Module 10 – Flashcards
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internal reference price
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Consumers' perceptions of the customary price of a product may depend on a(n) ________. This is a set price or price range in the mind of the consumer that they refer to in evaluating a product's cost.
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sales or market share
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When setting prices, a leading manufacturer of nutritional supplements decided to institute a pricing strategy that would support a 5 percent increase in sales over the next three years. What type of pricing objective does the company have?
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estimate demand for the entire product category in the market the company serves
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What is the first step an organization takes to estimate its potential sales?
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because increasing the price of prestige products can make them seem more desirable
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Why do marketers consider prestige products to be an exception to the law of demand?
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predatory pricing
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With ________, a company deliberately sets a low price with the express idea of driving its competition out of business.
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restroom supplies
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Which of the following would be an example of a variable cost for an amusement park?
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inelastic
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Many people rely on a prescription drug to control their cholesterol. An increase in the price of the drug would have little effect on the quantity demanded because there are no substitutes for the drug and because people who are taking it have no choice but to continue taking it if they wish to stay healthy. The demand for the cholesterol drug is ________.
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Variable costs
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________ are the per-unit costs of production that will fluctuate depending on how many units or individual products a firm produces.
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cost-plus pricing
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A person selling maple racks for cooling cakes and cookies knows that it costs $15 to make one rack. If the person who crafted the rack prices each rack so that he earns a 25 percent profit from the money he spent to make one rack, he is using which approach to pricing?
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Quality inference
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________ is a strategy used by consumers who are unable to judge the quality of a product through examination or prior experience, so the consumer will assume that the higher-priced product is the higher-quality product.
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Captive pricing
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________ is a pricing tactic a firm uses when it has two products that work only when used together. The firm sells one item at a very low price and then makes its profit on the second high-margin item.
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The price elasticity of demand
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_______ is a measure of the sensitivity of customers to changes in price.
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loss leader pricing
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Some retailers advertise items at very low prices or even below cost just to get customers into the store. The rationale for implementing this ________ strategy is the belief that once a customer is in the store she will buy this advertised item as well as other items.
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suggested retail price
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A consumer product list price is also referred to as a(n) ________.
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odd-even pricing
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A retailer known for selling all items for $.99 and another store known for selling all items for $1.00 are both implementing the ________ strategy.
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Price bundling
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________ refers to the sale of two or more goods and services as a single package for one price.
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The break-even point is the point at which ________.
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the total revenue and total cost lines intersect
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A business that uses price lining is ________.
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using price points to determine its pricing strategy
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True
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Value Meal Deals in which you get a sandwich, fries, and a drink for one price are an example of price bundling.
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competitive effect
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The pricing objective for a company that intended to maintain low-end pricing policies to make the market unattractive for its competitors is typed as ________.
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Fixed costs
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________ are costs that do not vary with the number of units produced.
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loss leader
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After looking at the ads in her Sunday paper, Ruby decided to visit a local nursery and buy potting soil at $1.99 a bag. The regular price is $4.99 a bag. While Ruby was there she also purchased three bushes, six flowering plants, and a bird bath. You can infer from this information that the nursery used the bags of potting soil as a ________.
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break-even
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Which of the following is not a type of pricing objective?
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there should be little chance that competitors can get into the market quickly
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For a skimming price to be successful, ________.
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cost-plus pricing
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The most common cost-based approach to pricing is ________.
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consumer trends
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Due to the 9/11 attacks, many consumers decided to forgo their usual vacation to Florida or the Caribbean and use their own cars if they decided to do any traveling at all. As a result motels and airlines have been offering greatly reduced prices on vacation packages to beach resorts. Which external influence on pricing is most evident in this strategy?
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The demand curve ________.
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shows the relationship between product demand and product price
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the competition
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Everyone has seen commercials in which consumers are told that a particular retailer is determined to offer the lowest price, and if a lower price can be found, the retailer will match it. Which external influence on pricing is most evident in this type of advertising?
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discourage competition from entering the market
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Marketers like to use penetration pricing for new products to ________.
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a skimming price
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The average price Xerox charged when it introduced the first stand-alone fax machine was $12,700. This premium price was a way for Xerox to recoup some of the research and development costs that went into producing this machine. Xerox used ________.
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Vertical price fixing
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________ occurs when manufacturers or wholesalers attempt to force retailers to charge a certain price for their products.
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fixed costs
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For a company that manufactures plastic signs, the printing press used to make the signs, the manager's salary, and the utilities are all examples of ________.
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caviar
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Demand is inelastic for ________.
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how difficult it is to estimate demand accurately
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A major disadvantage of using demand-based pricing strategies is ________.
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Demand-based pricing
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________ means the selling price is based on an estimate of volume or quantity a firm can sell in different markets at different prices.
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a skimming price
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A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future.
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channel intermediaries who perform wholesaling tasks that the manufacturer would otherwise have to perform
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Trade or functional discounts are offered to ________.
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elastic
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When Joe's Coffee Nook changed the price of a latte, Joe noticed a substantial change in how many lattes he sold daily. A price reduction caused his sales to increase. From this information, you can assume the demand for lattes is ________.
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Price
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________ is the value customers give up or exchange to obtain a desired product.
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Both consumers andprofessional business buyers focus on price when making a purchase decision.
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Which of the following statements about pricing is true? A)Both consumers andprofessional business buyers focus on price when making a purchase decision. B)Pricing is the least important marketing mix element during a recession. C)Most consumers believe price has little influence on their purchase decisions. D)Pricing is unaffected by changes in the business cycle. E)All of the above statements about pricing are true.
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Both consumers andprofessional business buyers focus on price when making a purchase decision.
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Which of the following statements about pricing is true? A)Both consumers andprofessional business buyers focus on price when making a purchase decision. B)Pricing is the least important marketing mix element during a recession. C)Most consumers believe price has little influence on their purchase decisions. D)Pricing is unaffected by changes in the business cycle. E)All of the above statements about pricing are true.
