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PRICING STRATEGY > MIX REVIEW > Flashcards

MIX REVIEW Flashcards

1
Q

In elastic markets, how do small changes in price affect the quantity sold
according to the elasticity of demand?
- A. Small changes in price have no effect on quantity sold.
- B. Small changes in price lead to small changes in quantity sold.
- C. Small changes in price lead to a decrease in quantity sold.
- D. Small changes in price lead to large changes in quantity sold.

A

D

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2
Q

How does economic price optimization contribute to setting optimal prices
for maximizing profits?
- A. It identifies the price that balances the opposing influences and delivers
the maximum profits.
- B. It relies on fixed costs to determine the optimal price for maximizing
profits. -
C. It focuses on reducing prices to increase sales volume without regard to
profitability.
- D. It sets prices based on historical data without considering current
market conditions.

A

A

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3
Q

Consider a retailer considering a 33-percent-off sale on blenders currently
priced at ₱54. The retailer pays ₱29 per blender from the manufacturer. What
is the initial contribution margin?
- A. ₱ 20
- B. ₱ 83
- C. ₱ 25
- D. ₱ 33

A

A/C

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4
Q

In conjoint analysis, how are products treated in terms of attributes,
features, and benefits?
- A. As individual components
- B. As separate entities
- C. As unrelated elements
- D. As a bundle of attributes, features, and benefits

A

D

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5
Q

___________ is the most popular and academically sound approach to
measuring customer perceptions of value.
- A. Economic price optimization
- B. Conjoint analysis
- C. Exchange value calculators
- D. Market segmentation

A

B. CONJOINT ANALYSIS

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6
Q

What is the primary disadvantage of using pictorial representations in
conjoint analysis stimulus presentation?
- A. Complexity in interpretation
- B. Difficulty in data analysis
- C. Limited effectiveness in communicating attributes -
D. Costly to prepare and prese

A
  • A. Complexity in interpretation
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7
Q

What is the evaluation criterion commonly used in conjoint analysis studies
for more established markets?
- A. Preference evaluations
- B. Competitor analysis
- C. Intention to buy
- D. Market share estimation

A

C. Intention to buy

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8
Q

___________ are created by the introduction of the first product into a new
market.
- A. Evolutionary markets
- B. Revolutionary markets
- C. Financial markets
- D. Perfectly-competitive markets

A
  • B. Revolutionary markets
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9
Q

What does it mean to be priced to value?
- A. Not related to the benefits
- B. Priced lower than the perceived benefits
- C. Priced higher than the perceived benefits
- D. Aligned with the perceived benefits it delivers

A

D. Aligned with the perceived benefits it delivers

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10
Q

What is the purpose of penetration pricing when launching a new product?
- A. To maintain premium pricing.
- B. To maximize immediate profits
- C. To capture market share quickly
- D. To target niche markets

A
  • C. To capture market share quickly
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11
Q

What is the purpose of using promotional bundles in price promotions?
- A. To offer temporary discounts
- B. To sell multiple products at a single discounted price
- C. To increase prices for bundled products
- D. To target high-profit custome

A
  • B. To sell multiple products at a single discounted price
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12
Q

What are the four general qualitative rules for price promotion design?
- A. Random, frequent, common, consistent
- B. Targeted, temporary, special, irregular
- C. Specific, continuous, standard, predictable
- D. Broad, permanent, generic, regular

A
  • B. Targeted, temporary, special, irregular
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13
Q

Why are price promotions effective in generating increased sales?
- A. By reducing product quality
- B. By focusing on high-profit customers
- C. By offering the lowest prices -
D. By encouraging brand switching and increasing market size

A

D. By encouraging brand switching and increasing market size

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13
Q

Why should price promotions be targeted towards marginal customers?
- A. To maintain consistent pricing
- B. To reward loyal customers
- C. To encourage purchases from customers who would not buy otherwise
- D. To increase prices for high-profit customers

A
  • C. To encourage purchases from customers who would not buy otherwise
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14
Q

What is the purpose of the price waterfall analysis in discount management?
- A. To uncover potential drivers to discounting.
- B. To identify the magnitude of the impact of specific types of discounts
- C. To combine explicit knowledge with tacit knowledge
- D. To uncover relationships between the form of price discounts and
customer price sensitivity

A
  • B. To identify the magnitude of the impact of specific types of discounts
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15
Q

What are the carrots and sticks that can be used to encourage better discounting decisions?
- A. Incentives for centralized executives to create products with strong demand at high prices
- B. Halting all discounts to prevent abuse
- C. Limiting decision-making rights within the organization
- D. Performance incentives based on volume, revenue, or profits

A
  • D. Performance incentives based on volume, revenue, or profits
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16
Q

How can senior executives monitor and manage thousands of individual discounting decisions at a high level?
- A. By restricting discount decision rights and altering decision incentives
- B. By shifting sales incentives from volume to revenue
- C. By halting all discounts to prevent abuse
- D. By connecting explicit knowledge with implicit knowledge

A
  • A. By restricting discount decision rights and altering decision incentives
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17
Q

Question 18:
Should every discount decision be made routine through quantitative analysis and checklists?
- A. Yes, to streamline the discounting process
- B. No, as it may lead to increased complexity
- C. Yes, to ensure consistency in discounting decisions
- D. No, as some decisions require a more nuanced approach

A
  • D. No, as some decisions require a more nuanced approach
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18
Q

How can organizations improve independent decision-making regarding discounts?
- A. By implementing routine quantitative analysis and checklists
- B. By connecting explicit knowledge with implicit knowledge
- C. By halting all discounts to prevent abuse
- D. By restricting discount decision rights and altering decision incentives

A
  • B. By connecting explicit knowledge with implicit knowledge
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19
Q

What is the role of field executives in making discounting decisions within an organization?
- A. To make field decisions, including discounting decisions
- B. To align incentives with organizational goals
- C. To monitor and manage discounting decisions at a high level
- D. To set discount policies based on market segmentation

A
  • A. To make field decisions, including discounting decisions
20
Q

Its aim is to maximize firm profits through creating and capturing customers.
- A. Profit
- B. Strategy
- C. Pricing Strategy
- D. Pricing

A
  • C. Pricing Strategy
21
Q

Question 22:
What is the importance of setting the right price?
- A. Impacts customer preferences
- B. Directly affects the profits of a firm
- C. Affects customer loyalty
- D. Influences market share

A
  • B. Directly affects the profits of a firm
22
Q

Assume that a firm produces a consumer product at a variable cost of ₱7.25 and has fixed costs of ₱75,000 per month. Currently, the firm sells 14,000 units per month priced at ₱14 per unit. What is the current profitability of the firm?
- A. ₱20,000
- B. ₱19,500
- C. ₱20,500
- D. ₱19,000

A
  • A. ₱20,000
  • B. ₱19,500
23
Q

What are the extreme boundaries that define the range of acceptable prices?
- A. Marginal cost and consumer utility
- B. Reference Value
- C. Exchange value
- D. Differential value

A
  • A. Marginal cost and consumer utility
24
Q

Price as the value that the firm captures in a _________ beneficial exchange with its customers.
- A. exclusively
- B. uniquely
- C. mutually
- D. independently

A
  • C. mutually
25
Q

Refers to the act of gathering information, conducting quantitative analysis, and accurate understanding that prices are likely to yield positive results.
- A. Art of Pricing
- B. Science of Pricing
- C. Pricing Data
- D. Science of Profit

A
  • B. Science of Pricing
26
Q

How can executives determine the exchange value of a new product?
- A. Customer utility minus marginal costs
- B. Average unit cost of production
- C. Price of comparable alternative plus differential value
- D. Fixed costs plus variable costs

A
  • C. Price of comparable alternative plus differential value
27
Q

What is the relationship between the elasticity of demand and the volume hurdle in pricing decisions?
- A. The elasticity of demand influences the cost-benefit analysis, while the volume hurdle guides strategic pricing decisions
- B. The elasticity of demand sets the profit margin, while the volume hurdle determines the cost structure
- C. The elasticity of demand determines the optimal price, while the volume hurdle sets the maximum allowable price
- D. The elasticity of demand predicts the expected volume change, while the volume hurdle defines the required change in volume to justify a price change

A
  • D. The elasticity of demand predicts the expected volume change, while the volume hurdle defines the required change in volume to justify a price change
28
Q

What is the primary purpose of conducting a profit sensitivity analysis in pricing decisions?
- A. To determine the effect of cost changes on profits and optimize pricing strategies
- B. To evaluate the impact of price changes on profitability and understand the relationship between prices and profits
- C. To analyze the elasticity of demand and predict customer behavior in response to price changes
- D. To identify the optimal price that maximizes profits and minimizes costs

A
  • B. To evaluate the impact of price changes on profitability and understand the relationship between prices and profits
29
Q

What is the primary reason why volume hurdles are considered a necessary but insufficient condition for evaluating pricing actions?
- A. Volume hurdles are based on inaccurate data sources
- B. Volume hurdles do not account for competitive reactions or changes in customer demand
- C. Volume hurdles are too complex to calculate accurately
- D. Volume hurdles are sufficient for making pricing decisions

A

B. Volume hurdles do not account for competitive reactions or changes in customer demand

30
Q

Price ________ may also communicate a message, such as being priced cheaply or being lucky, depending upon cultural influences.
- A. beginnings
- B. sensitivity
- C. endings
- D. capture

A
  • C. endings
31
Q

What is the term for the tendency of people to overestimate their ability to modify their behavior positively?
- A. The Endowment Effect
- B. The Fairness Effect
- C. The Bias Effect
- D. The Overconfidence Effect

A
  • D. The Overconfidence Effect
32
Q

What effect describes the tendency for customers to refer to the last price they paid when forming expectations about future prices?
- A. The Reference Price Effect
- B. The Endowment Effect
- C. The Fairness Effect
- D. The Diminishing Sensitivity Effect

A
  • A. The Reference Price Effect
33
Q

What is the term for the tendency of customers to perceive more value in something once they possess it?
- A. The Endowment Effect
- B. The Fairness Effect
- C. The Diminishing Sensitivity Effect
- D. The Reference Price Effect

A
  • A. The Endowment Effect
34
Q

What effect describes the tendency for people to avoid losses away from their point of reference and discount gains above the reference point?
- A. The Risk Aversion Effect
- B. The Endowment Effect
- C. The Status Quo Bias
- D. The Diminishing Sensitivity Effect

A
  • D. The Diminishing Sensitivity Effect
35
Q

______________ is charging different prices to different customers or groups of customers.
- A. Price discount
- B. Price hike
- C. Price Segmentation
- D. Price-cut

A
  • C. Price Segmentation
36
Q

What is the primary purpose of a price promotion?
- A. To maintain consistent pricing
- B. To attract new customers only
- C. To segment prices based on willingness to pay
- D. To increase overall market share

A
  • D. To increase overall market share
37
Q

How do price promotions impact customer behavior?
- A. By encouraging brand switching only
- B. By maintaining consistent pricing
- C. By increasing price sensitivity and shifting focus to price
- D. By improving product quality and loyalty

A
  • C. By increasing price sensitivity and shifting focus to price
38
Q

What is the primary challenge of determining the effectiveness of price promotions?
- A. Determining the profit margins of price promotions
- B. Identifying the right number and depth of price promotions
- C. Calculating the total cost of price promotions
- D. Measuring the redemption rates of coupons

A
  • B. Identifying the right number and depth of price promotions
39
Q

Why are rebates considered a good segmentation hedge in price promotions?
- A. Because they require customers to complete a form and mail it in
- B. Because they have high redemption rates
- C. Because they target high-profit customers
- D. Because they offer instant discounts

A
  • A. Because they require customers to complete a form and mail it in
40
Q

How does dispersion in perceived price and benefits affect customer purchasing decisions?
- A. It can result in missed profit opportunities and customer dissatisfaction
- B. It has no impact on customer decisions
- C. It leads to increased sales volume
- D. It improves customer loyalty

A
  • A. It can result in missed profit opportunities and customer dissatisfaction
41
Q

What is the role of perceived value in customer purchasing decisions?
- A. It only affects customer loyalty
- B. It is the sole factor in purchasing decisions
- C. It significantly influences customer purchasing decisions
- D. It has no impact on purchasing decisions

A
  • C. It significantly influences customer purchasing decisions
42
Q

Products are positioned according to their perceived prices.
- A. Value Equivalence Line
- B. Value Advantaged Positioning
- C. Price to Benefits Map
- D. Value Disadvantaged Positioning

A
  • C. Price to Benefits Map
43
Q

It is launching a new product at a low price in comparison to its benefits.
- A. Price Skimming
- B. Penetration Pricing
- C. Price Neutral Position
- D. Price Positioning

A
  • B. Penetration Pricing
44
Q

How does a company benefit from positioning a new product within the zone of indifference?
- A. It reduces customer interest
- B. It targets customers based on loyalty
- C. It increases production costs
- D. It allows the company to use other marketing factors to capture customers

A
  • D. It allows the company to use other marketing factors to capture customers
45
Q

What is the primary strategy behind price skimming when launching a new product?
- A. To target budget-conscious customers
- B. To capture profits from early customers
- C. To maximize market share
- D. To maintain low pricing

A
  • B. To capture profits from early customers
46
Q

How are products positioned on a map according to their perceived prices and benefits?
- A. Based on their brand reputation
- B. Based on their production costs
- C. Based on their market share
- D. Based on their perceived prices and benefits

A
  • D. Based on their perceived prices and benefits
47
Q

What effect describes the perception that losses weigh heavier than gains in decision making?
- A. Risk Aversion
- B. Diminishing Sensitivity
- C. Status Quo Bias
- D. Loss Aversion

A
  • D. Loss Aversion
48
Q

According to prospect theory, what weighs heavier in decision making: losses or gains?
- A. Both equally
- B. Depends on the context
- C. Losses
- D. Gains

A
  • C. Losses

PRICING STRATEGY (1 decks)

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