In determining the price for his company's new pocket digital camera, Matt is assessing what consumers consider the regular or original price for similar cameras available in the market. Matt is assessing the _______________ influence on pricing strategy.
The advantage of zone pricing to the seller and buyer is the shipping charges typically:
reflect more closely the cost of delivery
When a seller labels a product with the "regular price" or the "original price," and then offers a lower price, they are creating a(n):
external reference price
Most marketers think odd pricing got started as a way to:
prevent sales clerks from pocketing money.
Yvonne estimates the average cost of her floral arrangements is $14 regardless of whether she is doing 5 or 20 arrangements that day. She adds a standard markup to the $14 estimate to determine her price. Yvonne is using a ________________ pricing strategy.
everyday low pricing
Chris works for a hardware store. His boss directs him to make a list of manufacturers whose brand names were included in the store's recent newspaper ads and to put copies of the ads with the invoices from each manufacturer. Chris's boss is documenting a(n):
A pricing strategy is a long-term approach to setting prices in an integrated effort, and a pricing strategy is ________________________.
ALL OF THE ABOVE:
a short-term method focusing on one of the Five Cs of pricing
a response to a competitive threat
an approach that can be used with intermediaries or consumers
a broadly accepted method of calculating a final price for consumers that is short term in nature
In determining the price for his company's new personal computer photography printer, Raymond is assessing the total cost of owning his printer as compared to alternative products available in the market. Raymond is using the _______________ method to pricing strategy.
cost of ownership
Marketers in "flea markets" often leave the original price on products they are selling at a significant discount, recognizing that consumers will often use the original price as a(n):
external reference price
Because market and operating conditions are different in each target market:
the choice of a pricing strategy is specific to the target market.
Understanding the ________________ underlying the way consumers arrive at their perceptions and make judgments is critical to effective pricing strategies.
An everyday low pricing strategy stresses the continuity of retail prices:
at a level somewhere between the regular price and the deep-discount sale prices competitors may offer.
In a _____________________ pricing tactic, sellers advertise low prices and then aggressively pressure customers to purchase higher-priced versions of the product advertised with the low price.
Bait and Switch
3/10, n/30 means a 3 percent discount if paid in full within 10 days, or the net amount is due in 30 days
True, or could be false
T or F:The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur.
T or F: Price lining is setting a price floor and a price ceiling for a line of products and then setting
price points in between to represent differences in quality.
T or F: Value-based pricing necessitates a great deal of consumer research to be implemented successfully.
T or F: Because market and operating conditions are all very similar, marketers pricing strategies should be uniform.
T or F: Slotting allowances are used to get retailers to feature a manufacturer's product in their advertising and promotional efforts.
T or F: Cost-based pricing assumes costs will not vary much for different levels of production.
If all members of the Washington County Realty Association agreed to charge a 6 percent commission for representing home sellers, the association members would be engaging in:
Horizontal Price Fixing--
occurs when competitors that produce and sell competing products or services collude, or work together, to control prices. The fact that most realtors in an area tend to charge the same price for their services does not necessarily mean they colluded in determining prices.
Manufacturers like _______________ because as much as 90 percent of consumers never bother to redeem them.
Manufacturers also like rebates because they are price cuts offered to consumers directly.
Price lining, price bundling and leader pricing are all pricing tactics aimed at:
Price lining, price bundling and leader pricing are very different from the business to business pricing tactics.
If Hewlett Packard introduced a new home printer system for which consumers could only use HP paper, toner and software, they might logically use a ______________ pricing strategy for their printer to profit from the sale of paper, toner and software.
A market penetration strategy involves setting low initial prices in order to build sales, market share, or profits quickly. Once the firm has achieved this objective they can continue to profit through the sale of materials or supplies associated with using the product or service.
To recoup high research and development costs, signal high quality, limit demand or test consumers' price sensitivity, marketers use a(n) _______________ strategy.
Charging a high initial price to attract those customers most willing to pay to have a new product or service is known as price skimming; skimming off the top end of the demand curve.
Developing pricing strategies for ___________________ is one of the most challenging tasks a marketer can undertake.
new product or services--
Determining the consumers' perceptions of a new product's value in order to decide pricing becomes extremely difficult. A product already in the market is somewhat easier because the product's approximate value has already been established.
To understand the way consumers arrive at their perceptions, make judgments and finally invoke a choice, marketers must understand __________________ to be able to effectively price a product or service.
Consumers assign meanings to a price that is separate and distinct from the manufacturer's deliberations. Consumer ideas may include the use of reference pricing, perceptions of quality and more.
One of the reasons marketers don't always select a _______________ pricing strategy is that it necessitates a great deal of consumer research to be implemented successfully.
Value-based pricing requires marketers to research and assess what consumers' value. This can take time, be costly, and be difficult to determine.
The three basic pricing strategies are cost-based, value- based and ___________.
Firms will select the appropriate strategy based on company objectives, market conditions and how they operate. Even a single firm needs different strategies for different products, especially as time and markets change.
Marty is like many managers, traditionally he has determined the prices for his products by either looking at what competitors were charging or:
adding up his costs and adding a profit margin
The food and beverage manager at an upscale country club once offered a two-for-one happy hour price for all alcoholic beverages, only to see a very little response to the special. For these consumers, demand for alcoholic beverages is:
The observation that consumers are generally more sensitive to price increases than to price decreases, suggests:
it is easier to lose customers with a price increase than gain customers with a price decrease
Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing:
an increase in the price of natural gas will increase demand for his electrical heating systems
Raymond estimates the fixed costs associated with opening a new bank branch are $500,000. He estimates the branch will attract 1,000 new customers who will cost $50/year to service each of their accounts. He also expects to generate $100,000 in fees annually from these accounts. For Raymond, the total cost of opening the new branch and remaining open for one year will be:
One problem in relying on price elasticity and demand curves when setting prices is that:
how a product or service is marketed can have a profound impact on the elasticity
Barry customizes Harley-Davidson motorcycles. No two cycles are alike. He notices that very few customers even ask the price of his motorcycles before they decide to purchase them. Demand for his motorcycles is probably:
Brian knows his firm's pricing strategy needs to be consistent with the company's overall objectives. As marketing manager, Brian will base his pricing strategy based on whether the company's objective is to:
All of the Above:
build customer satisfaction.
In ________________ competition, there are many firms providing differentiated products.
A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________________ price elasticity demand.
For which of the following is demand likely to be most sensitive to price increases?
one brand of soft drink beverage
Jason rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20. His fixed costs are $100,000 and his target profit is $20,000. For Jason, to earn his target profit, he will need to rent out ________ rooms.
T or F:Economic trends that affect pricing decisions include increases in disposable income and status consciousness, a trend for customers to shop cheap, global economic conditions and local economic conditions.
T or F: In general, prices should not be based on costs because consumers make their purchase decisions based on perceived value, not the cost of production.
T or F: If Brandon bought hats for his store for $5 each, and sold them for $15 each, he used a keystoning pricing strategy.
T or F: A gray market employs irregular but not necessarily illegal methods of distributing products.
T or F: In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is elastic.
T or F: Price is the cash expenditure plus taxes that consumers have to pay for a good or service.
T or F: In addition to the product-specific and firm-specific factors that affect pricing, there are two broader factors - the Internet and socio-cultural factors.
The Internet allows consumers access to more products, services and information, which has made them ___________________.
More Price Sensitive--
In addition to making consumers more price sensitive, the Internet has opened new product and service categories to consumers.
When companies sell commodity products that consumers perceive as substitutable, the market will be characterized as:
Firms might want to differentiate their product by a logo or similar device to have consumers identify the product as distinct from the rest and less of a pure competition market.
If the fixed costs of opening an Internet-based, artisan soap business are $2,000, the price is $6 per unit and the variable costs are $2, the break-even point in units is:
The break-even point is determined by dividing $2,000 by the contribution profit per unit ($6-$2) = 2,000/4 = 500.
____________________ enables managers to examine the relationship among cost, price, revenue and profit over different levels of production and sales.
The break-even point is the point at which the number of units sold generates just enough revenue to equal the total costs. At this point, there is no profit.
The fewer substitutes that exist in a market:
the lower the price elasticity for each product--
In markets with many substitutes, if one firm raises their price many consumers will buy competing products instead, creating a significant decrease in quantity demanded for the firm's products. In this type of market situation, consumers are sensitive to price changes.
Price elasticity of demand measures consumers':
sensitivity to price changes--
Individual consumers react differently to price changes. Price elasticity measures consumers' sensitivity or responsiveness to price changes.
If a firm is taking an aggressive pricing approach by setting prices very low to generate new sales, the firm would be taking a ______________________ pricing objective.
Firms that use a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits. .Their concern is primarily on market share.
Which of the following is NOT one of the Five C's of Pricing?
The five C's of Pricing include customers, costs, competition, channel members, and company objectives.
_________________ is the overall sacrifice a consumer is willing to make to acquire a specific product or service.
Price is more than just the money consumers pay for a product. It also includes the time, travel, and search costs associated with purchase decisions.
Effective service recovery efforts can lead to all of the following EXCEPT:
increased dependence on technology to prevent future service failures
__________________ refers to the fairness of the process with which customers feel their complaints are handled by a company.
When marketers state services are _____________, they are referring to the fact that services cannot be touched, tasted, or seen like a pure product can.
Rob was complaining to another member of the lawn crew. "I don't know how they expect me to do an adequate job. The mower doesn't work right, the trimmers are so dull they can't cut anything and half the rest of the equipment is so old we can't get parts." Rob's company lacks the _______________________ the crews need to be able to do a good job.
The concept of the ______________ refers to the area between customers' expectation regarding their desired service and the minimum level of acceptable service.
zone of tolerance
Many sales organizations have created Intranet systems where reps can access inventory information and delivery times, and specifications for special orders. These systems help reduce service delivery gaps by:
providing a service delivery support system
Technology and ____________________ are two ways a delivery gap can be reduced.
A systematic ____________ program collects customer inputs and integrates them into managerial decisions.
The ability of many local Internet service providers to continue to survive and prosper in the face of large, national competitors is, in part, due to their well-trained, easily-accessed staff. These "techies" help reduce service delivery gaps by:
providing a service delivery support system
Gerald's Tire Service provides each employee with a clean, sharp-looking uniform. They also instruct employees to put all tools back where they belong and keep the work area clean and uncluttered. Gerald's Tire Service emphasizes ________________ in the five service quality dimensions.
The Gaps Model is designed to highlight those areas where:
customers believe they are getting less or poorer service than they should
Managers of fast food restaurants struggle with a rapid turnover of personnel. Employee turnover rates of 100 to 200 percent annually are common. The work environment is difficult and customers can often be demanding. One of the first steps managers can take to help workers deliver quality service is:
provide emotional support and concern for their employees
The old cliché, "Service with a smile," recognizes the fact that:
service providers need to be pleasant even if the customer is not
T or F: Procedural fairness pertains to a customer's perception of the benefits he or she received compared with the costs of the inconvenience or loss.
T or F: The CREST method of resolving service failures is modeled after Proctor & Gamble's highly successful Crest toothpaste.
The marketing of services differs from the marketing of products because services are tangible and separable from the service provider.
T or F: In the marketing of services, empowerment means allowing employees to make decisions about how service is provided to customers.
T or F: In training service providers, service quality goals should be general to allow for the various needs of consumers.
T or F: The knowledge gap is where "the rubber meets the road," where the customer directly interacts with the service provider.
T or F: The gaps model allows systematic examination of all aspects of the product creation process associated with delivering services.
T or F: By steadily improving its services, focusing on employees and working to create customer satisfaction, Enterprise Rent-A-Car has built competitive advantages.
T or F: When Buffalo Bank required all customers to use their online banking services, over 20 percent of their customers closed their accounts. Buffalo Bank exceeded customers' zone of tolerance.
If service recovery is handled well, once-dissatisfied customers _________________.
may increase purchase intentions--
Effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word of mouth. For example, an effective service recovery allows an employee to make amends to a problem that is more satisfying to the customer than if the problem never happened at all.
In order to be effective, service recovery must:
ALL OF THE ABOVE:
be seen as prompt.
be seen as fair.
include listening to the concerns of the customer before jumping to predetermined solutions.
be easy, if not painless, for the dissatisfied customer.
Service recovery is an important marketing function in services marketing, and the marketer should always place himself or herself in the customer's shoes to ensure the recovery actually works.