Marketing Chapter 14: Pricing Concepts
The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called ________-price elasticity.
cross-price
The graph that shows how many units of a product or service consumers will want during a specific period at different prices is known as the ______ curve.
demand
Prestige products or services do not follow the ______ curve.
downward-sloping demand
When a 10% decrease in price produces more than a 10% increase in quantity sold, the product or service is responsive to price changes and is considered to be _______.
elastic
If a restaurant reduces the price of a hamburger by 25% and sales increase by more than 50%, which of the following describe the demand for the hamburger?
price sensitive elastic
Competition, channel members, costs, customers, and company objectives are the five critical components of Blank______.
pricing
By focusing on target profit pricing, maximizing profits, or target return pricing, a firm is implementing a ______ orientation.
profit
What type of orientation is exemplified by target return pricing?
profit
Firms that are less concerned with the level of profits and more interested in the rate at which profits are generated relative to their investments tend to use ______.
target return pricing
Price is best defined as
the overall sacrifice a consumer is willing to make to acquire a specific product or service
Assuming the economy and other factors stay the same, a downward-sloping demand curve for a product shows which of the following?
As price decreases, demand increases. As price increases, demand decreases.
Break-even analysis examines the relationships between which of the following?
Cost Price
True or false: A firm with a primary objective of very high sales growth will have the same pricing strategy as a firm with a primary objective of being a quality leader.
False
A demand curve shows that a company will sell 10,000 units if it prices its new product at $200 per unit, but it will sell 20,000 units if it reduces the price to $75. Where should the company set the price of the new product in order to maximize profits?
$200
The five Cs of pricing
1. Company Objectives 2. Customers 3. Costs 4. Competition 5. Channel Members
What is a useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales?
Break-even analysis
Which is one of the five Cs of pricing?
Company objectives
Which of the following do you need to know to calculate target return price?
Fixed costs Variable costs Expected unit sales
Channel members include which of the following?
Manufacturers, retailers, wholesalers
Which of the following is another term for target return percentage?
Markup
Which of the following are strategies that can be used as part of the profit orientation?
Maximizing profits Target profit pricing
Which of the following are strategies that can be used as part of the profit orientation?
Target profit pricing Maximizing profits
What is the premise behind the pricing of prestige products or services?
The higher the price, the greater the status
Which of the following accurately characterize demand curves?
They relate demand to prices while assuming everything else remains unchanged. They show how much consumers will demand during a specific period at different prices.
How is total cost calculated?
fixed costs + variable costs
A demand curve enables a firm to examine prices ______.
in terms of demand and the firm's objectives
According to the cross-price elasticity of demand, when the price of DVD players drops, the demand for DVDs is likely to ______.
increase
Products that cost a lot of money but that people buy anyway because of the status and exclusivity that they project are called _________ products.
prestige
The overall sacrifice a consumer makes to acquire a product or service is known as
price
What information is gained by adding variable and fixed costs together?
total cost
