Chapter 14

Question 1

Value

Answer 1

Ratio of bundle of benefits a customer receives from an offering compared to the costs he/she incurs by acquiring

Question 2

Price

Answer 2

A monetary value and key determinant of perceived value

Question 3

Pricing objectives

Answer 3

Desired or expected result associated w/ a pricing strategy

Question 4

Elements of Pricing Decisions

Answer 4

Est. Pricing objectives, select pricing tactics, set exact price, determine channel discounts/allowances, execute price changes, understood legal considerations

Question 5

Market share increase?

Answer 5

Penetration pricing, useful if consumers are price sensitive (cars)

Question 6

Market entry at highest initial price point

Answer 6

Price skimming, useful for quality/prestige perceptions

Question 7

Profit maximization price?

Answer 7

Target ROI

Question 8

Value pricing

Answer 8

overtly attempts to take into account the role of price as it reflects the bundle of benefits sought/perceived by customer

Question 9

Product Line Pricing

Answer 9

Price points based on the position of the offering within the product line. (First class vs. business class)

Question 10

Complimentary pricing

Answer 10

Printers/Ink

Question 11

Price Bundling

Answer 11

Cable Companies

Question 12

Reference Pricing

Answer 12

MSRP vs. advertised price

Question 13

Cost-Plus Pricing

Answer 13

Markup on cost, simplistic and cost allocation - can be difficult to accurately determine

Question 14

Average-Cost Pricing

Answer 14

Total cost divided by forecast demand - then add desired profit margin

Question 15

Discounts

Answer 15

Direct, immediate reductions in price provided to purchasers

Question 16

Allowances

Answer 16

Remit monies to purchasers after the fact (rebates)

Question 17

A change in price…

Answer 17

…can dramatically impact the effectiveness of the overall marketing mix variables in reflecting your offering’s positioning in the eyes of customers.

Question 18

Deceptive Pricing

Answer 18

Bait and switch, car ads, same price, but fewer ounces?

Question 19

Predatory Pricing

Answer 19

INTENT to push competitor out of market…below cost prices followed by new highs.