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Marketing Chapter 10

STUDY
PLAY
A company building its pricing strategy around the experience curve would be likely to _____
price its products low
Price competition is minimized when all firms use this pricing method
markup pricing
Many people feel that _____ pricing is fairer to both buyers and sellers. Sellers earn a fiar return on their investment but do not take advantage of buyers when buyers' demand becomes great
markup
Which of the following is an external factor that affects pricing decisions?
A) the salaries of production management
B) competition
C) the salaries of finance management
D) funds expensed to clean production equipment
E) A, B, and C
B
_____ is the amount of money charged for a product or service
Price
The break-even volume is the point at which _____.
A) demand equals supply
B) a firm's profit goal is reached
C) total revenue and total cost lines intersect
D) the company can pay all of its l-t debt
E) the production of one more unit will not increase profit
C
Which of the following statements about break-even analysis is true?
A) it is a technique used to calc fixed costs
B) it is used to determine how much production experience a company must have to achieve its desired efficiencies
C) it is calculated using variable costs, the unit price, and fixed cost
C
_____ that influence pricing decisions include the nature of the market and demand and competitors' prices
External factors
Which of the following is a reason why markup pricing is NOT practical?
A) with a standard markup, consumers know when they are being overcharged
B) by tying the price to cost, sellers simplify pricing
C) sellers earn a fair return on their investment
D) this method ignores demand
D
In _____, price is considered along with the other marketing mix variables before the marketing program is set.
value-based pricing
Wal-Mart is famous for using what important type of value pricing?
everyday low pricing
Rent, electricity, and executive salaries are examples of _____
fixed costs
Fixed costs _____ as the number of units produced increases.
stay the same
When there is price competition, many compamies adopt _____ rather than cutting prices to match competitors
value-added strategies
Underpriced products sell very well, but they produce less revenue than they would have if price were raised to the _____ level.
perceived
With _____, price is set to match consumers' perceptions of product value
value-based pricing
_____ pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for the company's efforts and risks.
Cost-based
_____ uses buyers' perceptions of what a product is worth, not the seller's cost, as the key to pricing
value-based pricing
If a seller charges _____ than the buyer's perceived value, the company's sales will suffer
More
_____ involves charging a constant, everyday low price with few or no temporary price discounts
EDLP
Consumer perceptions of the product's value set the _____ for prices.
ceiling
value-based pricing is the reverse process of _____
cost-based pricing
price is the only element in the marketing mix that produces _____
revenue
_____ is a company's power to excape price competition and to justify higher prices and margins.
pricing power
some companies have adopted a _____ strategy, offering just the right combination of quality and good service at a fair price
good-value pricing
To maintain and increase a company's _____, a firm must retain or build the value of its marketing offer.
pricing power
_____ is an important element in the marketing mix. It is the only element that does not represent cost
Price
Product costs set a(n) _____ to a product's price.
floor
Which of the following is a customer-oriented approach to pricing?
A) value-based pricing
B) sealed bid pricing
C) break-even pricing
D) target profit pricing
E) C and D
A
Costs that do not vary with production or sales level are referred to as _____
fixed costs
Ryanair offers free flights to a quarter of its customers and rock-bottom prices to many of its other customers. Ryanair then charges for all the extra services, such as baggage handling and in-flight refreshments. Which pricing method best describes Ryanair's pricing method?
low-cost pricing
Measuring _____ can be difficult. A company might conduct surveys or experiments to test this in the different products they offer
perceived value
_____ involves attaching features and services to differentiate a company's offer.
Value-added pricing