Chapter 9

Question 1

Price

Answer 1

The amount of money charged for a product or service, or the sum of the values consumers exchange for he benefits of having or using the product or service

Question 2

Customer value-based pricing

Answer 2

Setting the price based on buyers’ perceptions of value, rather than on the seller’s cost

Question 3

Good-value pricing

Answer 3

Offering just the right combination of quality and good service that customers want at a fair price

Question 4

Value-added pricing

Answer 4

Rather than cutting prices to match competitors’ prices, marketers adopting this strategy attach value-added features and services to differentiate their offerings and this supports higher prices

Question 5

Cost-based pricing

Answer 5

Setting prices based on the costs for producing, distributing and selling the product, plus a fair rate of return for its effort and risk

Question 6

Fixed costs

Answer 6

Costs that do not vary with production or sales level

Question 7

Variable costs

Answer 7

Costs that vary directly with the level of production

Question 8

Total costs

Answer 8

The sum of the fixed and variable costs for any given level of production

Question 9

Cost-plus pricing

Answer 9

Adding a standard markup to the cost of the product

Question 10

Breakeven pricing

Answer 10

Setting the price to break even on the costs of making and marketing a product, or to make the desired profit

Question 11

Competition-based pricing

Answer 11

Setting prices based on competitors’ strategies, costs, prices and market offerings

Question 12

Target costing

Answer 12

Starts with an ideal selling price based on customer-value considerations and then targets costs that will ensure that the price is met