Pricing

Question 1

consumers don’t necessarily want a low price all the time rather

Answer 1

they want a high value

Question 2

price is the only element of the marketing mix that does not generate _______ but instead generate _______

Answer 2

costs; revenue

Question 3

consumers may use the price of a product or service to judge

Answer 3

its quality, price is a powerful indicator of quality when consumers are less knowledgeable about the product quality

Question 4

5 C’s of pricing

Answer 4

customers, costs, company objectives, channel members, competition

Question 5

profit orientation

Answer 5

the firm focuses on target profit pricing, maximizing profits, or target return pricing

Question 6

target profit pricing applies when

Answer 6

the firm has a particular profit goal

Question 7

sales oriented firm

Answer 7

believes increasing sales helps the firm more than increasing profits, they think the overall market share better reflects their success than dollar sales

Question 8

competitive parity

Answer 8

setting prices that are similar to those of major competitors

Question 9

demand curve shows

Answer 9

how many units consumers will demand during a specific period of time at different prices

Question 10

the horizontal axis on the demand curve measures

Answer 10

the quantity demanded at a specific price

Question 11

the vertical axis on the demand curve displays

Answer 11

the price options

Question 12

why may a demand curve not curve downwards

Answer 12

customers purchase prestigious products for their status, demand increases while price increases to a point

Question 13

three demand influences on pricing decisions

Answer 13

demographic factors, psychological factors, price elasticity

Question 14

demographic factors

Answer 14

number of potential buyers their ages education and gender, location of potential buyers, position of potential buyers, expected consumption rate of potential buyers, economic strength of potential buyers

Question 15

psychological factors

Answer 15

how consumers will perceive various price of price changes

Question 16

three types of psychological pricing strategy

Answer 16

prestige pricing, odd pricing, bundle pricing

Question 17

price elasticity

Answer 17

measure of consumers price sensitivity

Question 18

price elasticity equation

Answer 18

percent change in quantity demanded divided by percent change in price

Question 19

oligopolistic competitive market

Answer 19

only a few firms dominate and they change their prices in reaction to competition to avoid upsetting and otherwise stable competitive environment

Question 20

price wars

Answer 20

when two or more firms compete primarily by lowering their prices

Question 21

competition

Answer 21

when many firms compete for customers in a given market but differentiate their products

Question 22

pure competition

Answer 22

different companies that consumers perceive as substitutes sell commodity products so price usually depends on the laws of supply and demand

Question 23

gray markets

Answer 23

employ irregular but not necessarily illegal methods by legally circumventing authorized distribution channels to sell goods at prices lower than those intended by the manufacturer

Question 24

high/low pricing

Answer 24

relies on the promotion of sales appeals to price sensitive and price insensitive

Question 25

market penetration pricing

Answer 25

low introductory price build sales, market share and profits quickly

Question 26

price skimming

Answer 26

selling a new product at a high price that innovators and early adopters are willing to pay

Question 27

premium pricing

Answer 27

deliberately setting your price above the price set for competing products

Question 28

steps in the general pricing model

Answer 28

1. set pricing objectives
2. evaluate products price relationship
3. estimate costs and other price limitations
4. analyze profit potential
5. set initial price structure
6. change price structure as needed