Ch.10

Question 1

Price is the only part of the marketing mix that actually makes money (T/F)

Answer 1

True

Question 2

basic problem solving benefits consumers are seeking

Answer 2

core customer value

Question 3

the physical good or delivered service that supplies the core benefit

Answer 3

actual product

Question 4

nonphysical aspects and associated services of the product

Answer 4

augmented product

Question 5

(price * quantity) - total cost = ___

Answer 5

profit

Question 6

overall value consumers are willing to exchange or sacrifice to acquire a product

Answer 6

price

Question 7

product price, taxes, shipping costs, travel costs

Answer 7

monetary

Question 8

time, effort, opportunity costs

Answer 8

nonmonetary

Question 9

• cost (variable or fixed)
• competition
• stage in product lifecycle
• promotion strategy
• perceived quality
• distribution strategy
• target market’s demand

Answer 9

determinants of price

Question 10

shows how much customers will buy at different prices (assuming all else remains that same)

Answer 10

demand curve

Question 11

upward-sloping curves due to perceived quality, status, and exclusivity conveyed by price

Answer 11

prestige products

Question 12

sensitivity of customers to price changes in terms of the quantities they will buy

Answer 12

price elasticity

Question 13

small percent changes in $$ leads to large percent changes in number of units bought

Answer 13

elastic (sensitive)

Question 14

large percent changes in $$ lead to small percent changes in number of units bought

Answer 14

inelastic (insensitive)

Question 15

Consumers are more sensitive to price increases, than decreases (t/f)

Answer 15

True

Question 16

prices will more likely increase quickly as a response to a market shock (ex: war in Ukraine), but then decrease slowly in recovery

Answer 16

rocket and feather

Question 17

charging difference prices based on type of customer, time of day, day of week, season, or demand

Answer 17

dynamic pricing

Question 18

price is decision variable set to maximize firm profitability

Answer 18

firm perspective

Question 19

price is set based on the perceived value of the product/service to the customer

Answer 19

customer perspective

Question 20

1. Design a good product
2. Determine product costs
3. Set price based on costs
4. Convince buyers of products value

Answer 20

cost-based pricing

Question 21

1. Assess customer needs and value perceptions
2. Set target price to match customer perceived value
3. Determine costs that can be incurred
4. Design product to deliver desired value at target price

Answer 21

value-based pricing

Question 22

setting prices based on competitor’s strategies, costs, prices, and market offerings

Answer 22

competitor-driven pricing

Question 23

when product is introduced, set a low initial price with the goal of quickly building sales, market share, and profits

Answer 23

market penetration

Question 24

when product is introduced, set a high initial price with goal of “skimming” revenue layers from market

Answer 24

price skimming

Question 25

-quickly gain market entry and market share - discourage competition from entering market - when implemented successfully, your sales volume can offset the income you lose because of your low prices

Answer 25

benefits of market penetration

Question 26

- firms must have capacity to satisfy rapid increase in demand - low price many be interpreted as signal of low quality - could be "leaving money on the table"

Answer 26

disadvantages of market penetration

Question 27

- can signal high quality to the market - potential to quickly earn back R&D invested into product - tests price sensitivity

Answer 27

benefits of price skimming

Question 28

- undermined if it becomes easy for competitors to enter market - product quality/image and consumer demand must support the price - high costs of producing small volumes - consumers who purchased at higher $ may be irritated when $ drops

Answer 28

disadvantages of price skimming

Question 29

consumers have a set price or price range in their mind

Answer 29

internal reference prices

Question 30

global impression of the overall price level of a store (ex: Walmart compared to Neiman Marcus)

Answer 30

retailer price image

Question 31

a psychological pricing tactic in which numeric value is utilized to affect the customer's perception of product value

Answer 31

odd/even pricing

Question 32

most inexperienced consumers use price as an indicator of quality, price becomes crucial when consumers have little knowledge about certain products/brands

Answer 32

price-quality relationship

Question 33

stressing continuity of prices (at non-sale to discount prices)

Answer 33

everyday low pricing

Question 34

using temporary price reductions to encourage sales

Answer 34

high/low pricing

Question 35

group of products or services sold as a single unit

Answer 35

bundle

Question 36

no bundling/sold separately

Answer 36

PC/pure components

Question 37

can only get the individual items as a bundle

Answer 37

PB/pure bundling

Question 38

individual items are also available separately

Answer 38

MB/mixed bundling

Question 39

good/services sold below cost to encourage sales elsewhere

Answer 39

loss leader pricing

Question 40

reference prices that have been inflated or are fictitious and could harm consumers

Answer 40

deceptive reference prices

Question 41

lure customer in with low price (bait) and then pressuring them to a higher-priced option (switch)

Answer 41

bait and switch

Question 42

setting very low price for purpose of driving competitors out of business

Answer 42

predatory pricing

Question 43

manufacturers/wholesalers cannot charge a different price to different retailers, discounts must be equitable

Answer 43

robinson-patman act

Question 44

colluding with other firms to control prices

Answer 44

price fixing

Question 45

competitors work together to control prices

Answer 45

horizontal price fixing

Question 46

marketing channel members work together to control prices

Answer 46

vertical price fixing

Question 47

_____ uses buyers perceptions of value as the key to pricing.

Answer 47

customer value-based pricing

Question 48

The goal of the competition-based pricing is not to ______ or _____ competitor's price

Answer 48

match, beat

Question 49

______ reverses the usual process of first designing a new product, determining its cost, and then asking "can we sell it for that?"

Answer 49

target costing

Question 50

Under ____, the market consists of many buyers and sellers trading in a uniform commodity

Answer 50

pure competition