Chapter 13

Question 1

Pricing constraints

Answer 1

Factors that limit the latitude of price a firm may set

Question 2

Pricing objectives

Answer 2

Expectations that specify the role of price in an organization’s marketing and strategic plans

Question 3

Price elasticity of demand

Answer 3

The percentage change in quantity demanded relative to a percentage change in price

Question 4

Penetration pricing

Answer 4

Setting a low initial price on a new product to appeal immediately to the mass market

Question 5

Prestige Pricing

Answer 5

Setting a high price on a product to attract quality or status conscious of consumers

Question 6

Skimming Pricing

Answer 6

The highest initial price that customers really desiring a product are willing to pay

Question 7

odd-even pricing

Answer 7

Setting prices a few dollars or cents under an even number

Question 8

Bundle Pricing

Answer 8

The marketing of two or more products in a single “package” price

Question 9

Target Pricing

Answer 9

The practice of deliberately adjusting the composition and features of a product to achieve the target price to consumers

Question 10

yield management pricing

Answer 10

The charging of different prices to maximize revenue for a set amount of capacity at any given time

Question 11

Standard Mark-up pricing

Answer 11

Adding a fixed percentage to the cost of all items in a specific product class

Question 12

Cost-PLus Pricing

Answer 12

summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price

Question 13

Target Profit Pricing

Answer 13

Pricing method based on an annual target of a specific dollar volume of profit

Question 14

Experience curve pricing

Answer 14

Pricing method based on production experience; that is, the unit cost of many products and services declines by 10 to 30 percent each time a firm’s experience at producing and selling them doubles.

Question 15

target return on sales pricing

Answer 15

Setting typical prices that will give a firm a profit that is a specific percentage

Question 16

Target return on investment pricing

Answer 16

Setting prices to achieve a return on investment targets

Question 17

Customary pricing

Answer 17

Setting prices dictated by tradition standardized channels of distribution or other competitive factors

Question 18

above-at-or below market pricing

Answer 18

Setting prices based on pricing of similar products in the market