MKTG Quizzes Chapter 9

A grocer has purchased a truckload of frozen dinners for $3 each. The grocer operates on a margin of 30% for frozen food items. What is the retail price to the consumer? $3.35 $5.78 $2.60 $4.29

$4.29

Firm A is selling a product for $40, while their major competition is selling the same product for $50. Firm A is trying to decide whether to market their price as "$10 off" or "20% off." According to the majority of research, which strategy would be the most effective? $10 off 20% off They will be equally effective There is no way to determine effectiveness

20% off

What is a key feature of decoy products that consumers are intended to use as reference points? should share similar characteristics to the target product should be less attractive than the target product can be priced higher than the target product to make target more accessible All of these are correct

All of these are correct

What is one reason why pricing in insurance is so difficult? Prices must be determined without definite knowledge of the amount of consumers Prices cannot be easily changed during a payment period Prices must be determined without definite knowledge of the usage rates of consumers All of these are correct

All of these are correct

Assume that Netflix has introduced a new bundle service for their streaming services. Bundle 1 includes a base price of $9 to cover 25 hours of streaming for the month and variable price of $0.10 for every 30 minutes over that 25 hours. Bundle 2 includes no base price, but a variable price of $0.25 for every 30 minutes of streaming per month. When a consumer attempts to decide which bundle to use, what is he or she determining? Value of the brand Price elasticity Effectiveness of bundling Breakeven point

Breakeven point

What is defined as the marketing of two or more different products in a single package price? Target selling Bundle pricing Multiple unit pricing Group discount

Bundle pricing

Which of these is not part of the Three C's Model for Price Setting? Competitors' price Costs Capitalization Consumer assessment

Capitalization

If a company is using Reference pricing in an advertisement and lists their competitor's price for comparison inside that ad, what is this competitor's price called? Sale marketing Internal reference Market standard External reference

External reference

What is defined as the idea that people would try to avoid choosing extreme options and rather choose the "safe option" and take a middle path? Attraction effect Extremity attraction Psychological pricing Extremity avoidance

Extremity avoidance

It is desirable for an insurance company, such as BlueCross BlueShield, to hold the entire market. True False

False

More than 90% of Fortune 500 companies have a full-time job dedicated to pricing. True False

False

Small changes in price do not have a very large impact on bottom line profits. True False

False

You should quote prices of related items for consumers to use as anchors, because using unrelated product prices is always ineffective. True False

False

A change in price in an elastic market is likely to show _______ change in demand when compared to a similar change in an inelastic market. Greater Variable Equal Smaller

Greater

What is the first step in strategic pricing? Knowing how your industry behaves Financing large projects Knowing the price of your competitors Increasing the marketing budget

Knowing how your industry behaves

What is defined as setting a popular item at an extremely low price to attract people to the store? Mass discounting Low-cost strategy Loss leader Gimmicks

Loss leader

What is Black Friday an example of? Price skimming Loss leader pricing Prestige pricing Flat-rate pricing

Loss leader pricing

What is defined as a strategy to encourage people to buy more by offering price breaks for purchasing more than one unit of a particular product? Prestige pricing Loss leader Bulk discount Multiple unit pricing

Multiple unit pricing

The competitive retail price for a stereo system is $300. Retail stores normally have a margin of 30% for such items. Wholesalers normally have a margin of 20% for such items. The manufacturer's price is unknown. What steps should be taken to determine the manufacturer's highest price? Solve for Retail price, then Wholesale price, then Manufacturer price Solve for Wholesale price, then Manufacturer price, then Retail price Solve for Retail price, then Manufacturer price, then Wholesale price Solve for Manufacturer price, then Wholesale price, then Retail price

Solve for Retail price, then Wholesale price, then Manufacturer price

Value-based pricing will always be more profitable than cost-based pricing. True False

True

is not about what we put into our product, it's what our customers get out of it. Marketing Value Price Evaluation

Value

Are companies using prestige pricing more or less likely to use the odd/even pricing strategy than standard retail companies? more equally likely less all companies use this strategy at all times

less

What is ala carte pricing? variable rate for each customer setting a high price to skim maximum revenues price determined by choice of rigid, set bundles price assembled as you add options

price assembled as you add options

What is prestige pricing? setting a high price so quality or status-conscious consumers will be attracted to the product pricing to target low-budget shoppers designing a product to mimic luxury items setting a low price so quality or status-conscious consumers will be attracted to the product

setting a high price so quality or status-conscious consumers will be attracted to the product

What is odd-even pricing? setting prices a few dollars or cents under an even number bundling products in odd or even numbered quantities a method used for clearance sales only setting prices at alternating odd and even values

setting prices a few dollars or cents under an even number

What is flat-rate pricing? setting a low rate to penetrate the market price set to fluctuate with treasury bonds single rate per time period different rate for each customer

single rate per time period

What is dynamic pricing? variable rate for each customer price determined from bargaining price set to change with stock prices standard, flat rate for each customer

variable rate for each customer

What is the definition of Price? what is exchanged for the product, service, or idea the treasury-backed ultimate value of a product the combination of values for all raw values what is provided as a good or service

what is exchanged for the product, service, or idea

What is the breakeven point? the most desirable point for profits where profits just cover costs where variable costs only are covered where fixed costs only are covered

where profits just cover costs

What is the key difference between cost-based pricing and value-based pricing? where you start the process weight placed on customer service how you value each layer of business focus on quantity vs. focus on quality

where you start the process