Question 1

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

Accepted Answer

A)  overhead cost. 
B)  total cost. 
C)  unit cost. 
D)  average cost. 
E)  marginal cost. 
A)  overhead cost. 
B)  total cost. 
C)  unit cost. 
D)  average cost. 
E)  marginal cost.

Question 2

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

Accepted Answer

A)  The ice cream market is highly conservative. 
B)  Economies of scale in production would be substantial. 
C)  Retailers are not willing to carry new brands of ice cream in the already overcrowded category. 
D)  Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers. 
E)  The ice cream market exhibits inelastic demand over a fairly broad range of prices. 
A)  The ice cream market is highly conservative. 
B)  Economies of scale in production would be substantial. 
C)  Retailers are not willing to carry new brands of ice cream in the already overcrowded category. 
D)  Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers. 
E)  The ice cream market exhibits inelastic demand over a fairly broad range of prices.

Question 3

How do consumers use price in their assessments of value?

Accepted Answer

From a consumer's standpoint, price is o

Question 4

Figure 11-6
-A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

Accepted Answer

A)  Gantt chart. 
B)  demand curve. 
C)  ROI analysis. 
D)  cross-tabulation. 
E)  break-even chart. 
A)  Gantt chart. 
B)  demand curve. 
C)  ROI analysis. 
D)  cross-tabulation. 
E)  break-even chart.

Question 5

According to the price equation, a product's or service's final price equals its list price minus allowances plus

Accepted Answer

A)  profits. 
B)  commissions. 
C)  trade-ins. 
D)  extra fees. 
E)  taxes. 
A)  profits. 
B)  commissions. 
C)  trade-ins. 
D)  extra fees. 
E)  taxes.

Question 6

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Accepted Answer

A)  There will be a large potential market, even if the product is sold at a high price. 
B)  Technological problems still exist for competitors; their products are not equivalent. 
C)  Increasing the volume sold reduces production costs substantially. 
D)  Consumers perceive a strong price-quality relationship for this product. 
E)  Many consumers in the target market are innovators. 
A)  There will be a large potential market, even if the product is sold at a high price. 
B)  Technological problems still exist for competitors; their products are not equivalent. 
C)  Increasing the volume sold reduces production costs substantially. 
D)  Consumers perceive a strong price-quality relationship for this product. 
E)  Many consumers in the target market are innovators.

Question 7

Quantity discounts are

Accepted Answer

A)  price reductions in unit costs for placing a larger order. 
B)  price reductions for placing long-term prescheduled orders. 
C)  price reductions to encourage retailers to stock inventory earlier than their normal demand would require. 
D)  BOGOs. 
E)  reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product. 
A)  price reductions in unit costs for placing a larger order. 
B)  price reductions for placing long-term prescheduled orders. 
C)  price reductions to encourage retailers to stock inventory earlier than their normal demand would require. 
D)  BOGOs. 
E)  reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.

Question 8

Distinguish between elastic demand and inelastic demand.

Accepted Answer

Elastic demand exists when a 1 percent d

Question 9

A hardware store advertises a 3/8" Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the sale drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?

Accepted Answer

A)  predatory pricing 
B)  price discrimination 
C)  price fixing 
D)  bait and switch 
E)  conditional bargains 
A)  predatory pricing 
B)  price discrimination 
C)  price fixing 
D)  bait and switch 
E)  conditional bargains

Question 10

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Accepted Answer

A)  value 
B)  price 
C)  barter 
D)  currency 
E)  a tariff 
A)  value 
B)  price 
C)  barter 
D)  currency 
E)  a tariff

Question 11

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Accepted Answer

A)  there is a large number of products and estimating the demand for each would be difficult and time consuming. 
B)  there is a large number of product lines, all with basically the same product attributes. 
C)  there is a specific profit goal that needs to be achieved. 
D)  there is a policy of selling every item in a product line at the same price regardless of the product class. 
E)  the products are perishable or seasonal. 
A)  there is a large number of products and estimating the demand for each would be difficult and time consuming. 
B)  there is a large number of product lines, all with basically the same product attributes. 
C)  there is a specific profit goal that needs to be achieved. 
D)  there is a policy of selling every item in a product line at the same price regardless of the product class. 
E)  the products are perishable or seasonal.

Question 12

Skimming pricing is a strategy that introduces a new or innovative product by

Accepted Answer

A)  following a price elastic strategy. 
B)  creating multiple price points. 
C)  setting a high initial price. 
D)  setting a low initial price. 
E)  setting the price at the average of competitors' prices. 
A)  following a price elastic strategy. 
B)  creating multiple price points. 
C)  setting a high initial price. 
D)  setting a low initial price. 
E)  setting the price at the average of competitors' prices.

Question 13

Figure 11-6a
-Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the quantity of picture frames you will need to sell to break-even?

Accepted Answer

A)  200 picture frames 
B)  400 picture frames 
C)  800 picture frames 
D)  1,600 picture frames 
E)  2,000 picture frames 
A)  200 picture frames 
B)  400 picture frames 
C)  800 picture frames 
D)  1,600 picture frames 
E)  2,000 picture frames

Question 14

There are a lot of skateboards on the market, but when it was launched the BMW Streetcarver was the only one with stabilizers and wheel design based on BMW's automobiles. This technology gave the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard was priced at $495, which left many consumers (especially young males) who might have wanted to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the effect of ________ on sales.

Accepted Answer

A)  demand factors 
B)  macroeconomic environmental factors 
C)  barter factors 
D)  supply factors 
E)  exchange parameters 
A)  demand factors 
B)  macroeconomic environmental factors 
C)  barter factors 
D)  supply factors 
E)  exchange parameters

Question 15

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Accepted Answer

A)  cost-plus-percentage-of-cost pricing 
B)  experience curve pricing 
C)  standard markup pricing 
D)  yield management pricing 
E)  cost-plus-fixed-fee pricing 
A)  cost-plus-percentage-of-cost pricing 
B)  experience curve pricing 
C)  standard markup pricing 
D)  yield management pricing 
E)  cost-plus-fixed-fee pricing

Question 16

Cost-plus pricing refers to

Accepted Answer

A)  summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price. 
B)  setting the price of a line of products at a number of different price points. 
C)  adding a fixed percentage to the cost of all items in a specific product class. 
D)  setting prices to achieve a profit that is a specified percentage of the sales volume. 
E)  increasing the price slightly to protect against undue profit losses from unforeseen environmental forces. 
A)  summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price. 
B)  setting the price of a line of products at a number of different price points. 
C)  adding a fixed percentage to the cost of all items in a specific product class. 
D)  setting prices to achieve a profit that is a specified percentage of the sales volume. 
E)  increasing the price slightly to protect against undue profit losses from unforeseen environmental forces.

Question 17

Which of the following statements regarding pricing objectives is most accurate?

Accepted Answer

A)  Pricing objectives are similar to core values in that there is little to no change in them over time. 
B)  Pricing objectives may change depending on the segments in which a company is doing business. 
C)  Pricing objectives may change depending upon the cost of advertising. 
D)  Pricing objectives are established exclusively by the marketing department. 
E)  Pricing objectives are extremely sensitive to even the slightest change in the local economy. 
A)  Pricing objectives are similar to core values in that there is little to no change in them over time. 
B)  Pricing objectives may change depending on the segments in which a company is doing business. 
C)  Pricing objectives may change depending upon the cost of advertising. 
D)  Pricing objectives are established exclusively by the marketing department. 
E)  Pricing objectives are extremely sensitive to even the slightest change in the local economy.

Question 18

Companies use a ________ to assess whether its products and brands are above, at, or below the market.

Accepted Answer

A)  customary price 
B)  prestige price 
C)  price premium 
D)  price lining 
E)  cost benchmark 
A)  customary price 
B)  prestige price 
C)  price premium 
D)  price lining 
E)  cost benchmark

Question 19

Everyday low pricing refers to

Accepted Answer

A)  the pricing strategy of "extreme value" stores to maintain high price-quality images for the products they sell. 
B)  the pricing strategy of starting a product at standard list price and then lowering the price by a certain percentage until it is sold. 
C)  short-term price reductions when consumer demand takes a significant and unexpected dip. 
D)  the practice of replacing promotional allowances with lower manufacturer list prices. 
E)  a form of predatory pricing used solely for the purpose of undercutting competitors' prices. 
A)  the pricing strategy of "extreme value" stores to maintain high price-quality images for the products they sell. 
B)  the pricing strategy of starting a product at standard list price and then lowering the price by a certain percentage until it is sold. 
C)  short-term price reductions when consumer demand takes a significant and unexpected dip. 
D)  the practice of replacing promotional allowances with lower manufacturer list prices. 
E)  a form of predatory pricing used solely for the purpose of undercutting competitors' prices.

Question 20

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Accepted Answer

A)  maximizing current profit 
B)  managing for long-run profits 
C)  target return 
D)  break-even strategy 
E)  minimizing risk 
A)  maximizing current profit 
B)  managing for long-run profits 
C)  target return 
D)  break-even strategy 
E)  minimizing risk

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

How do consumers use price in their assessments of value?

Figure 11-6 -A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

According to the price equation, a product's or service's final price equals its list price minus allowances plus

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Quantity discounts are

Distinguish between elastic demand and inelastic demand.

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Skimming pricing is a strategy that introduces a new or innovative product by

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Cost-plus pricing refers to

Which of the following statements regarding pricing objectives is most accurate?

Companies use a ________ to assess whether its products and brands are above, at, or below the market.

Everyday low pricing refers to

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Filters

Exam 11: Pricing Products and Services

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

How do consumers use price in their assessments of value?

Figure 11-6 -A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

According to the price equation, a product's or service's final price equals its list price minus allowances plus

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Quantity discounts are

Distinguish between elastic demand and inelastic demand.

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Skimming pricing is a strategy that introduces a new or innovative product by

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Cost-plus pricing refers to

Which of the following statements regarding pricing objectives is most accurate?

Companies use a ________ to assess whether its products and brands are above, at, or below the market.

Everyday low pricing refers to

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Filters