d) Survival e) Cash flow
a
Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products? a) Status quo b) Market share c) Survival d) Cash flow e) Return on investment
Which of the following are personal informal exchanges of communication that customers share with one another about products, brands, and companies?
Word-of- mouth communication.
The fact that a gas station in Texas pays less for fuel than a gas station in Maine from a producer in Louisiana suggests that refineries are using which of the following pricing methods?
Zone pricing
What is customer services
______ includes human or mechanical efforts or activities a company provides that add value to a product. Examples of customer services include delivery and installation, financing arrangements, customer training, warranties and guarantees, repairs, layaway plans, convenient hours of operation, adequate parking and information through toll-free numbers.
c
___________ consumers are concerned about both the price and the quality aspects of a product. a) Price-conscious b) Prestige-sensitive c) Value-conscious d) Price-conscious and prestige-sensitive e) Quality-conscious
A sale that advertised prices "up to 65 percent off" the original price uses a) tensile pricing. b) random discounting. c) periodic discounting. d) bait pricing. e) psychological pricing.
a
Competition-based pricing is a) used when costs and revenues are secondary to competitors' prices. b) not useful as a method of increasing market share. c) not useful if the competing products are homogeneous. d) not able to increase sales. e) used when competing products are heterogeneous.
a
Executives in Japan decided to price Lexus luxury cars in the United States at $55,000 while pricing them at $66,000 in their own country. This is an example of a) secondary-market pricing. b) price skimming. c) bait pricing. d) prestige pricing. e) random discounting.
a
For customers, value is a function of the product's a) quality attributes. b) price. c) price and durability. d) quality and functional attributes. e) quality relative to the quality of competing brands.
a
If Nabisco wants to quickly gain a large market share with its new line of reduced-fat snack crackers, it should use a) penetration pricing. b) random discounting. c) captive pricing. d) price skimming. e) everyday low prices.
a
Maintaining or increasing market share a) can be achieved even if industry sales are flat or decreasing. b) is an infrequently used pricing objective in most industries. c) depends upon the overall growth of the total industry. d) is a profit-related objective based on price. e) is directly tied to leading an industry in product quality.
a
Markup is measured either as a percentage of _____ or a percentage of _____. a) selling price; cost b) cost; profit c) revenue; contribution margin d) resources used; cost e) demand; competition
a
Pricing strategies and methods a) help direct and structure the selection of a final price. b) are the last decisions made for a new product. c) are the same for all of a company's products. d) are the most important decisions made for a product. e) require limited planning on the part of management.
a
Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using a) multiple-unit pricing. b) reference pricing. c) price lining. d) bundle pricing. e) odd-even pricing.
a
The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo shirt is an application of odd-even pricing, and even prices are often used to a) give a product an upscale or exclusive image. b) show customers products are priced based on tradition. c) coordinate efforts with a promotional campaign. d) indicate prices have been cut to the last penny. e) facilitate comparison to competitors' prices.
a
The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called a) price lining. b) odd-even pricing. c) price skimming. d) prestige pricing. e) customary pricing.
a
When a company prices one item in a line low with the intention of selling a higher-priced item in the same line, it is using a) bait pricing. b) a price leader. c) penetration pricing. d) price lining. e) captive pricing.
a
When products in an industry are relatively homogeneous and price is a key purchase consideration, a) competition-based pricing becomes more important. b) demand-based pricing dominates pricing decisions. c) firms tend to use secondary-market pricing. d) cost-based methods like markup pricing are dominant. e) customary pricing is often used.
a
If a firm currently produces 2,500 products per month and decides to produce 2,501, it will incur
a marginal cost.
To gain market share, when Hyundai first entered the U.S. car market it did so with a comparatively low price strategy. One of the negative side effects of making this pricing decision is
a negative impact on consumers' perceptions of quality.
If Kroger Food Stores advertises 2-liter bottles of Pepsi for $0.89 to generate store traffic that will purchase other items at regular prices, the grocer is using
a price leader
Recruiting and Selecting Salespeople
a process by which the sales manager develops a list of qualified applicants for sales positions.
Odd-even pricing is
a psychological printing strategy
Demonstrations
a sales promotion method that manufacturers offer temporarily to encourage trial use and purchase of the product or to show how the product actually works.
An agreement in which the products of one organization are distributed through the marketing channel of another organization is called
a strategic channel alliance
Buy-back allowance
a sum of money that a producer gives to a reseller for each unit the reseller buys after an initial promotional deal is over. This method is a secondary incentive in which the total amount of money resellers can receive is proportional to their purchases during the initial promotional effort.
Which of the following purchases would most likely require a consumer to use extended problem solving? a) Audio equipment b) Shaving cream c) Cereal d) Kitchen napkins e) Gasoline
a) Audio equipment
McDonald's uses a segmentation strategy for its sandwiches based on market characteristics such as age, gender, or income. Which of the following segmentation variables is McDonald's using? a) Demographic b) Geographic c) Psychographic d) Product-related e) Education
a) Demographic
Toyota has developed aluminum car bodies that are 100 percent recyclable and light enough to help conserve fuel. What kind of response is this to environmental forces? a) Proactive b) Competitive c) Reactive d) Inactive e) Controllable
a) Proactive
The ___________ prohibits price fixing among firms in an industry. a) Sherman Antitrust Act b) Federal Trade Commission Act c) Wheeler-Lea Act d) Robinson-Patman Act e) Clayton Act
a) Sherman Antitrust Act
Which of the following agreements provides a forum for tariff negotiations, reducing trade restrictions, resolution of international trade problems, and ground rules for international trade? a) The World Trade Organization b) The North American Free Trade Agreement c) The Latin American Free Trade Agreement d) The European Union Free Trade Agreement e) The General Agreement on Tariffs and Trade
a) The World Trade Organization
The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to a) attempt to make large payments or bribes to influence policy decisions of foreign governments. b) offer foreign businesses any type of incentive for purchasing their company's products and services. c) change their ethical standards when dealing with foreign firms. d) give even small tips or gifts in countries where such gifts are customary business practices. e) introduce any type of corruption into foreign businesses that have higher ethical standards than those of the U.S. firm.
a) attempt to make large payments or bribes to influence policy decisions of foreign governments.
An advertising platform is the a) basic issue or selling point that an advertiser wishes to include in an advertising campaign. b) objective of the advertising campaign, stated in precise and measurable terms. c) form in which the basic issues of the campaign should be presented. d) broad objectives of the advertising campaign. e) consumer advertising research conducted.
a) basic issue or selling point that an advertiser wishes to include in an advertising campaign.
Advertising campaign objectives that are aimed at making customers' attitudes more favorable are stated in ________ terms. a) communication b) sales c) demand d) market e) survey
a) communication
When managers at Logistics Pro are developing their strategic plan, they use a market orientation as a guide to ensure that ________ is an integral part of the process. a) customer satisfaction b) employee satisfaction c) the best use of their marketing resources d) the marketing mix e) the marketing function
a) customer satisfaction
Kelly's Kids is a home-based business that sells high-quality children's clothing at premium prices using in-home parties. These in-home parties typically cater to families with small children and middle- to upper-middle-class income. Kelly's Kids is using _____ variables to segment its market. a) demographic b) psychographic c) sociographic d) behavioristic e) geographic
a) demographic
A targeting strategy in which an organization directs its marketing efforts at several segments is called a(n) ___________ targeting strategy. a) differentiated b) total market c) concentrated d) undifferentiated e) integrated
a) differentiated
Del Monte markets ketchup for household use to supermarkets through grocery wholesalers. It markets ketchup for institutional use through industrial distributors and food brokers. Del Monte is using a) dual distribution. b) industrial distribution. c) strategic channel alliance. d) supply chain management. e) an unethical marketing channel.
a) dual distribution.
Gateway Computer makes computers available through its own stores, its toll-free telephone line, and a website. This is an example of a) dual distribution. b) vertical integration. c) horizontal integration. d) tying agreements. e) exclusive dealing.
a) dual distribution.
All of the following describe the demand for business products except a) elastic. b) derived. c) joint. d) inelastic. e) fluctuating.
a) elastic.
Costs that do not vary with changes in the number of units produced and sold are called ____ costs. a) fixed b) total c) invariable d) variable e) set
a) fixed
An unplanned buying behavior resulting from a powerful urge to buy something immediately is called a) impulse buying. b) habitual buying. c) compulsive response behavior. d) non-problem solving. e) cognitive dissonance.
a) impulse buying.
Cameron Inc. is a very profitable automobile repair shop. The company is well known for its great service and involvement in the community, but it fails to properly dispose of its used oil as outlined in environmental regulations. Cameron is failing in its ______ responsibilities. a) legal b) ethical c) economic d) philanthropic e) strategic
a) legal
In product modification, three conditions must be met to improve a firm's product mix: the product must be modifiable, customers must be able to perceive that a modification has been made, and a) modification should make the product more consistent with customers' desires. b) competing companies should not be aware of planned product modifications. c) modification should change customers' desires to provide greater satisfaction. d) management must perceive the modification as a reasonable and necessary action. e) production costs and materials needed should be limited.
a) modification should make the product more consistent with customers' desires.
For customers, value is a function of the product's a) quality attributes. b) price. c) price and durability. d) quality and functional attributes. e) quality relative to the quality of competing brands.
a) quality attributes.
Marketers who view political forces as being beyond their control are taking a ___________ response toward these forces. a) reactive b) aggressive c) proactive d) competitive e) liberal
a) reactive
Marketing researchers at Essex Co. repeated a particular experiment several times and discovered that the results produced each time were nearly identical. This phenomenon would indicate that the results were a) reliable. b) valid. c) unusable. d) predictable. e) compatible.
a) reliable.
Stacy is going to the store to buy a gallon of milk. She will most likely use ___________ in her consumer decision-making process. a) routinized response behavior b) limited problem solving c) extended problem solving d) perceptual scanning e) evaluation of alternatives
a) routinized response behavior
While shopping at a Kroger grocery store, Tom sees a display of his favorite brand of diet cola. He buys a six-pack to take home for the weekend. This purchase process would be described as a) routinized response behavior. b) extended problem solving. c) limited problem solving. d) situational perception. e) enduring involvement.
a) routinized response behavior.
The process of dividing a total market into market groups because people within each group have relatively similar product needs is called a) segmentation. b) diversification. c) target marketing. d) concentration. e) customization.
a) segmentation.
Avon's Breast Cancer Awareness Crusade, which has raised nearly $400 million for community-based breast cancer education and early detection services, illustrates the positive consequences of a) social responsibility. b) corporate benevolence. c) green marketing. d) legal responsibility. e) economic responsibility.
a) social responsibility.
Another name for the European Union is a) the Common Market. b) the European Market. c) the Euro. d) NAFTA. e) AECO.
a) the Common Market.
If a product has an inelastic demand and the manufacturer raises its price, a) total revenue will increase. b) quantity demanded will decrease. c) the demand schedule will shift. d) the demand will become more inelastic. e) total revenue will decrease.
a) total revenue will increase
When the needs of individual consumers in a target market for a specific product are similar and the organization can satisfy most customers with a single marketing mix, the best approach to use may be the ___________ strategy. a) undifferentiated b) differentiated c) segmented d) concentrated e) heterogeneous
a) undifferentiated
Motivating Salespeople
achieved through an organized set of activities continuously performed by the company's sales management.
Premium (Push) Money
additional compensation to salespeople offered by the manufacturer as an incentive to push a line of goods. This is a good method when personal selling is an important part of the marketing effort.
Dealer listings
advertisements promoting a product and identifying the names of participating retailers that sell the product.
Relationship Selling
also known as consultative selling, involves building mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time. It is especially used in business-to-business marketing and can be enhanced through technology that improves interactive communications.
Lucy buys a new dress at T.J. Maxx that has a price tag with "Compare at $50.00. Our Price $29.99." This is an example of the use of
an external reference price.
Free Samples
are given out to stimulate trial of a product, increase sales volume in the early stages of the product's life cycle, or obtain desirable distribution.
Creating Sales Territories
are often selected because they have similar sales potential or require about the same amount of work. should also help the sales force provide the best possible customer coverage and should minimize selling costs.
What are product features?
are specific design characteristics that allows a product to perform certain tasks. By adding or subtracting features, a company can differentiate its products from those of the competition.
A firm operating below the breakeven point is operating
at a loss
Exterior and interior characteristics such as layout, displays, color, and lighting are all elements of a store's:
atmospherics.
A penetration pricing strategy is particularly appropriate when demand is a) increasing. b) highly elastic. c) highly inelastic. d) decreasing. e) inefficient.
b
Amtrak prices its tickets so that it is less expensive to travel on weekends than during the week when there is heavy business travel. This illustrates ___________ pricing. a) cost-plus b) demand-based c) competitive d) secondary markup e) seasonal
b
Bundle pricing may be perceived to be of value by customers because a) they always pay a lower price per item than they would have if they bought each item separately. b) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money. c) the companies selling the products can sell them at a lower price because their costs of packaging are lower. d) they are purchasing complementary products, which is convenient for them. e) they can purchase items that are consumed frequently in larger quantities.
b
Companies that focus on particular product categories and rely on everyday low pricing to acquire a large market share through aggressive and competitive pricing strategies are often referred to as a) pioneers. b) category killers. c) comparison discounters. d) price leaders. e) category leaders.
b
Gambrell Designs thinks its new product, the Automatic Dog Walker, will have a short product life cycle; therefore, its marketing department sets its primary pricing objective as a) market share. b) cash flow. c) profit. d) product quality. e) status quo.
b
If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using a) reference pricing. b) a price leader. c) special-event pricing. d) comparison discounting. e) professional pricing.
b
If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on a) cash flow. b) market share. c) survival. d) return on investment. e) dollar sales volume.
b
If a business decides to reduce its prices once in a while on an unsystematic basis, it is using a) price reduction planning. b) random discounting. c) bait pricing. d) periodic discounting. e) penetration pricing.
b
If a product is priced based on how many or how few people want it at a particular time and place, ______ pricing is being used. a) markup b) demand-based c) competitive d) peak e) differential
b
Lexmark sells some of its color printers for about $100, but the refill cartridges cost over $30 each. Lexmark's pricing strategy would be best labeled as a) bait pricing. b) captive pricing. c) customary pricing. d) price lining. e) complementary pricing.
b
Marketers improve their ability to establish prices appropriately when a) there is nonprice competition. b) they know prices charged for competing brands. c) their products are of better quality than the competition's. d) the main objective is image building. e) using psychological pricing.
b
Marketers must take steps to make sure that the pricing objectives they set are consistent with the organization's ___________ objectives and ___________ objectives. a) advertising; marketing b) overall; marketing c) marketing; promotional d) overall; promotional e) overall; revenue
b
Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not a) generate capital to cover research and development costs. b) discourage competitors from entering the market. c) provide flexibility in the introductory base price. d) protect the firm from covering costs if prices are set too low. e) reduce the stress that may be placed on the firm's production capabilities.
b
The pricing of Clinique makeup considerably higher than brands such as Cover Girl, Revlon, and Maybelline is used to communicate ______, which is the company's primary pricing objective. a) market share b) product quality c) status quo d) profitability e) cash flow
b
When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of a) multiple-unit pricing. b) bundle pricing. c) prestige pricing. d) price lining. e) price packaging.
b
When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as a) prestige pricing. b) price lining. c) customary pricing. d) odd-even pricing. e) ethical pricing.
b
Advertising that encourages customers to send in reply cards for additional information aids salespeople in achieving which goal of personal selling? a) Convincing prospects to buy b) Finding prospects c) Keeping customers satisfied d) Making the presentation e) Following up the sale
b) Finding prospects
Which of the following products is most likely to have an inverted C-shaped demand curve? a) Levi jeans b) Giorgio perfume c) Maxwell House coffee d) Pillsbury cake mix e) Ford Taurus
b) Giorgio perfume
Kellogg's is introducing a new bran waffle for toasters. Television commercials will be a key element in communicating the benefits associated with this product. Based on that decision, Kellogg's is expecting consumers to engage in what form of problem solving? a) Routinized response behavior b) Limited problem solving c) Extended problem solving d) Impulse buying e) Extensive response behavior
b) Limited problem solving
Which of the following countries was the world's first service economy? a) England b) United States c) Sweden d) Canada e) Germany
b) United States
The D-Lite Corporation produces a unique type of light bulb that is used in refrigerator manufacturing. D-Lite is the only maker of this light bulb, and there are no close substitutes for it. In this case, the D-Lite Corporation would be a) an oligopoly. b) a monopoly. c) involved in monopolistic competition. d) involved in perfect competition. e) involved in a perfect oligopoly.
b) a monopoly.
The ability of a marketer to identify customers before they make a purchase is called a) connectivity. b) addressability. c) interactivity. d) accessibility. e) control.
b) addressability.
According to the Boston Consulting Group, marketers may classify their products as all of the following except a) dogs. b) cash contributors. c) question marks. d) stars. e) cash cows.
b) cash contributors.
The Boston Consulting Group classifies products that have a dominant market share but low prospects for growth and that generate more cash than is required to maintain market share as a) dogs. b) cash cows. c) stars. d) cash contributors. e) question marks.
b) cash cows.
The _____ stage of the personal selling process is when the salesperson asks the prospect to buy the product. a) proposal b) closing c) overcoming objections d) approach e) trial
b) closing
The exchange rates of several European countries are linked together to a common currency, the a) lira. b) euro. c) dollar. d) peso. e) ropea.
b) euro.
Demand for a business product is ___________ if a price increase or decrease will not significantly affect that demand. a) elastic b) inelastic c) derived d) joint e) separate
b) inelastic
Candy bars and chewing gum are most likely to be distributed through _____ and _____. a) selective distribution; multiple channels b) intensive; dual distribution c) strategic channel alliances; intensive d) exclusive; a single channel e) dual distribution; convenience channels
b) intensive; dual distribution
When a new variety of Kashi whole-grain breakfast cereals is first introduced, consumers will most likely engage in______ when deciding whether or not to purchase this new product. a) extended problem solving b) limited problem solving c) situational solving behavior d) routinized response behavior e) automatic processing behavior
b) limited problem solving
If the manufacturer of Cool Whip were to introduce an orange-flavored Cool Whip and still continue to produce all of its other Cool Whip products, this would be an example of a) a brand extension. b) line extension. c) functional modification. d) quality modification. e) a new-to-the-world product.
b) line extension.
Most marketers operate in a competitive environment of either a) oligopoly or monopoly. b) oligopoly or monopolistic competition. c) oligopoly or pure competition. d) monopoly or pure competition. e) pure competition or monopolistic competition.
b) oligopoly or monopolistic competition.
Services have six basic characteristics: intangibility, inseparability of production and consumption, perishability, client-based relationships, customer contact, and a) labor-intensiveness. b) orientation toward value. c) homogeneity. d) heterogeneity. e) specialization.
b) orientation toward value.
Raython Hardware and Thames Industrial Supplier have worked closely for many years and have a mutually beneficial relationship in which Raython provides all of Thames's hardware needs in a timely manner. Raython and Thames's relationship could be best characterized as a(n) a) reciprocity agreement. b) partnership. c) intra-organizational group. d) alliance. e) tying arrangement.
b) partnership.
Tim has just finished compiling a list of potential customers and evaluating their ability, willingness, and authority to buy. He knows his next step in the personal selling process is to a) approach. b) preapproach. c) make the presentation. d) prospect. e) overcome objections.
b) preapproach.
Marketing ethics a) refers to laws and regulations that govern marketing. b) refers to principles and standards that define acceptable conduct in marketing. c) maximizes an organization's positive impact and minimizes its negative impact on society. d) is most important for advertising agencies. e) applies well-defined rules for appropriate marketing behavior.
b) refers to principles and standards that define acceptable conduct in marketing.
Within a business organization, a profit center that is self-supporting in terms of sales, markets, production, and other resources is known as a a) profit entity. b) strategic business unit. c) marketing program. d) small business. e) diversified corporation.
b) strategic business unit.
Bundle pricing may be perceived to be of value by customers because a) they always pay a lower price per item than they would have if they bought each item separately. b) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money. c) the companies selling the products can sell them at a lower price because their costs of packaging are lower. d) they are purchasing complementary products, which is convenient for them. e) they can purchase items that are consumed frequently in larger quantities.
b) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money.
If Morton Salt saw all table salt customers as pretty much alike and thus offered only one marketing mix, it would be using the ___________ strategy. a) directed b) undifferentiated c) segmented d) differentiated e) product-use
b) undifferentiated
Costs that vary directly with changes in the number of units produced or sold are called a) changeables. b) variable costs. c) direct costs. d) fixed costs. e) marginal costs.
b) variable costs.
When Gabriella logs on to Dell's website, she sees a notebook model priced will below $1,000. As she continues through the site to view the other options, she realizes the first one she saw was the cheapest model available, but she of course wants more features. Dell is utilizing
bait pricing
When a company prices one item in a line low with the intention of selling a higher-priced item in the same line, it is using
bait pricing
The oldest form of exchange trading of products is known as
barter.
What is product development?
begins when the company finds and develops a new-product idea. During product development, sales are zero and the company's investment costs mount.
Suppose managers at Caterpillar have determined the costs associated with producing hay balers are equal to the price that they charge for the hay balers. This indicates that Caterpillar is producing at the ___________ point.
breakeven
Barnes and Noble sells online through its website, while also selling through physical store locations. This type of retailing is referred to as:
bricks-and-clicks.
When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris includes meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of
bundle pricing
Cents-Off Offers
buyers pay a certain amount less than the regular price shown on the label or package.
An attempt to create a trend or acceptance of a product through word-of-mouth communication is called:
buzz marketing.
How does a company develop new products?
by enhancing its product mix and adding depth to a product line.
Some grocery stores collect data on competitive prices
by using full-time comparison shoppers
A marketer is most likely to set prices according to a cash-flow objective when a a) trial-and-error approach to the market is acceptable. b) certain market share must be maintained. c) quick return on investment is desired. d) higher price is acceptable to the firm. e) product is expected to have a long life cycle.
c
A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy? a) Custom pricing b) Special-event pricing c) Premium pricing d) Price lining e) Bait pricing
c
A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate markup as a percentage of selling price? a) 3 percent b) 14.3 percent c) 30 percent d) 70 percent e) 20 percent
c
Breyer's produces a variety of ice cream flavors and lines of varying qualities. The higher quality ice cream varieties are priced higher than the basic ones. Breyer's is using _____ to price its ice cream. a) captive pricing b) price baiting c) premium pricing d) bait pricing e) differential pricing
c
Maria recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell the house, she may have to use a) secondary-market pricing. b) reference pricing. c) negotiated pricing. d) price lining. e) professional pricing.
c
Marketers at organizations engaged in nonprice competition a) are more concerned about knowing competitors' prices than are marketers in organizations that are engaged in price competition. b) are not concerned about the prices of competing brands. c) need competitive price information to make sure that their products are priced at approximately the same level as the prices of competing brands. d) rely on customers to help them gather information regarding the prices of competing brands. e) experience high levels of price instability.
c
Most pricing objectives based on ___________ are achieved by trial and error because not all cost and revenue data are available when prices are set. a) market share b) cash flow c) return on investment d) survival e) profit
c
Pricing the basic product in a product line low while pricing related items at a higher level is called a) premium pricing. b) bait pricing. c) captive pricing. d) price skimming. e) price lining.
c
Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm's primary pricing objective is a) status quo. b) profit. c) survival. d) market share. e) recovery.
c
Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called a) competition-based pricing. b) reference pricing. c) comparison discounting. d) captive pricing. e) psychological pricing.
c
Steinway produces concert grand pianos, often using the custom materials and designs desired by a specific customer. The average price of these pianos runs about $50,000 depending on the exact piano. What type of pricing does Steinway most likely use for these pianos? a) Markup b) Competition-based c) Cost-plus d) Demand-based e) Secondary-market
c
The "White Sale" that many department stores have every year a few weeks after Christmas is an example of a) secondary pricing. b) off-peak pricing. c) periodic discounting. d) random discounting. e) captive pricing.
c
The manager at Best Buy puts a sign up next to a Pioneer audio system that reads, "Only $199.99! $60 less than Circuit City." This is an example of what type of pricing strategy? a) Random discounting b) Periodic discounting c) Comparison discounting d) Penetration pricing e) Everyday low prices
c
The three primary bases for developing prices are a) profit, demand, and competition. b) supply, demand, and marketing objectives. c) demand, competition, and cost. d) markup, cost, and cost-plus. e) negotiation, periodicity, and randomness.
c
What type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client? a) Price lining b) Prestige pricing c) Professional pricing d) Customary pricing e) Price skimming
c
Which of the following pricing objectives sets prices to recover cash as quickly as possible? a) Market share b) Profit c) Cash flow d) Return on investment e) Product quality
c
Which of the following characteristics distinguish online media from traditional marketing? a) Experience, networking, and personal contact b) Social networking, personal contacts, control, and salesmanship c) Addressability, interactivity, accessibility, connectivity, and control d) Environment, responsiveness, customization, and affordability e) Dynamic responsiveness, control, friendliness, and attention-getting
c) Addressability, interactivity, accessibility, connectivity, and control
Which of the following lists forms of competitive advertising? a) Pioneer, comparative, reminder b) Reminder, repetitive, reinforcement c) Comparative, reminder, reinforcement d) Institutional, product, comparative e) Product, pioneer, reminder
c) Comparative, reminder, reinforcement
Beth Hines is buying furniture for her apartment for the first time. She is spending considerable time and effort comparing the products that different stores offer. Which type of problem-solving process is she using? a) Selective b) Intensive c) Extended d) Shopping e) Routinized
c) Extended
Which of the following are the most frequently sentenced organizational crimes? a) False advertising and price discrimination b) Price discrimination and fraud c) Fraud and antitrust violations d) Price fixing and antitrust violations e) Fraud and price fixing
c) Fraud and antitrust violations
What does the demand curve for a prestige product look like? a) It is a straight line where the quantity sold continues to increase as the price of each product increases. b) It is a curve where the highest and the lowest prices yield the greatest quantity sold and mid-range prices produce the fewest sales. c) It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases. d) It forms a straight vertical line because of the prestige of the product, and quantity sold will remain stable regardless of the price. e) It slopes from left to right at a very mild slope; that is, as quantity increases, price decreases slowly.
c) It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases.
Which of the following statements about social responsibility is correct? a) Social responsibility dimensions do not include philanthropic concerns. b) Social responsibility does not deal with the total effect of all marketing decisions on society. c) Social responsibility refers to a company's obligation to maximize its positive impact and minimize its negative impact on society. d) Social responsibility dimensions do not include economic concerns. e) Social responsibility refers to principles and standards that define acceptable conduct in marketing as determined by various stakeholders.
c) Social responsibility refers to a company's obligation to maximize its positive impact and minimize its negative impact on society.
Inelastic demand simply means that a) buyers will not make a modified rebuy purchase. b) demand depends on how many items are purchased. c) a price increase or decrease will not significantly change the demand for an item. d) when price goes up, demand goes down. e) when supply is reduced, the price will increase.
c) a price increase or decrease will not significantly change the demand for an item.
Rick has reviewed a prospect's account and credit history, identified product needs, and gathered the appropriate literature. He feels he is ready for the ____ step of the personal selling process. a) prospecting b) presentation c) approach d) preapproach e) closing
c) approach
Soft drink companies advertise that their products beat the competition in national "taste tests," and they refer to the rival brands by name. This type of advertising is best described as a) pioneer. b) competitive. c) comparative. d) defensive. e) selective.
c) comparative.
In general, differences between goods and services are determined by the a) degree of labor intensiveness. b) type of target market. c) degree of tangibility. d) type of provider. e) degree of consumer contact.
c) degree of tangibility.
After a firm has identified an appropriate targeting strategy, the next step in the target market selection process is a) determining the demographic variables of the target market. b) developing market segment profiles. c) determining which segmentation variables to use. d) selecting specific target markets. e) evaluating relevant market segments.
c) determining which segmentation variables to use.
If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be a) steady. b) inelastic. c) elastic. d) prestige. e) marginal.
c) elastic.
Which of the following refers to the strategic process of distributing, promoting, pricing products, and discovering the desires of customers using digital marketing. a) digital orientation b) digital media c) electronic marketing d) digital electronics e) electronic processing
c) electronic marketing
Suppose that marketers at Lever Bros. are trying to determine whether the use of free samples of Snuggle fabric softener was the reason for a sales increase in a particular store. The type of research conducted to answer this question is a) exploratory. b) descriptive. c) experimental. d) informal. e) qualitative.
c) experimental.
When more information is needed about a problem and a tentative hypothesis needs to be made more specific, marketers usually conduct _________ research. a) descriptive b) experimental c) exploratory d) analytical statistical e) conclusive
c) exploratory
Justin Franklin's company is interested in locating areas where the average income is high, the average age range is 25-35 years, and the lifestyles of the people involve extreme adventures and dangerous leisure activities. His company would most likely find possible markets through a) U.S. Census Bureau information. b) geographic segmentation variables. c) geodemographic segmentation. d) climate information. e) psychographic segmentation.
c) geodemographic segmentation.
A major disadvantage of personal selling is that it a) is not remembered as well by consumers as advertising messages are. b) cannot easily adjust the message to satisfy a customer's information needs. c) is very expensive per contact. d) does not provide immediate feedback. e) is not compatible with other promotional activities.
c) is very expensive per contact
A major determining factor in deciding which type of problem-solving process should be used depends on the individual's intensity of interest in a product and the importance of the product for that person. This is known as an individual's a) motivational structure. b) routinized response behavior. c) level of involvement. d) cognitive dissonance. e) evaluative criteria.
c) level of involvement.
The target audience for an advertising campaign is the a) information base on which to develop the campaign. b) geographic distribution of persons. c) people toward whom the advertisements are directed. d) overall goal of the advertising campaign. e) sales objective to be achieved by the campaign.
c) people toward whom the advertisements are directed.
Kathy Adkins, owner of Adkins Styling Salon, looks at the day's appointment schedule and notices that it is completely full. She wishes some of the empty slots from earlier in the week were available on this Saturday afternoon. Her thoughts deal with the ___________ characteristic of services. a) credence b) heterogeneity c) perishability d) search e) inseparability
c) perishability
When marginal cost is equal to marginal revenue, the firm should a) produce more to increase profits. b) produce less to decrease total costs. c) stop producing additional units to maximize profits. d) provide discounts to encourage purchases. e) intensify distribution to increase sales.
c) stop producing additional units to maximize profits.
An analysis of ___________ examines internal factors that give the organization certain advantages and disadvantages in meeting the needs of its target markets. a) opportunities and threats b) market opportunities c) strengths and weaknesses d) activities and responsibilities e) organizational resources
c) strengths and weaknesses
A firm has conducted market research and found that customer satisfaction with its product is quite high. Nonetheless, repurchase behavior is very low. The research design evidently has a problem with a) secondary data. b) reliability. c) validity. d) reporting findings. e) generalizability.
c) validity.
A market share objective
can be used effectively whether total industry sales are rising or falling
Training Sales Personnel
can concentrate on the company, its products, its selling methods, or all three. can be aimed at newly hired salespeople, experienced salespeople, or both. may be performed in the field, at educational institutions, in company facilities, and/or by using web-based technology.
Lexmark sells some of its color printers for about $100, but the refill cartridges cover over $30 each. Lexmark's pricing strategy would be best labeled as
captive pricing
Pricing the basic product in a product line low while pricing related items at a higher level is called
captive pricing
Gambrell Designs thinks its new product, the Automatic Dog Walker, will have a short product life cycle; therefore, its marketing department sets its primary pricing objective as
cash flow
Companies that focus on particular product categories and rely on everyday low pricing to acquire a large market share through aggressive and competitive pricing strategies are often referred to as
category killers
When Yoplait Yogurt gives a portion of its profits to Breast Cancer Research, it is using:
cause-related marketing.
Claire Nevsky is in charge of advertising for her company and has produced a 30-second television spot to promote one of the company's new products. One of her assistants just out of college believes that the commercial has too much visual and audio information packed into such a small amount of time. The assistant is specifically concerned about limits in the receiver's:
channel capacity.
A single leader who controls and organizes a marketing channel is called a
channel captain
At the _____ stage of the personal selling process, a salesperson asks the prospect to buy the product.
closing
The process of putting one's thoughts (meaning) into signs (symbols) is called the:
coding (encoding) process.
Stacey's client group has been gradually shrinking and she is looking for new prospective clients. She has decided to spend a couple of days approaching potential customers without any prior consent. Stacey's method of approach is known as:
cold canvas.
Stacey and Evan are preparing budgets for a new product as well as finalizing plans for the full-scale marketing and manufacturing of the new Genie-Vac. They are in the ____ phase of the new-product development process.
commercialization
Radio and television signals as well as ink on the paper of a magazine or newspaper are all considered:
communication channels.
ACE Electronics introduces a new voice-activated personal computer that no longer requires a keyboard. ACE charges the high price of $11,000 per unit, thus generating large profits because it has a 20 percent market share. ACE's major problem in the future will most likely be
competition
When products in an industry are relatively homogeneous and price is a key purchase consideration,
competition based-pricing becomes more important
If General Mills looks at Kellogg's cereal prices as the primary method of determining its own prices, General Mills is using
competition-based pricing
Current-Customer Sales
concentrate on current customers, calling on people & organizations which have purchased products from the firm before.
The difference between consumer sales promotion methods and trade sales promotion methods is:
consumer sales promotions focus on getting consumers to buy their products, whereas trade sales promotions focus on getting wholesalers and retailers to buy.
Money Refunds
consumers submit proof of purchase and are mailed a specific amount of money.
When determining markup as a percentage of cost, divide the markup amount by
cost
For custom-made equipment or commercial construction projects, which pricing method is most likely used?
cost-plus
Steinway produces concert grand pianos, often using the custom materials and designs desired by a specific customer. The average price of these pianos runs about $50,000 depending on the exact piano. What type of pricing does Steinway most likely use for these pianos?
cost-plus
The federal government often uses ___ pricing when it grants defense contracts
cost-plus
When a seller's costs are usually determined during or after a product is made and then specified percentage or dollar amount is added to the cost to establish a price, an organization is using ___ pricing.
cost-plus
Marketers generally view _____ as the minimum price a product can be sold for.
costs
What is product differentiation
creating and designing products so that customers perceive them as different from competing products
Often when a company introduces a new product or line extension, its promotion will focus on ____ in order to initiate the product-adoption process.
creating awareness
Goods that are priced primarily based on the way they have always been priced are examples of
customary pricing
A firm establishes which of the following pricing objectives to maintain or increase its product's sales in relation to total industry sales? a) Cash flow b) Sales potential c) Product quality d) Market share e) Status quo
d
A manager at JC Penney discovers that Sears has reduced the price of its children's Levi's from $31.99 to $24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing strategy? a) Secondary-market pricing b) Bait-pricing c) Reference pricing d) Random discounting e) Comparison discounting
d
A product is a price leader when a) it is sold at the highest price. b) its price maximizes profits. c) an increase or decrease in price leads to increased revenue or lower costs. d) it is sold at less than cost in the hope that sales of other products will increase. e) its price leads the industry in sales.
d
A sale at The Bon Marche the day after Thanksgiving to kick off the Christmas season would be considered a) psychological pricing. b) comparison discounting. c) customary pricing. d) special-event pricing. e) captive pricing.
d
During July and August, Lakewood Links Golf Course, located in South Carolina, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of a) differential pricing. b) incentives. c) competition-based pricing. d) demand-based pricing. e) random discounting.
d
If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as a) penetration pricing. b) psychological pricing. c) price lining. d) price skimming. e) odd-even pricing.
d
If PepsiCo sets its twelve-pack price at $3.99 to match the price charged by Coca-Cola, Pepsi is using which of the following pricing methods? a) Demand-based b) Cost-based c) Reference pricing d) Competition-based e) Price leader
d
If REVO sets the price for its sunglasses at $240, it is using psychological pricing to convey a) thrift. b) cost cutting. c) value. d) prestige. e) availability.
d
If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would be needed to make this a true pricing objective? a) Statement of demand elasticities b) Identification of cost structure c) Breakeven analysis d) Identification of a time period for accomplishment e) Establishment of a subsequent pricing policy
d
If an organization sets prices to recover research and development expenses and establish a premium quality image for its product, it would be using a _________ pricing objective. a) survival b) return on investment c) market share d) product quality e) cash flow
d
J.C. Penney's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately ___________ percent for this product. a) 64 b) 36 c) 18 d) 57 e) 45
d
Odd-even pricing is a) a cost-based strategy. b) competition-based. c) a rarely used technique. d) a psychological pricing strategy. e) a form of unethical pricing.
d
Price skimming and penetration pricing are both strategies used for a) product-line pricing. b) business products only. c) psychological pricing. d) new-product pricing. e) promotional pricing.
d
Reference pricing is a) listing the manufacturer's suggested retail price on the price tag along with the store's lower price. b) mentioning the price that other retailers charge for the same product on the display for the product. c) using a consumer's internal perceptions of what the appropriate price should be to help price a firm's products. d) pricing a product at a moderate level and positioning it next to a more expensive model or brand. e) using prices in advertising so that customers will have a point of reference when they come to the retail facility.
d
The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ___________ pricing. a) price-line b) promotional c) professional d) differential e) psychological
d
The federal government often uses _____ pricing when it grants defense contracts. a) markup b) differential c) breakeven d) cost-plus e) competition-based
d
The management at Allied Electronics is having difficulty in raising the introductory price on system components to cover the increased costs of producing the sensing devices for home security systems. Apparently, Allied used a(n) ___________ strategy in pricing these components. a) odd-even b) skimming c) lining d) penetration e) psychological
d
Westin Inc. has an objective of achieving a 25 percent return from its overall sales. This is an example of a ______ pricing objective. a) market share b) cash flow c) return on investment d) profit e) status quo
d
What type of pricing objective would an organization use if it were in a favorable position and desired nothing more? a) Return on investment b) Cash flow c) Profit d) Status quo e) Survival
d
When Sharp first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Sharp is called a) customary pricing. b) odd-even pricing. c) penetration pricing. d) price skimming. e) prestige pricing.
d
When a company adjusts price levels so that it can increase sales volume to levels that match the organization's expenses, it is said to employ a _________ objective. a) market share b) cash flow c) return on investment d) survival e) profit
d
When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using _____ pricing. a) markup b) demand-based c) differential d) cost-plus e) expensed-based
d
When businesses charge the highest possible price that customers who really want the new product will pay, they are using a) premium pricing. b) prestige lining. c) captive pricing. d) price skimming. e) penetration pricing.
d
When consumers are making do with less expensive products and shopping more selectively, manufacturers and retailers must focus on the ___________ of their products. a) price b) quality c) availability d) value e) image
d
Identifying and analyzing a target market and developing a marketing mix to satisfy individuals in that market are essential elements of which of the following parts of strategic planning? a) Establishing marketing objectives b) Coordinating marketing activities c) Organizing marketing functions d) Developing a marketing strategy e) Planning marketing activities
d) Developing a marketing strategy
Which of the following products would probably require extended problem solving before a purchase? a) Products purchased frequently b) Products to be purchased in the future c) Products that are purchased routinely d) Expensive products e) Products purchased as a result of social influences
d) Expensive products
Zerex markets its radiator liquid as a coolant in the South and an antifreeze in the North. Which of the following segmentation variables is Zerex using? a) Demographic b) Psychographic c) Life cycle d) Geographic e) Product use
d) Geographic
Justin Abercrombie attends a seminar on just-in-time inventory management. Excited about the idea, he returns to his office at Atlanta Auto Supply to start designing such an inventory system. Which of the following steps must Justin take as he institutes this change? a) Increase safety stock b) Raise the reorder point c) Reduce customer service standard d) Increase order frequency e) Reduce estimates of inventory turnover rate
d) Increase order frequency
If all the gas stations in a city collaborated to determine what gas prices should be charged, they would be violating the a) Wheeler-Lea Act. b) Clayton Act. c) Robinson-Patman Act. d) Sherman Antitrust Act. e) Celler-Kefauver Act.
d) Sherman Antitrust Act.
What is the primary distinction between a line extension and a product modification? a) A product modification results in a completely new product while a line extension is simply changing an old product. b) In both cases an existing product is altered, but the alteration is more dramatic with a product modification than it is with a line extension. c) Line extensions are designed to better meet the needs of the existing market segment while product modifications target entirely new segments of the market. d) With product modifications, the original product is replaced in the product line while both the old and the new products remain in the case of line extension. e) Line extensions are strictly aesthetic changes to an existing product whereas product modifications consist of changes in quality and functionality.
d) With product modifications, the original product is replaced in the product line while both the old and the new products remain in the case of line extension.
The last stage in the development of any advertising campaign is a) creating the advertising platform. b) developing the media plan. c) creating the advertising message. d) evaluating the effectiveness of advertising. e) defining the advertising objectives.
d) evaluating the effectiveness of advertising.
Coca-Cola has expanded to Diet Coke, Cherry Coke, and Caffeine-free Coke, to name a few. These are examples of a) product modifications. b) functional modifications. c) aesthetic modifications. d) line extensions. e) product lining.
d) line extensions.
The type of competitive structure that exists in the case where there are almost no substitutes for a product is a(n) a) monopolistic competition. b) oligopoly. c) pure competition. d) monopoly. e) noncompetition.
d) monopoly.
The four major competitive structures are a) monopolies, oligopolies, oligopolistic monopolies, and pure competition. b) pure competition, heavy competition, moderate competition, and light competition. c) brand, product, total budget, and generic. d) oligopolies, monopolies, monopolistic competition, and pure competition. e) monopolies, limited competition, oligopolistic competition, and pure competition.
d) oligopolies, monopolies, monopolistic competition, and pure competition.
A business that contributes resources to the community to improve the quality of life is taking on a(n) ___________ responsibility. a) ethical b) legal c) cost d) philanthropic e) economic
d) philanthropic
Temporary and dynamic factors that result from a particular set of circumstance a consumer is facing when making purchase decisions characterize a) enduring involvement. b) extended problem solving. c) selective exposure. d) situational involvement. e) selective retention.
d) situational involvement.
Lauren is a concert promoter who works for pop star Justin Timberlake. She works very hard to make sure most of Justin's concerts are sold out because she understands the concept of perishability, which means a) because the concert is not tangible, customers will have a difficult time judging its quality in advance. b) the production of the concert and the consumption of the concert by the fans cannot be separated so tickets must be sold. c) a high level of interaction will exist between the customers and the musicians, which makes the customers' presence necessary. d) that if the tickets are not sold, seats will remain empty and they can never be sold to anyone again. e) that each concert is different and customers will miss a unique experience if they are not present at the concert.
d) that if the tickets are not sold, seats will remain empty and they can never be sold to anyone again
A graph of the quantity of products marketers expect to sell at various prices if other factors remain constant is a
demand curve.
Primary demand is defined as:
demand for a product category.
The three primary bases for developing prices are
demand, competition, and cost
If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it knows that at that price it will reach that goal, the firm would be using a ___ pricing method
demand-based
If a product is priced based on how many or how few people want it at a particular time and place, ___ pricing is being used
demand-based
During July and August, Lakewood Links Golf Course, located in S.C., offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of
demand-based pricing
Although a cosmetics brand would like to use _____ as a consumer sales promotion method, this method has extremely high labor costs that are more affordable for higher-end make-up companies.
demonstrations
Following Up
determine if the order was delivered on time & was installed properly; whether the customer has problems or questions about the product; determine the customer's future product needs.
When establishing prices, a marketer's first step is to:
develop pricing objectives
Prospecting
developing a database of potential customers
. What is customer-segmented pricing?
different customers pay different prices for the same product or service. i.e. Museum ,may charge a lower admission for students and seniors citizens
Executives in Japan decided to price Lexus luxury cars in the US at $55,000 while pricing them at $66,000 in their own country. This is an example of
differential
The fact that senior citizens are charged a lower price at movie theatres than younger adults is an example of ___ pricing
differential
Trade Salespeople
direct much of their efforts toward helping customers, especially retail stores & promoting the products. Food producers and processors commonly employ trade salespeople.
Technical Salespeople
direct their efforts toward the organization's current customers by giving technical assistance regarding applications of the product, system designs, and installation procedures. Technical sales personnel frequently are employed to sell technical industrial products.
What is a functional discount (also called a trade discount)?
discount is offered by the seller to trade channel members who perform certain functions, such a selling, storing, and record keeping.
Sony management decided to use skimming as a pricing strategy for its newest line of HDTV sets. It should be aware that this strategy does NOT
discourage competitors from entering the market
For most firms in the United States, demand curves are
downward sloping.
A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish? a) Everyday low prices strategy b) Odd-even pricing strategy c) Prestige pricing strategy d) Special-event pricing strategy e) Reference pricing strategy
e
A cost-based pricing method commonly used in retail is called a) value pricing. b) cost-plus pricing. c) cost discounting. d) differential pricing. e) markup pricing.
e
A market share objective a) is not recommended when sales for the total industry are declining. b) is not especially useful when sales for the total industry are increasing. c) is not especially useful when sales for the total industry are flat. d) is useful primarily in an industry where total sales are increasing. e) can be used effectively whether total industry sales are rising or falling.
e
A price-skimming strategy assumes that a) the initial demand is highly elastic. b) the product is efficient. c) it will be difficult to recoup development costs. d) all consumers have homogeneous tastes. e) the initial demand is highly inelastic.
e
A problem associated with _____ is that consumers can predict when prices will be lowered and delay purchases until that time. a) random discounting b) penetration pricing c) reference pricing d) everyday low pricing e) periodic discounting
e
All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except a) premium pricing. b) price lining. c) captive pricing. d) bait pricing. e) penetration pricing.
e
All of the following are psychological techniques except a) customary pricing. b) prestige pricing. c) reference pricing. d) odd-even pricing. e) price skimming.
e
Competitors' prices, along with the marketing variables they emphasize, are determining factors in a) the instability of prices in a particular industry. b) using markup pricing for consumer goods. c) how much marketing research a firm needs to collect. d) using differential pricing to demonstrate quality differences. e) how important price will be to customers.
e
For custom-made equipment or commercial construction projects, which pricing method is most likely used? a) Prestige b) Premium c) Differential d) Return-on-investment e) Cost-plus
e
Goods that are priced primarily based on the way they have always been priced are examples of a) traditional pricing. b) professional pricing. c) everyday low prices. d) price lining. e) customary pricing.
e
If General Mills looks at Kellogg's cereal prices as the primary method of determining its own prices, General Mills is using a) price fixing. b) price discrimination. c) demand-based pricing. d) market share pricing. e) competition-based pricing.
e
If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it knows that at that price it will reach that goal, the firm would be using a ___________ pricing method. a) cost-plus b) competition-based c) psychological d) comparison e) demand-based
e
Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and achieving price stability are all associated with a _____ pricing objective. a) product quality b) market share c) survival d) profit e) status quo
e
Price leaders, comparison discounting, and special-event pricing are applications of a) psychological pricing. b) professional pricing. c) product-line pricing. d) bait-and-switch. e) promotional pricing.
e
Some grocery stores collect data on competitive prices a) by calling their competitors. b) on a quarterly basis. c) through stores' purchase data. d) from their resellers. e) by using full-time comparison shoppers.
e
To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called a) price lining. b) special-event pricing. c) differential pricing. d) comparison discounting. e) price leader pricing.
e
When Gabriella logs on to Dell's website, she sees a notebook model priced well below $1,000. As she continues through the site to view the other options, she realizes the first one she saw was the cheapest model available, but she of course wants more features. Dell is utilizing a) bait and switch. b) price lining. c) captive pricing. d) penetration pricing. e) bait pricing.
e
When a company attempts to influence a consumer's perception of price to make a product's price more attractive and reduce "sticker shock," it is using a ______ pricing strategy. a) competition-based b) professional c) promotional d) comparison e) psychological
e
Which of the following is a requirement for setting pricing objectives? a) The objectives should be short-term oriented. b) There should be only one pricing objective. c) An evaluation of competitors' prices should be made. d) The cost structure should be identified. e) The objectives should be explicitly stated.
e
Which of the following is not true of NAFTA? a) The agreement has a long adjustment phase-in time period. b) Increased competition should lead to a more efficient market. c) It will provide additional opportunities for the United States in long-term affiliations with other countries in the Western hemisphere. d) It is controversial. e) Business licensing requirements have been increased.
e) Business licensing requirements have been increased.
Which of the following factors have contributed the least to the growth of services in the U.S. economy? a) Increased interest in travel and entertainment b) Increased number of women in the workforce c) Increased proportion of older people in the United States d) Increased interest of Americans in fitness and recreation e) Increased number of high-tech goods
e) Increased number of high-tech goods
Which of the following actions is illegal? a) Political officials influencing how much a government agency purchases and from whom. b) Corporate contributions to candidates. c) Corporate contributions to elected officials. d) Political officials helping businesses secure foreign markets. e) Paying political officials not to enforce a particular law.
e) Paying political officials not to enforce a particular law.
After the advertising budget is determined, the next step in creating an advertising campaign is a) creating the advertising message. b) creating the advertising platform. c) evaluating the advertising objectives. d) executing the campaign. e) developing the media plan.
e) developing the media plan.
When marketing researchers try to manipulate an independent variable and measure the resulting changes in a dependent variable, they are engaging in a) surveys. b) secondary data gathering. c) interviews. d) observation. e) experimentation.
e) experimentation.
If Pacific Power and Light increased its rates 10 percent and experienced only a 2 percent reduction in the demand for power, the demand would be a) elastic. b) prestige. c) common. d) horizontal. e) inelastic.
e) inelastic.
Personal selling goals include finding prospects, convincing prospects to buy, and a) monitoring new products being developed. b) being aware of competitors' sales activities. c) seeking one-sale customers. d) avoiding repeat transactions. e) keeping customers satisfied.
e) keeping customers satisfied.
Favorable conditions in the marketplace environment that could produce business rewards for the organization if acted upon properly are called a) strengths. b) market strategies. c) market niches. d) threats. e) opportunities.
e) opportunities
Dividing the percentage change in quantity demanded by the percentage change in price gives the a) prestige demand curve. b) breakeven point. c) marginal cost curve. d) price sensitivity curve. e) price elasticity of demand.
e) price elasticity of demand.
Age, rate of product use, location, and gender are all examples of common a) demographic variables. b) geographic characteristics. c) targeting strategies. d) psychographic variables. e) segmentation variables.
e) segmentation variables.
A salesperson finds and analyzes information about each prospect's specific product needs, current use of and feeling about brands, and personal characteristics during a) prospecting. b) the approach. c) presentation preparation. d) overcoming objections. e) the preapproach.
e) the preapproach.
As Emily prepares the script for a radio commercial for her boutique, she is engaging in the____ stage of the communication process.
encoding
Consumer Sales Promotion Methods
encourage or stimulate consumers to patronize a specific retail store or try a particular product.
Promotional efforts designed to reduce the risk to consumers for using a product for the first time seek to:
encourage product trial.
All of the following are major steps in developing a new product except
evaluation of competitors' efforts
When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on
external reference prices.
Support Personnel
facilitate selling but usually are not involved solely with making sales.
Costs that do not vary with changes in the number of units produced and sold are called ____ costs.
fixed
Frequent-User Incentives
foster customer loyalty to a specific company or group of cooperating companies that provide extra incentives for patronage. reward loyal customers and also generate data that helps marketers foster desirable customer relationships.
The maker of Huggies diapers is developing a media plan that involves trying to expose its target audience to its new advertisement about ten times. This is advertising:
frequency.
Merchant wholesalers can be divided into two basic categories:
full-service and limited service.
A marketer sometimes uses temporary price reductions to
gain market share.
Reductions for transportation and other costs related to the physical distance between buyer and seller are known as
geographic pricing.
The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo shirt is an application of odd-even pricing, and even prices are often used to
give a product an upscale or exclusive image
A common form of tactile communications in U.S. business activities is:.
handshaking
Pricing strategies and methods
help direct and structure the selection of a final price
A penetration pricing strategy is particularly appropriate when demand is
highly elastic
To expand the number of its retail outlets in the Washington, D.C., area, the Dress Barn bought out a small chain of women's apparel stores in northern Virginia. This type of integration is called
horizontal
Competitors' prices, along with the marketing variables they emphasize, are determining factors in
how important price will be to customers
Point-of-purchase (P-O-P) materials
include outside signs, window displays, counter pieces, display racks, and self-service cartons. These items attract attention, inform customers, and encourage retailers to carry particular products.
In recent years, the proportion of promotional dollars spent on sales promotion has:
increased relative to advertising.
Order Getters
increases sales by selling 2 new customers & increasing sales 2 present customers, which is sometimes called "creative selling."
Consumer Contests,
individuals compete for prizes based on their analytical or creative skills.
Consumer Games
individuals compete for prizes based primarily on chance.
If Pacific Power and Light increased its rates 10 percent and experienced only a 2 percent reduction in the demand for power, the demand would be
inelastic.
Promotion helps consumers because it:
informs consumers and places them in a position to specify the products that they seek.
Michelle works for a company that sells rotisseries for chicken and other foods. She answers phone calls from customers who see infomercials on TV and call to order the product. Michelle is considered a(n):
inside order taker.
The Robert Morris University runs a series of ads throughout the Mid Atlantic area on how friendly and helpful its faculty, staff, and students are as well as how outstanding its academic programs are. This type of promotion would best be characterized as:
institutional advertising.
The coordination of promotion and other marketing efforts for maximum informational and persuasive impact defines:
integrated marketing communications.
A price developed in the consumer's mind through experience with the product is called a(n)
internal reference price.
What a price means or what it communicates to customers is called
interpretation.
For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.
inverse
If the terms of a business exchange are 2/10 net 30, this means that the transaction
involves a cash discount if paid within ten days
If the terms of a business exchange are 2/10 net 30, this means that the transaction
involves a cash discount if paid within ten days.
Team Selling
involves the salesperson joining with people from the firm's financial, engineering, and other functional areas, is appropriate for expensive, complex, high-tech business products. These products are so complex that a single salesperson can no longer be expert in all aspects of the product and purchase process.
What is the maturity stage of the product life cycle?
is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because if increased marketing outlays to defend the product against competition
What is a quantity discount?
is a price reduction to buyers who buy large volumes. Such discounts provide an incentive to the customer to buy more from one given seller, rather than from many different sources.
Sales promotion
is an activity and/or material that acts as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or consumers.
Public relations:
is an element of promotion that should be handled on a continuous basis.
What is the decline stage of the product life cycle?
is the period when sales fall off and profits drop. When this happens, the marketer considers pruning items from the product line to eliminate those not earning a profit. The marketer may also cut promotion efforts, eliminate marginal distributors and finally, plan to phase out the product. In this stage, marketers must determine whether to eliminate the product or try to reposition it to extend its life.
A product under nonprice competition would most likely not succeed in the market if
it is easy to duplicate.
A product is a price leader when
it is sold at less than cost in the hope that sales of other products will increase
Premiums
items offered free or at a minimum cost as a bonus for purchasing a product.
Personal selling goals include finding prospects, convincing prospects to buy, and:
keeping customers satisfied
Head nodding, winking, hand gestures, and arm motions are all forms of ___ communication.
kinesic
Coca-Cola has expanded to Diet Coke, Cherry Coke, and Caffeine-free Coke, to name a few. These are examples of
line extensions
Most marketing channels have marketing intermediaries. A marketing intermediary's role is to
link producers to other middlemen or to consumers
A salesperson will be better able to determine the prospect's specific needs by
listening carefully to questions and comments and watching reactions during the sales presentation.
Location is important to a retailer because:
location determines the trading area from which the store must draw its customers
To maintain market share and revenue in an increasingly price-sensitive market, companies have focused on quality, used labor-saving technologies, and used efficient manufacturing processes. These tactics have provided gains in productivity that have translated into ___________ for the consumer.
lower costs for the company and lower prices
The best advice for recruiting and selecting salespeople for one's organization would be to:
make recruitment a continuous activity aimed at seeking out the best applicants.
Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ___________ cost.
marginal
If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where
marginal revenue equals marginal cost.
Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's
marginal revenue.
A cost-based pricing method commonly used in retail is called
mark-up prices
If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on
market share
Suppose that the watchband department of Timex sells completed watchbands to the finished watch department. The finished watch department is charged the price it would have to pay an outside watchband manufacturer less a discount to reflect low sales and transportation costs. This method of pricing is called _______ pricing.
market-based cost
A firm might temporarily sell products below their cost in order to
match competition or generate cash flow.
Assisting the producer's customers in selling to their own customers is the major purpose of a(n) _____.
missionary salesperson
Daphne King of Cleborn Pharmaceuticals tells a sales management class at the state university that her job is to call on doctors and explain the benefits of new prescription drugs that her firm develops. Daphne would call herself a(n):
missionary salesperson.
Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using
multiple-unit pricing
Marketers at organization engaged in nonprice competition
need competitive price information to make sure that their products are priced at approximately the same levels as the prices of competing brands
Maria recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell the house, she may have to use
negotiated pricing
Price skimming and penetration pricing are both strategies used for
new-product pricing
A single page of typewritten copy that has 300 words or less and describes a company event or product is called a:
news release.
The public relations department at Lowe's Home Improvement submits one page of typewritten copy to national newspapers and news web sites to announce its one-day, nationwide clean-up-local-parks event. This is an example of a:
news release.
Anything that reduces the accuracy and clarity of communication is called:
noise
Justin Caprese phones Ben Kirkland of Southside Furniture to inform him that if he will increase his recent order of 15 mattress sets to 20, he will receive a 14 percent price reduction. This offer is due to a recent overstock condition at the factory and will not be available in the future. The discount offered here is
noncumulative.
Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing
nonprice competition.
Dylan is a sales person for Whole Foods. In his position, he is primarily responsible for seeking repeat sales. Dylan is most likely a(n):
order taker.
Marketers must take steps to make sure that the pricing objectives they set are consistent with the organization's ___ objectives and ___ objectives
overall; marketing
Personal selling
paid personal communication that attempts to inform customers and persuade them to purchase products in an exchange situation.
The management at Allied Electronics is having difficulty in raising the introductory price on system components to cover the increased costs of producing the sensing devices for home security systems. Apparently, Allied using a(n) ___ strategy in pricing these components
penetration
All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except: -premium pricing -price lining -captive pricing -bait pricing -penetration pricing
penetration pricing
If Nabisco wants to quickly gain a large market share with its new line of reduced-fat snack crackers, it should use
penetration pricing
The target audience for an advertising campaign is the:
people toward whom the advertisements are directed.
Marketers have no flexibility in setting prices under conditions of
perfect competition.
A problem associated with ___ is that consumers can predict when prices will be lowered and delay purchases until that time
periodic discounting
The "White Sale" that many department stores have every year a few weeks after Christmas is an example of
periodic discounting
Paid personal communication that attempts to inform and persuade customers to purchase products in an exchange situation is called:
personal selling
Paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation is:
personal selling.
The marketers of a particular brand of ice cream have decided to delete their line of ice cream bars. They will do so by letting the product decline, and they will not change the current marketing strategy. This method of deletion is called
phase-out
Signs, counter pieces, racks, and self-service cartons are all forms of:
point-of-purchase displays.
Tim has just finished compiling a list of potential customers and evaluating their ability, willingness, and authority to buy. He knows his next step in the personal selling process is to:
preapproach.
A product that has more features than those of its competition, or that is perceived to be higher quality, warrants using which type of pricing strategy?
premium pricing
At one time, Wheaties offered two free golf balls with the purchase of a twin pack of Wheaties cereal featuring tiger woods. This is an example of a:
premium.
If researchers at Merck Pharmaceuticals develop a cure for prostate cancer, the best way to announce this to the public and get wide media coverage would be through a:
press conference.
French Quarter Inns drops the price of a suite from $225 to $195 per night and experiences a reduction in the quantity of rooms demanded of an average of five per night. This is an indication that suites at this hotel are apparently an example of a(n) ___________ product.
prestige
If REVO sets the price for its sunglasses at $240, it is using psychological pricing to convey
prestige
A customer who is ___________ is likely to say, "People notice when you buy the most expensive brand of a product."
prestige-sensitive
Buyers who focus on purchasing products that signify prominence and status are
prestige-sensitive buyers.
Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of
price
The tuition and fees each student paid for this semester of college are both terms for
price
For most consumers, there is an assumed relationship between
price and quality.
When marketers emphasize price as an issue and match or beat the prices of other companies, they are using
price competition.
If a company provides price differentials that harm competition by giving one or more buyers a competitive advantage, it is committing
price discrimination.
A measure of sensitivity of demand in relation to changes in price is
price elasticity of demand.
Dividing the percentage change in quantity demanded by the percentage change in price gives the
price elasticity of demand.
Which of the following pricing strategies often results in a retailer losing money on the product?
price leader
To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called
price leader pricing
When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as
price limiting
The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called
price lining
To determine the breakeven point in units, divide the fixed costs by
price minus variable costs.
All of the following are psychological techniques except -customary pricing -prestige pricing -reference pricing -odd-even pricing -price skimming
price skimming
If Norelco introduced a new electric razor that sonically removes hair and priced is first at $175 and then at $150 before reducing the price to $100, the firm's initial pricing strategy is known as
price skimming
When Sharp first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Sharp is called
price skimming
When business charge the highest possible price that customers who really want the new product will pay, they are using
price skimming
When businesses charge the highest possible price that customers who really want the new product will pay, they are using
price skimming.
A danger associated with engaging in price competition is that competitors can also change prices quickly and aggressively, which can result in a(n) _____ that will be harmful to both companies.
price war
Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of
price.
Reference pricing is
pricing a product at a moderate level and positioning it next to a more expensive model or brand
What is marketing skimming pricing?
pricing is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales
Product Line Pricing: Captive Pricing
pricing the basic product in a product line low, while pricing related items higher Items required to operate or that enhance the primary item are priced higher e. Printer and print toner
Order Takers
primarily seeks repeat sales.
If Ford adds a driver-side sliding door, side-impact airbags, and a small television with DVD player to its Freestar van, it is differentiating its product based on
product features
If an organization sets prices to recover research and development expenses and establish a premium quality image for its product, it would be using a ___ pricing objective
product quality
Research indicates that both market share and ___ are good indicators of profitability
product quality
The pricing of Clinique make up considerably higher than brands such as Cover Girl, Revlon, and Maybelline is used to communicate ___, which is the company's primary pricing objective
product quality
The perception of price depends on a
product's actual price and consumers' expectations regarding price
The perception of price depends on a
product's actual price and consumers' expectations regarding price.
What type of pricing strategy is used in situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client
professional pricing
One of Westin, Inc.'s objectives is to achieve a 25-percent return on its overall sales. This is an example of a ____ pricing objective.
profit
Westin Inc. has an objective of achieving a 25 percent return from its overall sales. This is an example of a ___ pricing objective
profit
If the push policy is used in promoting a product, the firm:
promotes only to the next marketing institution down the marketing channel.
Price leaders, comparison discounting, and special-event pricing are applications of
promotional pricing
Elements of the Personal Selling Process
prospecting, pre-approach, approach, presentation, overcoming objections, closing the sale & follow up
Company sales records, commercial databases, newspaper announcements, telephone directories, and public records are all sources used for:
prospecting.
Sayyid's company has launched a new product line, and he is put in charge of sales. He decides his first step will be to find potential customers in the company's sales records. Sayyid is:
prospecting.
Scott Bartello, a salesperson for Lamkin Golf Products, develops a list of potential customers and evaluates them on the basis of their ability, willingness, and authority to purchase copy machines. This process is called:
prospecting.
When a company attempts to influence a consumer's perception of price to make a product's price more attractive and reduce "sticker shock," it is using a ___ pricing strategy.
psychological
Communication through the use of brochures, annual reports, event sponsorships, and news stores is referred to as:
public relations.
Sharper Image likes to use nonpersonal communication in news story form such as press releases for its new and improved products. This is an example of:
publicity.
. What is meant by a product design?
refers to how a product is conceived, planned, and produced. Design is a very complex topic because it involves the total sum of all the product's physical characteristics.
What is product positioning?
refers to the decisions and activities intended to create and maintain a certain concept of the firm's product (relative to competitive brands) in the minds of the customers.
What is meant by the consistency of quality?
refers to the degree to which a product has the same level of quality over time. Consistency means giving consumers the quality they expect every time they purchase the product.
IHOP is active on Facebook, Twitter, and YouTube in order to communicate with its customers, conduct a video contest, and generally find out the customers' likes and dislikes. IHOP in this example, is engaging in ___ marketing.
relationship
An ad for a multivitamin that claims, "We still bring you everything you need to get through your day in one vitamin," would most likely be considered ____ advertising.
reminder
Most pricing objectives based on ___ are achieved by trial and error because not all cost and revenue data are available when prices are set
return on investment
Controlling and Evaluating Sales Force Performance
sales management needs information, which can be obtained from salespersons' call reports, customer feedback, and invoices.
The salesperson must attract and hold the prospect's attention, stimulate interest, and spark a desire for the product during the _____ step.
sales presentation
Subway is conducting a contest in which customers are asked to name a new sandwich. The winner gets a free sandwich each day for one year and an appearance in one of the company's TV commercials. This contest illustrates Subway's use of the ___ elements of the promotion mix.
sales promotion
An activity and/or material that offers added value or incentive to resellers, salespeople, or consumers is:
sales promotion.
When McDonald's uses the Monopoly game in which customers receive game pieces with each visit and try to assemble a set of properties to win prizes, McDonald's is utilizing
sales promotion.
Combination compensation plan
salespeople are paid a fixed salary plus a commission based on sales volume.
Straight salary compensation plan
salespeople are paid a specified amount per time period, regardless of selling effort, and this sum remains the same until they receive a pay increase or decrease.
Straight commission compensation plan
salespeople's compensation is determined solely by sales for a given period. A commission may be based on a single percentage of sales or on a sliding scale which involves several sales levels and percentage rates.
Preapproach
salesperson finds & analyzes information about each prospect's specific product needs, current use of brands, feelings about available brands, & personal characteristics, identifying key decision makers, reviewing account histories & problems, contacting other clients 4 information, assessing credit histories & problems, preparing sales presentations, identifying product needs, & obtaining relevant literature.
Making the Presentation
salesperson must attract & hold the prospect's attention, stimulate interest, & spark a desire 4 the product.
Premium-priced products are usually marketed through
selective or exclusive distribution.
Markup is measured either as a percentage of ___ or a percentage of ___
selling price; cost
Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and achieving price stability are all associated with a ___ pricing objective
status quo
What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?
status quo
Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry?
status quo
Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products?
status quo
When marginal cost is equal to marginal revenue, the firm should
stop producing additional units to maximize profits.
Running a bike sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm's primary pricing objective is
survival
When a company adjusts price levels so that it can increase sales volume to levels that match the organization's expenses, it is said to employ a ___ objective
survival
On a break between classes, Kelley enters her contact information on the Publishers Clearing House site. She doubts that she will win $10 million, but she never passes up a chance to participate in a
sweepstakes.
On a break between classes, Kelly checks her smartphone and enters her contact information on the publishers clearing house site. She doubts that she will win $10 million, but she never passes up a chance to participate in a:
sweepstakes.
Natalie is a sales representative with Nike. In a few days, she will join with people from the firm's financial, engineering, and other functional areas to engage in the personal selling process. Natalie is engaged in:
team selling.
Establishing Sales Force Objectives
tell salespeople what they are expected to accomplish during a specified period. They give the sales force direction and purpose. should be stated in precise, measurable terms and be specific about the time period and geographic areas involved. are usually established for both the total sales force and each individual salesperson.
A sale that advertised prices "up to 65% off" the original prices uses
tensile pricing
The step of the personal selling process in which a salesperson contacts a potential customer is called
the approach.
The point at which the costs of producing a product equal the revenue earned from selling the product is
the breakeven point.
Rebates
the consumer is sent a specified amount of money for making a single product purchase.
In the long run, the J. F. Smucker Company must view ___________ as the absolute lowest price for its Jif brand peanut butter.
total costs
If a product has an inelastic demand and the manufacturer raises its price,
total revenue will increase.
Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson's Entertainment by 10 percent to allow for expenses associated with Robertson's promoting the games to consumers. This is an example of a ___________ discount.
trade
The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____________ discounts.
trade
When Cadillac buys headlights from Delco (both of which are divisions of General Motors), ___________ pricing occurs.
transfer
Suppose that the frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called
transfer pricing.
Field Order Takers
travel 2 customers & often develop interdependent relationships with them; they may also be referred to as outside order takers.
A retailer is an organization that purchases products for the purpose of reselling them to:
ultimate consumers.
A company trying to position itself as value oriented should not
use premium pricing for its products.
Suppose Tommy Hilfiger is introducing a new line of men's ties. The designer believes that the target market for these ties comprises men who are very status-conscious. In keeping with this assessment, department stores selling the ties should
use price symbolically.
Sales Contests
used to motivate distributors, retailers, and sales personnel through the recognition of outstanding achievements. This method must be equitable for everyone involved.
Sweepstakes
used to stimulate lagging sales and may be used in conjunction with other sales promotion methods.
Competition-based pricing is
used when costs and revenues are secondary to competitors' prices