CH.12 Mkt

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Which of the following is a particular type of price?

college tuition

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and

the ease of making price comparisons on the Internet

The price equation formula is final price equals [list price] minus [(__________) plus (allowances) plus [extra fees].

incentives

Tara is enrolled for spring semester at college. The tuition is $6,000 but she has a scholarship for $1,000 as well as a work study grant of $1,500. The health fees and student activity fees are $150 for the semester. What is the actual price Tara is paying for the spring semester?

$3,650

To calculate _________, you would compute: (Perceived benefits / Price).

value

Which of the following statements is most accurate?

For some products, price influences the perception of overall quality, and ultimately value, to consumers.

A firm's profit equation demonstrates that profit equals _________, or _________.

Total revenue-Total cost; (Unit price x Quantity sold)-(Fixed cost + Variable cost)

Key to setting a final price for a product is to find an approximate price level to use as a reasonable starting point. Four common approaches to helping find this approximate price level are (1) demand oriented, (2) cost-oriented, (3) _________, and (4) competition-oriented approaches.

Profit-oriented

Demand-oriented approaches weigh factors that underlie expected __________ more heavily than factors such as cost, profit, and competition when selecting a price level.

customer tastes and preferences

The most commonly used pricing method for business products is _________.

cost-plus pricing

Target profit pricing refers to

setting an annual target of a specific dollar volume of profit

A skimming pricing policy is likely to be most effective when

a high initial price will not attract competitors

A manufacturer using ________ is setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it.

prestige pricing

A penetration pricing policy is likely to be most effective when (1) __________, (2) unit production and marketing costs fall dramatically as production volume increases, and (3) many segments of the market are price sensitive.

a low initial price discourages competitors from entering the market

Standard markup is considered to be a _________ approach to pricing.

cost-oriented

If you were to buy five dwarf peach trees from the Stark Bros. fruit trees and landscaping catalog in five separate orders, you will pay $108.99, but if you order its assortment (1 each of five different dwarf peach trees), you pay $89.99. Stark Bros. uses

bundle pricing

Airlines, hotels, and car rental firms engage in ____________ by varying prices based on time, day, week, or season to match demand and supply.

yield management pricing

Which of the following companies would be most likely to use target return-on-investment pricing?

an automobile manufacturer

The most commonly used pricing method for business products is _____________.

cost-plus pricing

Target profit pricing refers to

setting an annual target of a specific dollar volume of profit.

Target return-on-investment (ROI) is frequently used by

public utilities

Marketing executives must translate estimates of customer demand into estimates of

revenues the firm expects to receive

Using _________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic.

loss-leader pricing

Marketing executives must translate estimates of customer demand into estimates of

revenues the firm expects to receive

Movement along the demand curve is illustrated by which of the following?

As the price is lowered, the quantity demanded increases, assuming all else stays the same

A demand curve typically appears as

a diagonal line going from top left to bottom right demonstrating that as price goes down, demand goes up.

At a price of $3 each, SHΛPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price per issue is increased to $3.25 each, only 1 million copies will be sold. For the information provided, the price elasticity of demand for SHΛPE magazine in this price range can be described as

elastic demand

Demand for a product is likely to be more price elastic if

it has many substitutes.

Inelastic demand exists when a(n)

a small increase or decrease in price will not significantly affect the demand, or units sold.

Total cost refers to

the total expense incurred by a firm in producing and marketing a product; the sum of fixed cost and variable cost.

Demand factors refer to

onsumers' willingness and ability to pay for goods and services.

A demand curve graph typically appears as

a diagonal line going from top left to bottom right demonstrating that as price goes down, demand goes up.

The sum of the expenses of the firm that vary directly with the quantity of the product that is produced and sold is referred to as

variable cost.

Fixed cost refers to

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.

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as _________.

break-even analysis

Demand for a product is likely to be more price inelastic if

it is considered a necessity.

You have been asked to calculate the break-even point for a new line of souvenir tee-shirts. The selling price will be $25 per shirt. The labor costs will be $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt. What is the break-even quantity?

8,000 shirts

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. These objectives have different implications for pricing strategy. The three objectives include a target return, maximizing current profit objectives, and _________.

managing for long-run profits

Specifying the role of price in an organization's marketing and strategic plans is referred to as

pricing objectives

Netflix used to charge $14.99 per month for its movie rental service. However when Blockbuster introduced the same service at $13.99, Netflix then dropped its price to $13.99. Netflix most likely made this price reduction in an attempt to

maintain market share

If the CEO of the Clorox Company were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a __________ pricing objective.

market share

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

market share.

Factors that limit the range of prices a firm may set are referred to as _________.

pricing constraints

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. These objectives have different implications for pricing strategy. The three objectives include a target return, maximizing current profit objectives, and _________.

managing for long-run profits

A conspiracy among firms to set prices for a product is referred to as

price fixing.

Four pricing practices are closely scrutinized because of potential unethical or illegal actions. They include (1) price fixing, (2) price discrimination, (3) predatory pricing, and (4) _________.

deceptive pricing

Given that a firm's profit is high enough for it to remain in business, a sales pricing objective may be to _________, which will in turn lead to increases in market share and profit.

increase sales revenue

What do 60 percent of prospective buyers dread about looking for a new car?

negotiating the price

The practice of changing a very low price for a product with the intent of driving competitors out of business is referred to as

predatory pricing.

The three major types of special adjustments to list or quoted price are

discounts, allowances, and geographical adjustments.

The four major types of price discounts are

quantity, seasonal, trade (functional), and cash.

Which of the following statements about a flexible-price policy is most accurate?

When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act.

Functional discounts are 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

To encourage retailers to pay their bills quickly, manufacturers offer them

cash discounts

What do 60 percent of prospective buyers dread about looking for a new car?

negotiating the price

Functional discounts are 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.

n the cash discount $500 4/10 net 30, the number 4 refers to

he percentage discounted if the bill is paid within 10 days.

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect

the cost of transportation of the products from seller to buyer.

A new car dealer can offer a reduction in the list price of a new Ford pickup truck by offering you a __________ of $1,000 for your 1998 Nissan

trade-in allowance

The four major types of price discounts are

quantity, seasonal, trade (functional), and cash.

Washburn sell their guitars through a number of channels such as chains and online dealers, but they feel it is their independent dealers who sell the guitar for them. In recognition of their hard work, Washburn takes a smaller profit margin from them because they have to do more work. In essence, this special adjustment to the list price or quoted price is an example of a(n)

Trade discount.

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and _____________.

FOB origin pricing

In the cash discount $500 4/10 net 30, the number 4 refers to

the percentage discounted if the bill is paid within 10 days.

A new car dealer can offer a reduction in the list price of a new Ford pickup truck by offering you a __________ of $1,000 for your 1998 Nissan.

trade-in allowance

North America's fastest-growing HDTV and consumer electronics company is

vizio

In order to deliver a product that the average consumer could afford, Vizio used the strategy of

having the product design and marketing done in the United States and having contract manufacturers in Taiwan, build the product.

A buying situation can involve comparing the costs and benefits of substitute items—such as real sugar to the sugar substitute Equal which, although more expensive than sugar, is purchased by many consumers because it contains no calories. This situation involves the consumer considering

a reference value.

Which of the following statements is most accurate?

For some products, price influences the perception of overall quality, and ultimately value, to consumers.

Key to setting a final price for a product is to find an approximate price level to use as a reasonable starting point. Four common approaches to helping find this approximate price level are (1) demand oriented, (2) cost-oriented, (3) _________, and (4) competition-oriented approaches.

Profit-oriented

In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery, but unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market. Energizer used

Penetration pricing

Setting prices a few dollars or cents under an even number is referred to as _________.

odd-even pricing

which of the following companies would be most likely to use target return-on-investment pricing?

an automobile manufacturer

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to a _________.

customary pricing

Using _________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic.

loss-leader pricing

The maximum quantity of products consumers will buy at a given price is shown by

a demand curve

When estimating demand, price is not the only factor to be considered. Three other elements include consumer tastes, price and availability of similar products, and

consumer income

Target return-on-investment (ROI) is frequently used by

public utilities

A demand curve typically appears as

diagonal line going from top left to bottom right demonstrating that as price goes down, demand goes up.

Movement along the demand curve is illustrated by which of the following?

As the price is lowered, the quantity demanded increases, assuming all else stays the same

Demand for a product is likely to be more price elastic if

it has many substitutes.

Elastic demand exists when a(n)

a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.

Inelastic demand exists when a(n)

a small increase or decrease in price will not significantly affect the demand, or units sold.

Demand for a product is likely to be more price inelastic if

it is considered a necessity.

Total revenue refers to

the total money received from the sale of a product

Total cost refers to

the sum of the expenses of the firm deducted from the revenue generated by the sale of the product
the total expense incurred by a firm in producing and marketing a product; the sum of fixed cost and variable cost.

A demand curve graph typically appears as

a diagonal line going from top left to bottom right demonstrating that as price goes down,

The sum of the expenses of the firm that vary directly with the quantity of the product that is produced and sold is referred to as

variable cost.

Fixed cost refers to

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.

Unit variable cost refers to

variable cost expressed on a per unit basis for a product.

General Motors, Ford, and Chrysler have all recently experienced financial distress because

their costs got out of control, causing their total costs to exceed their total revenues.

The quantity at which total revenue and total cost are equal is referred to as

break-even point

Specifying the role of price in an organization's marketing and strategic plans is referred to as

pricing objectives

Which of the following statements regarding pricing objectives is most accurate?

Pricing objectives may change depending on the financial position of the company, the segments in which it does business, including the country in which the product is sold

Demand factors refer to

consumers' willingness and ability to pay for goods and services

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as _________.

break-even analysis

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. These objectives have different implications for pricing strategy. The three objectives include a target return, maximizing current profit objectives, and _________.

managing for long-run profits

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

market share.

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price are referred to as

vertical price fixing.

An analysis of a prospective product shows it is expected to grow by at least 10 percent each year over the next 5 years, and then enter the maturity phase of its product life cycle. This type of analysis would provide useful information in which stage of the price-setting process?

identifying pricing objectives and constraints

Specifying the role of price in an organization's marketing and strategic plans is referred to as

pricing objectives

Four pricing practices are closely scrutinized because of potential unethical or illegal actions. They include (1) price fixing, (2) price discrimination, (3) predatory pricing, and (4) _________.

Deceptive pricing

A conspiracy among firms to set prices for a product is referred to as

price fixing.

Price fixing is illegal under per se under the

Sherman Act..

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price are referred to as

verticle pricing fixing

Price discrimination is illegal under the

Robinson-Patman Act

Deceptive pricing is outlawed by the

Federal Trade Commission

What do 60 percent of prospective buyers dread about looking for a new car?

negotiating the price

Reductions in unit costs for a larger order are referred to as

quantity discounts.

The practice of changing a very low price for a product with the intent of driving competitors out of business is referred to as

predatory pricing.

The three major types of special adjustments to list or quoted price are

discounts, allowances, and geographical adjustments.

The four major types of price discounts are

quantity, seasonal, trade (functional), and cash.

Which of the following statements about a flexible-price policy is most accurate?

When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act.

To reward wholesalers and retailers for the risk they accept in assuming increased inventory carrying costs, manufacturers offer

seasonal discount

Setting different prices for products and services depending on individual buyers and purchase situations is referred to as

a flexible-price policy

A new car dealer can offer a reduction in the list price of a new Ford pickup truck by offering you a __________ of $1,000 for your 1998 Nissan.

trade-in allowance

Which of the following statements about a flexible-price policy is most accurate?

When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act.

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

trade discounts

Reductions from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller is called

discounts

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

trade discounts

Functional discounts are 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.

To encourage retailer to pay their bills quickly, manufactures offer them

cash discounts

the cash discount $500 4/10 net 30, the number 4 refers to

the percentage discounted if the bill is paid within 10 days.

A new car dealer can offer a reduction in the list price of a new Ford pickup truck by offering you a __________ of $1,000 for your 1998 Nissan.

trade-in allowance

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect

the cost of transportation of the products from seller to buyer.

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and _____________.

FOB origin pricing

Central Ice Machine Company located in Omaha, Nebraska and sells Frick, Sullair, York, and Fes Fuller ammonia refrigeration parts. The company ships using FOB origin pricing. Which of the following statements about the shipment of a Frick reciprocating compressor is true?

A buyer in Albany, New York, will pay significantly more shipping charges than a buyer in Lincoln, Nebraska, and Central Ice Machine will pay none.

The price the seller quotes that includes all transportation costs is referred to as _________.

uniform delivered pricing

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