Marketing Final: Ch. 14 – Flashcards

Price is the cash expenditure plus taxes that consumers have to pay for a good or service.

The key to successful pricing is to match the product with the consumer's perception of value.

Price is the only part of the marketing mix that does not generate costs.

Rarely is the lowest-price product offering the dominant brand in a given market.

A demand curve shows the relationship between income and demand.

Because consumers are generally more sensitive to price increases than to price decreases, it is easier to lose current customers with a price increase than it is to gain new customers with a price decrease.

Brands that have developed loyal customers have a higher price elasticity of demand.

In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high.

At the break-even point, profits are maximized.

A gray market employs irregular but not necessarily illegal methods of distributing products.

Diana owns a boutique specializing in ball gowns. Sales are stable and Diana feels it is time she had a 20 percent increase in her salary. If Diana takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself.

Firm A has set very low prices for its products in an attempt to drive its competitor, Firm B, out of business. This is known as monopolistic pricing.

Odd prices suggest low quality.

When Sony released its PlayStation 3 game machines, it charged a high price, attracting the most avid game players. This was a market penetration pricing strategy.

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens. To do this, she will likely use a market penetration pricing strategy.

Proving that a company has engaged in the deceptive bait and switch practice is easy.

The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur.

When a retail store rarely sells deeply discounted or sale products, it is known as everyday low pricing.

The demand curve for prestige products generally slopes downward due to higher prices.

Price is the _____________ a consumer is willing to make to acquire a specific product or service.

Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as ________________, while most consumers recognize price as the ______________ made to acquire a good or service.

The full price of a product or service includes all of the following EXCEPT

Gerald has a number of customers for his lawn care service who never question his bill but expect their lawns to be perfect. These customers do not want low prices, they want

Unlike product, promotion, or place, price is the only part of the marketing mix

Price is often the most challenging of the four Ps to manage, partly because it is often ______________ in developing marketing strategies.

Historically, prices were

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

Which of the following is NOT one of the five Cs of pricing?

Tess is the marketing manager for a fast food restaurant chain. She uses a target return pricing strategy because her firm's primary objective is to

Gary is the marketing manager for an automobile dealership. His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent. His firm is using a ________ orientation.

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard's job to examine the pricing to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard's effort?

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______________ pricing strategy.

A _________________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a ______________ pricing strategy.

Many years ago Honda's Accord and Ford's Taurus were the top two selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a ___________________ pricing strategy.

Julia wants her firm's gourmet snacks to be the leading brand in the U.S. market. When adopting a pricing strategy designed to gain market share, she should remember that

Sharon knew that her established customers liked her product much better than her competitor's. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Sharon was considering

When Ursula decides how to price new products in her gift store, she measures the value of her product offerings against those of the other stores in her area. Ursula uses a__________________ pricing strategy.

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.

When firms set prices similar to those of competitors, they are following a strategy of

In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. Each firm weighs the comparative advantages and disadvantages of its offerings to determine whether to price above, equal to, or below the other hotel. In these markets, the hotels are using a _______________ pricing strategy.

A customer orientation toward pricing implicitly invokes the concept of

A no-haggle pricing policy is a type of _______________ pricing strategy.

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a ________________ pricing strategy.

A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy, especially if the strategy

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.

Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on

A demand curve shows the relationship between ___________________ in a period of time.

A demand curve is built assuming that

According to a typical demand curve, the higher the price,

There is an old saying, "If you have to ask the price of a yacht, you cannot afford it." Products like yachts are most likely to be associated with

_________________ measures consumers' sensitivity to price changes.

For which of the following is demand likely to be least sensitive to price increases?

For which of the following is demand likely to be most sensitive to price increases?

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.

If a 1 percent decrease in price results in more than a 1 percent increase in quantity demand, demand is

Assume the demand for electricity, a necessity with few substitutes, is -0.2. If the electric company raised its rates by 10 percent, we would expect

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

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

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how ____________ affects demand for products.

Rodi owns Hallman's auto repair service. He has observed over the years that customers keep their high-mileage cars longer when the economy is doing poorly, creating demand for his maintenance and repair service. Rodi has observed the impact of ______________ on demand for his service.

The more substitutes that exist in a market,

Brad always buys and uses Nike brand golf balls. If he finds a Titleist or Callaway ball in the rough, he gives it away. Brand loyal golfers like Brad allow Nike to charge a higher price and not lose many sales. By building a strong brand, Nike has effectively

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm's products by

Cross-price elasticity is the

Which of the following is the most logical example of complementary products?

Bill is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of

If the price for a product increases, the demand for the complementary product will

Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that

Managers of Wendy's fast food restaurants keep track of prices at competitors such as McDonald's, Burger King, and Arby's, knowing that a decrease in the prices at these other fast food restaurants will

One problem in relying on price elasticity and demand curves when setting prices is that

In general, prices should not be based on costs because

Labor, materials, and energy are typically __________ costs.

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following EXCEPT

Variable costs change with

Raymond estimates that the fixed costs associated with opening a new bank branch are $500,000. He expects the branch to attract 1,000 new customer accounts in the first year, each of which will cost $50 per year to service. He also expects to generate $100,000 per year in revenue. For Raymond, the total cost of opening the new branch and remaining open for one year will be:

At the break-even point,

The break-even point is estimated by

If the fixed costs of manufacturing a new cell phone are $10,000, the sales price is $60, and variable cost per unit is $20, the break-even point is

Jacob rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Jacob, the contribution per unit is

The contribution per unit is

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.

Break-even analysis is useful because it allows managers to

One of the limitations associated with break-even analysis is that

Which of the following markets is MOST likely to be characterized by oligopolistic competition in the United States?

Because there are only a few firms in markets with oligopolistic competition,

In a market with _______________, there are many firms providing differentiated products.

Because there are many firms in monopolistic competition markets,

In _______________, many firms provide similar products that are considered substitutes for each other.

Which of the following is most likely to be characterized by pure competition in the United States?

Because there are many firms with similar products in purely competitive markets,

If a firm in a purely competitive market can differentiate its product or service, it becomes part of a _______________ market.

How can a company find its way out of a market characterized by pure competition?

Gray markets can be a challenge to marketers because

To discourage consumers from buying in gray markets, some manufacturers have

Diane owns a bakery where she sells cupcakes. Two blocks down there is another bakery, CC's Bakery, that sells cupcakes for $1 less than Diane. Diane decides to lower her price and match CC's Bakery prices. What type of pricing strategy is Diane implementing?

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the

The commercial airline industry is considered what type of market?

A reference price is

In determining the price for his company's new pocket digital camera, Matt determines what consumers consider the regular or original price for similar cameras available in the market. Matt is assessing the influence of __________ on pricing strategy.

Odd prices often suggest __________ to consumers.

Developing pricing strategies for __________ is one of the most challenging tasks a manager can undertake.

Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price

Price skimming focuses on selling products to __________ and __________ in the consumer adoption process model.

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year's supply. Burroughs Wellcome was probably pursuing a __________ pricing strategy.

When Apple Computer company introduced the iPhone—a combination phone, MP3 player, and Internet access device—in 2007, it was priced at $499, considerably higher than either the iPod or competing cell phones. Apple was probably pursuing a __________ pricing strategy.

With a __________ pricing strategy, marketers set a low initial price for the introduction of a new product or service.

Mario is the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a __________ pricing strategy.

The major objectives associated with a market penetration pricing strategy are to

The __________ occurs when unit cost drops as the quantity sold increases.

Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the __________, a decrease in unit cost as product volume increases.

Marlie designs and manufactures specialty furniture. She has a number of unique products but can only produce in limited quantities. Marlie will probably NOT use a market penetration strategy because

Yurgen is opening a financial consulting service for high-income retirees in his area. This target market is used to paying for quality and associates high quality with high prices. Yurgen should probably NOT use a market penetration pricing strategy because

Price advertisements should never

For marketers to advertise a price as their __________, the Better Business Bureau recommends that at least 50 percent of the sales of a product occur at that price.

Marketers advertising an artificially high regular price are unethically attempting to influence consumers' __________ perceptions.

__________ pricing tactics lower the price of a product below cost.

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.

Bill desperately needed tires for his car, and he found an ad with an incredibly low price. When he got there, he found out that those had been sold out, and he was pressured into buying tires that were more expensive than he wanted. Bill found out later that Marcelo had had the same experience at the store a few weeks earlier. It's quite possible that both Bill and Marcelo had become the victim of a deceptive pricing tactic known as

If a telecommunications company drastically cuts the price for cellular phone service to eliminate local competitors, the company could be charged with

__________ is the practice of colluding with other firms to control prices.

__________ price fixing occurs when competitors collude to control prices, and __________ price fixing occurs within a marketing channel to control prices passed on to consumers.

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

What type of pricing tactic is being used when several airlines agree to charge the same fare for a single route?