Question 1

Which of the following statements about the product life cycle as a pricing constraint is most accurate?

Accepted Answer

A) The newer a product is, the higher the price that can usually be charged. 
B) The later in the product life cycle a product is, the higher the price that can usually be charged. 
C) Once a product is considered nostalgic, the price will continue to rise indefinitely. 
D) Fads will generally have only two price points-high and low-but the values of those price points usually will be within 10 percent of each other. 
E) Prices should not be changed until a product reaches its maturity stage. 
A) The newer a product is, the higher the price that can usually be charged. 
B) The later in the product life cycle a product is, the higher the price that can usually be charged. 
C) Once a product is considered nostalgic, the price will continue to rise indefinitely. 
D) Fads will generally have only two price points-high and low-but the values of those price points usually will be within 10 percent of each other. 
E) Prices should not be changed until a product reaches its maturity stage.

Question 2

At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a fraction of that amount. Today, those same Beanie Babies can be found at garage sales all over the country for less than a dollar apiece. This is most likely due to

Accepted Answer

A) faulty craftsmanship in later production batches. 
B) a sharp downturn in the economy. 
C) the new, more nostalgic fad of bobblehead dolls. 
D) too many counterfeit Beanie Babies entering the country. 
E) a product becoming a fad and then losing its fad appeal. 
A) faulty craftsmanship in later production batches. 
B) a sharp downturn in the economy. 
C) the new, more nostalgic fad of bobblehead dolls. 
D) too many counterfeit Beanie Babies entering the country. 
E) a product becoming a fad and then losing its fad appeal.

Question 3

A break-even chart is a graphic presentation

Accepted Answer

A) that shows the maximum number of units that will be sold at a certain price. 
B) of a break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold. 
C) that relates variable costs in terms of product or service substitutes in order to determine which items or services would least affect total revenues. 
D) that relates profits and revenues versus total costs in order to determine the time frame in which a company could achieve profitability. 
E) is a form of scatter graph used to identify specific activities or items that are creating the greatest return on investment. 
A) that shows the maximum number of units that will be sold at a certain price. 
B) of a break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold. 
C) that relates variable costs in terms of product or service substitutes in order to determine which items or services would least affect total revenues. 
D) that relates profits and revenues versus total costs in order to determine the time frame in which a company could achieve profitability. 
E) is a form of scatter graph used to identify specific activities or items that are creating the greatest return on investment.

Question 4

Elastic demand exists when

Accepted Answer

A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded. 
B) a small percentage decrease in price produces a larger percentage increase in quantity demanded. 
C) an increase in price causes a larger increase in quantity demanded. 
D) the quantity demanded remains the same regardless of level of price. 
E) no change in price produces a small percentage change in quantity demanded. 
A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded. 
B) a small percentage decrease in price produces a larger percentage increase in quantity demanded. 
C) an increase in price causes a larger increase in quantity demanded. 
D) the quantity demanded remains the same regardless of level of price. 
E) no change in price produces a small percentage change in quantity demanded.

Question 5

Pure monopoly is the competitive market situation where

Accepted Answer

A) many sellers follow market price for identical, commodity products. 
B) one seller sets the price for a unique product. 
C) few sellers are sensitive to one another's prices. 
D) many sellers compete on nonprice factors. 
E) one or a few sellers compete solely on nonprice factors. 
A) many sellers follow market price for identical, commodity products. 
B) one seller sets the price for a unique product. 
C) few sellers are sensitive to one another's prices. 
D) many sellers compete on nonprice factors. 
E) one or a few sellers compete solely on nonprice factors.

Question 6

Washburn Guitars markets its guitars to four distinct market segments. The firm's one-of-kind custom instruments are targeted at

Accepted Answer

A) first-time buyers. 
B) professional musicians. 
C) stars and collectors. 
D) large institutional buyers such as high school and collegiate band programs. 
E) intermediate-skill players who may become professional musicians. 
A) first-time buyers. 
B) professional musicians. 
C) stars and collectors. 
D) large institutional buyers such as high school and collegiate band programs. 
E) intermediate-skill players who may become professional musicians.

Question 7

Distinguish between elastic demand and inelastic demand.

Accepted Answer

Elastic demand exists when a 1 percent d

Question 8

Which of the following statements regarding a market share pricing objective is most accurate?

Accepted Answer

A) A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits). 
B) Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits. 
C) Selecting market share as a pricing objective is particularly effective if industry sales are rising. 
D) An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions. 
E) Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle. 
A) A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits). 
B) Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits. 
C) Selecting market share as a pricing objective is particularly effective if industry sales are rising. 
D) An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions. 
E) Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle.

Question 9

The sum of the firm's expenses that change with the quantity of the product that is produced and sold is referred to as

Accepted Answer

A) fixed cost. 
B) total cost. 
C) marginal cost. 
D) unit cost. 
E) variable cost. 
A) fixed cost. 
B) total cost. 
C) marginal cost. 
D) unit cost. 
E) variable cost.

Question 10

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as _________, is common in many firms because the targets can be set and performance measured quickly.

Accepted Answer

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

Question 11

Pricing constraints refers to

Accepted Answer

A) barriers that must be overcome in order to set pricing objectives. 
B) competitive pricing advantages one firm has over another. 
C) different pricing strategies for each of the firm's products. 
D) factors that limit the range of prices a firm may set. 
E) barriers to entry a firm faces when launching a new product. 
A) barriers that must be overcome in order to set pricing objectives. 
B) competitive pricing advantages one firm has over another. 
C) different pricing strategies for each of the firm's products. 
D) factors that limit the range of prices a firm may set. 
E) barriers to entry a firm faces when launching a new product.

Question 12

If the CEO of the Clorox Co. were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a __________ pricing objective.

Accepted Answer

A) profit 
B) sales 
C) unit volume 
D) market share 
E) social responsibility 
A) profit 
B) sales 
C) unit volume 
D) market share 
E) social responsibility

Question 13

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and

Accepted Answer

A) the ease of making price comparisons on the Internet. 
B) value, the idea of getting more for their money. 
C) the need for extra accessories. 
D) avoiding state sales taxes from Internet purchases. 
E) a dislike of price haggling or negotiating. 
A) the ease of making price comparisons on the Internet. 
B) value, the idea of getting more for their money. 
C) the need for extra accessories. 
D) avoiding state sales taxes from Internet purchases. 
E) a dislike of price haggling or negotiating.

Question 14

Unit variable cost refers to variable cost expressed

Accepted Answer

A) as the sum of all units sold. 
B) on a per unit basis for a product. 
C) as a percentage of total sales. 
D) as a percentage of fixed costs. 
E) as a percentage of total costs. 
A) as the sum of all units sold. 
B) on a per unit basis for a product. 
C) as a percentage of total sales. 
D) as a percentage of fixed costs. 
E) as a percentage of total costs.

Question 15

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

Accepted Answer

A) We can rely on our reputation for our other products in the line. 
B) Experts are predicting a surge in global demand. 
C) We need to make allowances for large quantity orders. 
D) We should increase the price during the holiday shopping season. 
E) We're going to face some stiff competition. 
A) We can rely on our reputation for our other products in the line. 
B) Experts are predicting a surge in global demand. 
C) We need to make allowances for large quantity orders. 
D) We should increase the price during the holiday shopping season. 
E) We're going to face some stiff competition.

Question 16

Suppose you want to get "plugged in" and buy an all-electric Tesla Model S, the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multi-coat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2008 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S?

Accepted Answer

A) $57,000 
B) $68,000 
C) $87,500 
D) $107,000 
E) $151,000 
A) $57,000 
B) $68,000 
C) $87,500 
D) $107,000 
E) $151,000

Question 17

Marketing executives must translate estimates of customer demand into estimates of

Accepted Answer

A) personnel. 
B) advertising expenditures. 
C) ancillary product support. 
D) revenues the firm expects to receive. 
E) supply. 
A) personnel. 
B) advertising expenditures. 
C) ancillary product support. 
D) revenues the firm expects to receive. 
E) supply.

Question 18

You are president of a manufacturer of small electric appliances. You want to reduce your break-even quantity. All things being equal, you can do this by

Accepted Answer

A) increasing the quantity sold, while keeping price unchanged. 
B) reducing marginal revenue. 
C) reducing unit variable cost. 
D) increasing fixed cost. 
E) increasing total cost. 
A) increasing the quantity sold, while keeping price unchanged. 
B) reducing marginal revenue. 
C) reducing unit variable cost. 
D) increasing fixed cost. 
E) increasing total cost.

Question 19

Factors that limit the range of prices a firm may set are referred to as

Accepted Answer

A) pricing restraints. 
B) pricing constraints. 
C) demand factors. 
D) pricing barriers. 
E) pricing restrictions. 
A) pricing restraints. 
B) pricing constraints. 
C) demand factors. 
D) pricing barriers. 
E) pricing restrictions.

Question 20

Creative marketers engage in value-pricing, which is the practice of simultaneously increasing product and service benefits while

Accepted Answer

A) increasing costs. 
B) increasing price. 
C) increasing advertising. 
D) decreasing costs. 
E) maintaining or decreasing price. 
A) increasing costs. 
B) increasing price. 
C) increasing advertising. 
D) decreasing costs. 
E) maintaining or decreasing price.

Exam 13: Building the Price Foundation

Which of the following statements about the product life cycle as a pricing constraint is most accurate?

At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a fraction of that amount. Today, those same Beanie Babies can be found at garage sales all over the country for less than a dollar apiece. This is most likely due to

A break-even chart is a graphic presentation

Elastic demand exists when

Pure monopoly is the competitive market situation where

Washburn Guitars markets its guitars to four distinct market segments. The firm's one-of-kind custom instruments are targeted at

Distinguish between elastic demand and inelastic demand.

Which of the following statements regarding a market share pricing objective is most accurate?

The sum of the firm's expenses that change with the quantity of the product that is produced and sold is referred to as

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as _________, is common in many firms because the targets can be set and performance measured quickly.

Pricing constraints refers to

If the CEO of the Clorox Co. were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a __________ pricing objective.

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and

Unit variable cost refers to variable cost expressed

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

Marketing executives must translate estimates of customer demand into estimates of

You are president of a manufacturer of small electric appliances. You want to reduce your break-even quantity. All things being equal, you can do this by

Factors that limit the range of prices a firm may set are referred to as

Creative marketers engage in value-pricing, which is the practice of simultaneously increasing product and service benefits while

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

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

Services Marketing

Arriving at the Final Price

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

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

Implementing Interactive and Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

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