Marketing Smartbook Chapter 11 Q&A/Notes

Organizations choosing competitor-oriented approaches to set prices might use which two pricing strategies?

-Loss-leader pricing -Customary Pricing

Select all of the following that are common approaches to setting an approximate price level for a product.

-competition-oriented -demand-oriented -cost-oriented

Pricing objectives involves specifying the role of price in what two areas of an organization?

-its marketing plans -strategic plans

Final price Equation

=List price - Allowance + Extra fees

Barter

Exchange goods without involving money.

Price (P)

Is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

A marketing manager considers pricing objectives and constraints to ______.

Narrow the range of choices among the variety of pricing strategies.

Fixed costs ______.

Remain at the same level despite changes in production

In what pricing strategy are prices lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices?

Skimming price

The relationship, or ratio, between a product's perceived benefits and the consumer's costs is known as its ______.

Value

A used car dealer advertises a $5,000 SUV for sale in the local paper. When prospective customers arrive at the dealership they are told that the $5,000 SUV is sold and are offered a $15,000 SUV instead. This is an example of ______.

bait and switch

Legal and regulatory issues and consumer demand are pricing ________ that limit what a company can charge for its products.

constraints

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are known as ______ approaches.

cost-oriented

When using predatory pricing, a firm sets a very low price for one or more of its products in order to ______.

drive its competition out of business

Price Equation

final price = list price - (incentives + allowances) + extra fees

Price fixing, price discrimination, and predatory pricing are ______.

legally prohibited

A demand curve is derived by measuring how many units of a product are sold at various ______.

levels of price

In penetration pricing, the initial price of the product is set ______.

low, to appeal to the mass market.

If a firm prices its products relatively low compared to the cost to develop, with the prospect of gaining a high market share, it is utilizing which profit-oriented pricing objective?

managing for long-run profits

Many South Korean HDTV manufacturers are willing to give up immediate profits for long-term penetration of the market. This is a pricing objective known as ______.

managing for long-run profits

Current profit ________ and target ________ are two strategies used by firms that are pursuing a profit pricing objective.

maximization; return

Price deals that _____ fall into the category of deceptive pricing.

mislead consumers

Pricing ________ involve specifying the role of price in an organization's marketing and strategic plans.

objectives

Pricing ________ frequently reflect corporate goals, while pricing ________ often relate to conditions existing in the marketplace.

objectives; constraints

Setting a price with no variation for product buyers is called a ________ policy.

one-price

When using _________ pricing, a firm sets a very low price for one or more of its products with the specific intent to drive its competition out of business...

predatory

A firm must know its competitors' ________ in order to best set its own.

prices

By focusing on target profit pricing or target return pricing, a firm is using a ________ pricing approach.

profit-oriented

What two strategies can be used as part of a firm's profit objectives?

target return and maximizing current profits

Which of the following are pricing practices that are legally restricted?

-predatory pricing -price fixing

Profit Equation

=Total revenue - Total Cost =(Unit Price x Quantity sold) - (Fixed costs + Variable Cost)

A company can encourage its wholesalers and retailers to pay their bills quickly by offering ________ discounts.

Cash

Common approaches to pricing are oriented around which four elements?

Competition, Demand, Cost, and Profit

If firms set prices with specific consideration of firms challenging them directly for customers, they have adopted a ________ approach to pricing.

Competition-oriented

A pricing constraint firms face is the price that its _________ are currently charging and likely to charge in the future.

Competitors

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are known as ______ approaches.

Cost-oriented

________-oriented pricing approaches weigh factors underlying expected customer tastes and preferences more heavily than other factors.

Demand

___________-oriented approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision.

Demand

The chart that shows how many units of a product or service consumers will demand during a specific period of time at different prices is known as the ______.

Demand curve

__________ cost is the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

Fixed

A ________ policy is also known as fixed pricing.

One price

Organizations using ________ pricing set the initial price low for the introduction of the new product to appeal immediately to the mass market.

Penetration

The money or other considerations exchanged for the ownership or use of a product or service is its _____________.

Price

What element of the marketing mix has a unique role in that it is the place where all other business decisions come together?

Price

Which two are profit-oriented approaches to setting a price?

Target profit pricing and target return pricing

Value Pricing

The practice of simultaneously increasing product and service benefit while maintaining or decreasing price.

Value

The ratio of perceived benefits to price

The percentage change in quantity demanded relative to a percentage change in price is known as ______.

Total Revenue

Break-even analysis analyzes the relationship between which two at various levels of output?

Total Revenue and Total Cost

_______ discounts are also known as functional discounts.

Trade

Small changes in price ______.

can have comparably big effects on company profit

price discrimination

charging different prices to different buyers for goods of like grade and quality

When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ________ pricing strategy.

skimming

The percentage change in quantity demanded relative to a percentage change in price is known as ______.

Price elasticity of demand

Reductions off the list price offered to resellers in the marketing channel on the basis of where they are in the channel and the marketing activities they are expected to perform in the future are called ______ discounts.

Trade

Final Price Equation Example: Charges include (1) an import duty of $55,000; (2) a gas-guzzler tax of $7,700; (3) a sales tax of $225,000; (4) an auto registration fee of $7,000 to the state; and (5) a $54,000 destination charge to ship the car to you from France.

=3,400,000 - 7,000 +(55,000+7,700+225,000+7,000+54,000) =3,400,000-7,000+348,700 Total Price = 3,741,700

Value =

Perceived benefits/ Price

Cost-oriented approaches to pricing consider which three things in the setting of a product's price?

Production Costs, overhead, profit

Reductions in unit costs for a larger order are known as _______ discounts.

Quantity

Which of the following are reductions in unit costs for a large order?

Quantity Discounts

Which of the following is an example of deceptive pricing?

a bait an switch to lure customers into the store to sell them a higher priced product

Demand-oriented, cost-oriented, profit-oriented, and competition-oriented are four approaches used to set ______.

approximate price levels

Four approaches used to set ______ are oriented around demand, cost, profit, and competition.

approximate price levels

When a buyer arrives at a retail location and is told that the product she saw in a promotion is out of stock and no rainchecks are available, the retailer might be accused of ______.

bait and switch

predatory pricing

charging a very low price for a product with the intent of driving competitors out of business

price fixing

conspiracy among firms to set prices

Factors that limit the range of prices a firm may set are known as pricing ______.

constraint

Cash discounts are offered because they encourage customers to ______.

pay their bills quickly

Deceptive pricing

price deals that mislead consumers

Charging different prices to different buyers for goods of like grade and quality is known as ______.

price discrimination

If a firm sells the same product to different buyers at different prices, it may be considered ________.

price discrimination

The practice of colluding with other firms to set prices is called ______.

price fixing

Total _________ is equal to the unit price for a product times the quantity of it sold.

revenue

Price fixing is the conspiracy among firms to _____.

set prices for a product

According to the profit equation, profit is ______.

total revenue - total cost

Today's pricing tactic involves

using "special fees" and "surcharges"

Price elasticity of demand is expressed as percentage change in ________ divided by the percentage change in ________.

Quantity demanded; price

Break-even analysis analyzes the relationship between total revenue and total cost to determine profitability ______.

at various levels of output