Exam 2 Flashcards
Which of the following is true with regard to price?
Historically, price has had the least perceptible impact on buyer choice.
What sets the floor for product prices?
product costs
Cost-plus pricing ________.
involves adding a standard markup for profit
Herbie Inc., a firm manufacturing sandwich makers, has fixed costs of $250,000, variable costs of $20 per unit of output, and expected unit sales of 50,000 units. What is the unit cost of a sandwich maker manufactured by Herbie?
$25
Target return pricing is a variation of which of the following cost-oriented pricing approaches?
break-even pricing
The break-even volume is the point at which ________.
the total revenue and total cost curves intersect
Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?
125,000
A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer’s unit cost be in order to break even?
$12
Which of the following is an internal factor that affects pricing decisions in a company?
the overall marketing strategy of the company
If demand hardly changes with a small change in price, the demand is ________.
inelastic
Buyers are less price sensitive when ________.
the product they are buying is unique
There was a 35 percent increase in demand for a product after the seller decreased its price by 14 percent. Therefore, the price elasticity of demand is ________.
-2.5
Price elasticity of demand is represented by ________ divided by ________.
percentage change in quantity demanded; percent change in price
Which of the following is true with regard to pure competition?
Under pure competition, no single buyer or seller has much effect on the going market price.
Under ________, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price.
monopolistic competition
Companies which set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.
market-penetration pricing
Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?
market-penetration pricing
Which of the following is true of product line pricing?
The price steps take cost differences between products in the line into account.
Which of the following companies uses product line pricing?
Mobile Point, which launched a range of cell phone models, each priced according to its features
Which of the following is true of optional product pricing?
It involves pricing accessory products sold with the main product
Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two of the firm’s models share the same specifications. What type of pricing does Multiprint use?
captive product pricing
Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.
by-product
Which of the following product mix pricing strategies involves pricing multiple products to be sold together?
product bundle pricing
Which of the following is a price adjustment strategy?
discount and allowance pricing
Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly?
cash discount
A(n) ________ refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.
allowance
________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.
Promotional
Which term refers to prices that buyers carry in their minds and check with when they look at a given product?
reference prices
What type of pricing is being used when a company temporarily prices its product below the list price to create buying excitement and urgency?
promotional pricing
The Internet offers ________, where the price can easily be adjusted to meet changes in demand.
dynamic pricing
Which of the following is true of FOB-origin pricing?
It is an expensive alternative for customers in distant locations.
When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.
maintain its current prices and profit margin
When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.
price fixing
If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.
predatory pricing
________ occurs when a seller states price savings that are not actually available to consumers.
Deceptive pricing
Thinking Cap Corp. prices its various cap designs at different price levels, ranging from $2.05 to $5.95. This is an example of optional product pricing.
False
Consumers who have no past experience with a product are especially likely to judge it by its price.
True
In segmented pricing, the difference in prices is based on differences in costs.
False
A ________ is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
marketing channel
________ play an important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities.
intensive distribution
Lifebelt Insurance sells insurance only through its door-to-door salespeople. What type of marketing channel does Lifebelt use?
direct
Plasticine Palace supplies its products exclusively to Arts & Crafts, a chain of stationery stores across the country. The chain then makes the plasticine available to end-consumers. This is an example of ________.
disintermediation
The greater the number of channel levels in a marketing channel, the ________.
greater the channel complexity
Conflict which occurs among firms at the same level of the marketing channel is known as ________ conflict.
horizontal
Managers at the Imperial Hotel-Chicago complained that the chain’s overall image was hurt because Imperial Hotel-Dallas was overcharging guests and providing poor service. The Imperial Hotel was experiencing ________ conflict
horizontal
When KFC came into conflict with its franchisees over the brand’s “Unthink KFC” repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken, KFC experienced ________ conflict.
vertical
Which of the following is true of conventional distribution channels?
Channel members seek to maximize their own profits.
A(n) ________ marketing system consists of producers, wholesalers, and retailers acting as a unified system.
vertical
Movie Giants offers DVD rentals through its Web site. It also offers DVD rentals via Star City stores. This is an example of a(n)________ distribution system.
multichannel
Which of the following is a disadvantage of adding new channels in a multichannel distribution system?
decreasing control over the system
________ occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.
Disintermediation
The Bookworm began delivering books directly to customers through mail instead of selling through “brick-and-mortar” companies. This is an example of ________.
disintermediation
________ distribution is a strategy in which producers of convenience products and raw materials stock their products in as many outlets as possible.
Intensive
Whitelight stocks its toothpastes in all convenience stores across the country. This is an example of ________ distribution.
intensive
With which of the following strategies would a company give only a limited number of dealers the right to distribute its products in their territories?
exclusive distribution
For which of the following would a company use an exclusive distribution strategy?
luxury cars
When a seller requires its dealers to abstain from handling competitors’ products, it is called ________.
exclusive dealing
________ management refers to the management of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
Supply chain
Which of the following is NOT a major logistics function?
product designing
Producers use intermediaries because they create greater efficiency in making goods available to target markets.
True
