Principles of Marketing Chapter 12 Quiz
What assumption does breakeven analysis make that limits its overall usefulness?
It relies on demand for a product being inelastic.
____________ is setting the price lower than competing brands in order to enter a market and quickly gain a significant share of the market.
Penetration pricing
At what point does a firm maximize profit?
The point at which marginal cost equals marginal revenue
A market share objective
can be used effectively whether total industry sales are rising or falling.
The three primary bases for developing prices are
demand, competition, and cost.
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
When establishing prices, a marketer's first step is to
develop pricing objectives
The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ____ pricing.
differential
Pricing strategies and methods
help direct and structure the selection of a final price.
For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.
inverse
Which of the following would be used in setting the price of a new product if considerable competition is expected?
penetration pricing
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?
premium pricing
When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as
price lining
Price leaders, comparison discounting, and special-event pricing are applications of
promotional pricing
If a business decides to reduce its prices once in a while on an unsystematic basis, it is using
random discounting.
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
When marginal cost is equal to marginal revenue, the firm should
stop producing additional units to maximize profits
Competition-based pricing is
used when costs and revenues are secondary to competitors' prices.
