Exam 16: Developing Pricing Strategies and Programs

Companies strive to maximize their current profits if they are plagued with overcapacity, intense competition, or changing consumer wants.

When a product is more distinctive, it leads to less price sensitivity.

________ refers to selling below cost with the intention of destroying competition.

When firms charge different prices to different customer groups for the same product or service, it is a case of second-degree price discrimination.

When Sony introduced the world's first high-definition television to the Japanese market in 1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from the various segments of the market. The price dropped steadily through the years - a 28-inch Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $450 in 2014. What pricing strategy did Sony use here?

Price is one of the two elements of the marketing mix that produces revenue.

What are three possible responses to low-cost competitors?

On sites such as eBay and Amazon.com, the seller puts up an item and bidders raise the offer price until the top price is reached. What kind of auctions are these?

When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference.

A company decided to conduct a market survey for its new MP3 player that the company had priced at $150. In the survey, 95 percent of participants said that the maximum they would pay for the MP3 player is $100. This is an example of which of the following possible consumer reference prices?

When a movie theater charges a lower ticket fee for children and senior citizens, it is engaging in ________ pricing.

In a price-war trap, higher-priced competitors match the firm's lower prices but have longer staying power because of deeper cash reserves.

Companies who believe that higher sales volume leads to lower unit costs and higher long-run profits are attempting to ________.

The first step in estimating demand is to ________.

Costs that do not vary with production levels or sales revenue are known as ________ costs.

When Juan's company introduced its new product in the market, it introduced it at the lowest possible price assuming that the demand for the product is going to be highly responsive to the introduction price. It also believes that a higher sales volume will lead to lower unit costs and higher long-run profit. What can be said about the company's objective?

Costs that differ directly with the level of production are known as ________ costs.

Today, consumers are price takers and accept prices at face value or as given.

A company that pays its bills each month for its rent, heat, interest, and salaries regardless of its output is said to be incurring what type of costs?

Madame Tussaud's wax museum is a popular tourist attraction in London. The museum charges higher entry rates for tourists compared to locals. This form of price discrimination is known as ________ pricing.