Chapter 13: Marketing Channles

Question 1

Price

Answer 1

Overall sacrifice a consumer is willing to make to acquire a specific product or service

Question 2

Profit Orientation

Answer 2

Firms implement a profit orientation specifically by focusing on target profit pricing, maximizing profits or target return pricing

Question 3

Target Profit Pricing

Answer 3

Firms usually implement target profit pricing when they have a particular profit goal as their overriding concern

Question 4

Maximizing Profits

Answer 4

The maximizing profits strategy relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized

Question 5

Target Return Pricing

Answer 5

Firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments turn to target return pricing

Question 6

Sales Orientation

Answer 6

Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits

Question 7

Premium Pricing

Answer 7

Means the firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter

Question 8

Competitor Orientation

Answer 8

When firms take a competitor orientation, they strategize according to the premise that they should measure themselves primarily against their competition

Question 9

Competitive Parity

Answer 9

Means they set prices that are similar to those of their major competitors

Question 10

Status Quo Pricing

Answer 10

Changes prices only to meet those of the competition

Question 11

Customer Orientation

Answer 11

Explicitly invokes the concept of value. Sometimes a firm may attempt to increase value by focusing on customer satisfaction and setting prices to match consumer expectations

Question 12

Demand Curve

Answer 12

Shows how many units of a product or service consumers will demand during a specific period of time at different prices

Question 13

Prestige Products or Services

Answer 13

Products or services which consumers purchase for their status rather than their functionality

Question 14

Price Elasticity of Demand

Answer 14

Measures how changes in a price affect the quantity of the product demand

Question 15

Elastic

Answer 15

Relativity small changes in price will generate fairly large changes in the quantity demanded, so if a firm is trying to increase sales, it can do so by lowering prices

Question 16

Inelastic

Answer 16

Generally, if a firm must raise prices, it is helpful to do so with inelastic products or services because in such a market, fewer customers will stop buying or reduce their purchases

Question 17

Income Effect

Answer 17

Refers to the change in the quantity of a product demanded by consumers due to a change in their income

Question 18

Substitution Effect

Answer 18

Refers to consumers’ ability to substitute other products for the focal brand. The greater the availability of substitute products, the higher the price of elasticity of demand for any given product will be