Chapter 14

Question 1

supply

Answer 1

the amounts of a product that will be offered for sale at different prices during a specified period
Generally, the higher the price, the more supply.

Question 2

demand

Answer 2

the amounts of a product that consumers will purchase at different prices during a specified time period
As the price goes down, demand goes up.

Question 3

Market equilibrium

Answer 3

Suppliers make just enough product and price it in such a way that consumers buy it all.

Question 4

elasticity

Answer 4

the measure of the responsiveness of purchasers and suppliers to price changes

Question 5

elasticity of demand

Answer 5

the percentage change in the quantity of a product demanded divided by the percentage change in its price

Question 6

Benefit/Limitation of Jury of Executive Opinion

Answer 6

Opinions from executives are cheap and inexpensive and can come from many different departments. BUT Managers may lack background knowledge and experience to make meaningful predictions
*Qualitative Method

Question 7

Benefit/Limitation of Delphi technique

Answer 7

A group of experts may predict long-term events such as technological breakthroughs. BUT Time-consuming,
Expensive.
*Qualitative Method

Question 8

Benefit/Limitation Sales force composite

Answer 8

Useful in predicting short-term and intermediate sales for firms that serve selected customers. BUT Intentions to buy may not result in actual purchases. Time-consuming,
Expensive.
*Qualitative Method

Question 9

Benefit/Limitation of the Test market

Answer 9

It provides realistic information on actual purchases rather than on intent to buy. BUT, Alerts competition to new product plans. Time-consuming and Expensive.
*Quantitative Method

Question 10

Benefit/Limitation of Trend analysis

Answer 10

Quick, Inexpensive, Effective with stable customer demand and environment. BUT, Assumes the future will continue the past Ignores possible changes in the marketing environment.
*Quantitative Method

Question 11

Three pricing Strategies

Answer 11

Skimming
Penetration
Competitive pricing

Question 12

skimming pricing strategies

Answer 12

intentionally setting a relatively high price compared with the prices of competing products.
Also known as market-plus pricing
Commonly used as a market-entry price for distinctive goods or services with little or no initial competition
When supply begins to exceed demand or competition catches up, the initial high price is dropped.

Question 13

penetration pricing strategy

Answer 13

setting a lower price than competitive offerings in order to stimulate demand and market acceptance.
Also known as market-minus pricing
Once the product achieves some recognition, marketers may increase the price to the level of competing products.

Question 14

competitive pricing strategy

Answer 14

pricing strategy designed to reduce the emphasis on price as a competitive variable by matching competitors’ prices and focusing on other ways to differentiate products

Question 15

Pricing Tactics

Answer 15

Psychological pricing
Product-line pricing
Promotional pricing

Question 16

Psychological Pricing

Answer 16

pricing tactic based on the belief that certain prices or price ranges make products more appealing to buyers

Question 17

product line pricing

Answer 17

pricing tactic where the firm sets a limited number of prices for a selection of merchandise

Question 18

promotional pricing

Answer 18

pricing tactic in which a lower-than-normal price is used as a temporary ingredient in a firm’s marketing strategy
Customers may get hooked on sales and other promotional pricing events.

Question 19

Loss leaders

Answer 19

pricing tactic where goods are priced below cost to attract customers to stores in hopes they will buy other merchandise at regular prices.

Question 20

Robinson-Patman Act

Answer 20

a Depression-era law that prohibits price discrimination when selling the same product in the same amount to two different customers
Rules that price differences must reflect actual cost differences
Prohibits selling at unreasonably low prices to drive competitors out of business

Question 21

price discrimination

Answer 21

when a supplier offers the same product to two buyers at two different prices

Question 22

unfair-trade laws

Answer 22

laws which require sellers to maintain minimum prices for comparable merchandise
The goal of these laws is to deter intentional predatory pricing by larger companies.