marketing chapter 10 final
The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n) ________.
oligopolistic competition
Price elasticity of demand is represented by ________ divided by ________.
percentage change in quantity demanded; percent change in price
Under ________, the market consists of many buyers and sellers trading in a uniform commodity.
pure competition
In which situation is the market dominated by one seller?
pure monopoly
________, the more it pays for the seller to raise the price.
The less elastic the demand
Which of the following is true with regard to pure competition?
Under pure competition, no single buyer or seller has much effect on the going market price.
The perceived value of different product offers can be reasonably assessed by ________.
conducting surveys and experiments
Companies can legitimately charge a higher price if ________.
consumers perceive that the company product offers greater value
Which of the following processes does value-based pricing reverse?
cost-based pricing
The simplest pricing method is ________ pricing.
cost-plus
Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.
cost-plus pricing
Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged?
demand curve
The learning curve is representative of the ________.
drop in the average per-unit production cost that comes with accumulated production experience
If demand changes greatly with a small change in price, the demand is ________.
elastic
Cost-plus pricing ________.
involves adding a standard markup for profit
Which of the following exemplifies a pure competitive market?
a market where many buyers and sellers trade in a uniform commodity
PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining their systems than the initial price of the product. PoolPak specializes in and differentiates itself through both cutting-edge technologies used to build its high-value climate control systems as well as seamless quality service. PoolPak's prices are very high, but demand for its climate-control systems seems to be forever on the rise. This exemplifies ________.
a nonprime position
________ involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.
high-low pricing
Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.
increased consumer price sensitivity
If demand hardly changes with a small change in price, the demand is ________.
inelastic
Why is markup pricing most likely impractical?
The method ignores demand and competitor prices.
Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.
demand
The long-run average cost (LRAC) curve indicates the ________.
per unit cost of output in the long run
Under ________, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price.
monopolistic competition
A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.
overhead
What sets the ceiling for product prices?
customer perceptions of the product's value
________ pricing uses buyers' perceptions of value as the key to pricing.
customer value-based
Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.
customer-oriented
Which of the following statements about break-even analysis is true?
It is calculated by using variable costs, the unit price, and fixed costs.
________ is the only element in the marketing mix that produces revenue.
Price
RedFin, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer RedFin, which has earned a reputation for selling high-quality products. This exemplifies ________.
a non-price position
As production workers become better organized and more familiar with equipment, the average cost per unit tends to decrease with the ________.
accumulated production experience
Fixed costs ________.
are costs that do not vary with production or sales level
Companies that adopt value-added pricing ________.
attach value-added features and services to differentiate their offers and support their higher prices
Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects Bon Vivant's ________ strategy.
everyday low pricing
Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________.
everyday low pricing
Which of the following is most likely a fixed cost?
facility rental payments
Companies using target costing ________.
first design a new product and then determine its cost
As production moves up, the average cost per unit decreases because ________.
fixed costs are spread over more units
With accumulated production experience and a higher volume of production, companies not only become more efficient but also ________.
gain economies of scale
John assured his venture capitalists an earning of 25 percent return on equity when he began his IT start-up. In order to achieve this result, he will most likely use which of the following pricing approaches?
target return pricing
Which of the following is a cost-based approach to pricing?
target return pricing
Under oligopolistic competition ________.
the market consists of only a few large sellers
Why is markup pricing most likely popular?
Sellers do not need to make frequent adjustments as demand changes.
Which of the following is true of a pure competitive market?
Sellers spend little time on marketing strategy.
Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?
good-value pricing
When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ________.
good-value pricing
Which of the following involves introducing less-expensive versions of established, brand-name products?
good-value pricing
________ pricing refers to offering just the right combination of quality and gratifying service at a fair price.
good-value pricing
In the aftermath of the Great Recession, consumers ________.
have become more value conscious
Department stores such as Kohl's and Macy's practice high-low pricing by ________.
having frequent sale days for store credit-card holders
In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of ________.
value-added pricing
A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug in the market. The company justifies the high price of the drug by claiming that it is highly effective for treating all kinds of ulcers. The company also claims that the new drug will help bring down the need for invasive surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company most likely using in this instance?
value-based pricing
Costs that change with the level of production are referred to as ________.
variable costs
Which of the following is true about the demand curve?
A demand curve shows the number of units the market will buy in a given time period at different prices that might be charged
Which of the following is most likely a risk associated with experience-curve pricing?
Aggressive pricing often gives a product a cheap image
Which of the following is true with regard to value-added pricing?
Companies practicing value-added pricing differentiate their offers by attaching value-added features to offerings that, in turn, justify higher prices.
________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Cost-based pricing
________ refers to the amount of money charged for a product or service.
Price
Which of the following is true with regard to price?
Price is the sum of all the values that consumers give up to gain the benefits of having a product
Which of the following is true of value-based pricing?
The targeted value and price drive decisions about what costs can be incurred and the resulting product design.
Target return pricing uses the concept of a(n) ________, which shows the total cost and total revenue expected at different sales volume levels.
break-even chart
Target return pricing is a variation of which of the following cost-oriented pricing approaches?
break-even pricing
Companies with lower costs ________.
can set lower prices that result in smaller margins but greater sales and profits
Which of the following involves setting prices based on a rival firm's strategies, costs, prices, and market offerings?
competition based pricing
Experience-curve pricing assumes that ________.
competitors are weak and not willing to fight price cuts
When companies set prices, the government and social concerns are ________ affecting pricing decisions.
external factors
________ refers to a measure of the sensitivity of demand to changes in price.
price elasticity
In industries in which pricing is a key factor, ________ often set the best prices or help others in setting them.
pricing departments
Underpriced products ________.
produce less revenue than they would if they were priced at the level of perceived value
What sets the floor for product prices?
product costs
Price setting is usually determined by ________ in large companies.
product managers
In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shop-owners. This exemplifies ________.
pure competition
Overhead costs ________ as the number of units produced increases.
remain the same
The experience curve reveals that ________.
repetition in production enhances efficiency
A decision to position the product on high-performance quality will mean that the ________.
seller must charge a higher price to cover higher costs
Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.
target costing
As a manufacturer increases the price, ________.
the break-even volume drops
A downward-sloping experience curve is indicative of ________.
the falling unit production cost of a company
Which of the following is an external factor that affects pricing decisions in a company?
the nature of the market
Which of the following is an internal factor that affects pricing decisions in a company?
the overall marketing strategy of the company
Buyers are less price sensitive when ________.
the product they are buying is unique
Price setting is usually determined by ________ in small companies.
the top managers
The break-even volume is the point at which ________.
the total revenue and total cost curves intersect
In industrial markets, ________ typically has the final say in setting the pricing objectives and policies of a company.
top management
