Final exam 487 - Assignment Essays

question

* pricing decisions determine the types of ______ and ______ a firm attracts

answer

customers and competitors

question

a single pricing error can effectively ________ all other marketing mix activities

answer

nullify

question

* price affects the ________ and hence ______ because it directly affects both revenues and costs

answer

quantity sold and profit

question

Pricing Objectives

answer

- be consistent with a firm's overall marketing objectives including
- enhancing brand image
providing customer value
- obtaining adequate ROI or cash flow

question

greater price discretion exists

answer

earlier than later in the life cycle

question

* the price differentials of a firm's offerings to maintain perceived _______________ ________ among buyers

answer

value differences

question

value is the

answer

ration of perceived benefits to price

question

* consumers (automatically pr consciously) pair price with the perceived benefits

answer

derived from an offering to determine value

question

value=

answer

perceived benefits/price

question

* perception of quality

answer

price influencing consumers

question

* price affects consumer perceptions of

answer

prestige

question

as the price for an item increases

answer

the demand for it rises (scarcity)

question

* consumers determine value by judging the ____ and _____ of an offering relative to _____ that satisfy the same need

answer

worth and desirability/ substitutes

question

comparing the costs and benefits of substitute items gives rise to a

answer

"reference value"

question

* pricing private brands more then 20 to 25 percent below manufacturers brands causes

answer

consumers to view the lower price as an indicator for lower quality

question

price elasticity of demand

answer

measurers how responsive consumer demand is to changes in an offering's price

question

Price elasticity of demand (E)

answer

percentage change in quantity demanded/percentage change in price

question

* elastic demand

answer

the percentage change in quantity demanded is GREATER than the percentage change in price

question

* A small price reduction will result in a _____ increase in the quantity purchased and as a result total revenue will _____ ______

answer

large/rise significantly

question

* inelastic demand

answer

the percentage change in quantity demanded is LESS than the percentage change in price

question

* a small price reduction will result in a _____ increase in the quantity purchased , as a result, total revenue will rise very little

answer

small

question

Example of inelastic demand

answer

concert tickets to your favorite artist (monopoly)

question

example of elastic demand

answer

airline tickets, high competition, no monopoly

question

full-cost price strategies

answer

those that consider both variable and fixed costs (also called direct and indirect costs)

question

variable-costs price strategies

answer

those that take into account only the direct variable costs associated with an offering

question

*short-term,

answer

the relevant costs are variable, not total

question

*variable unit cost represents the

answer

minimum selling price

question

full cost price strategies

answer

- mark-up pricing
- break-even pricing
- rate-of-return pricing

question

markup pricing

answer

is determined simply by adding a fixed amount to the cost of the offering

question

break-even pricing

answer

equals the par-unit fixed costs plus the per unit variable costs of an offering

question

rate-of-return pricing

answer

Obtain a pre-specified rate of return on investment (ROI) for the organization.

question

variable cost price strategies are also known as

answer

contribution pricing

question

variable-cost price strategies are used when

answer

a firm operates under capacity and fixed costs are a great proportion of total costs

question

assumptions of variable-cost price strategies : ______, the relevant costs are variable, not total

answer

short-term

question

variable unit cost represents the _________ _____ _______

answer

minimum selling price

question

any price above this _____ contributes to fixed and profit

answer

minimum

question

fixed cost incurred whether or not an

answer

offering is sold

question

the incremental variable costs of serving one more customer are ______

answer

minimal

question

shift demand, may use different price schedules to shift

answer

behavior

question

conceptual new-offering pricing strategies are:

answer

-skimming pricing strategy
-penetration pricing strategy
-intermediate pricing strategy

question

skimming pricing strategy

answer

the price for a new offering is set very high initially and is typically reduced over time

question

penetration pricing strategy

answer

an offering is introduced at al low price

question

intermediate pricing strategy

answer

The price is set between the two extremes and is used in the vast majority of initial pricing decisions

question

skimming pricing strategy is appropriate for a new offering if:

answer

- it can be protected by patent or copyright
- the firm wants to quickly recoup its investment or fund other projects
- there is a realistic perceived value in it

question

marketers are advised to

answer

"look forward and reason backward" by envisioning patterns of future pricing moves, likely outcomes, and competitor countermoves

1 of 45

question

* pricing decisions determine the types of ______ and ______ a firm attracts

answer

customers and competitors

question

a single pricing error can effectively ________ all other marketing mix activities

answer

nullify

question

* price affects the ________ and hence ______ because it directly affects both revenues and costs

answer

quantity sold and profit

question

Pricing Objectives

answer

- be consistent with a firm's overall marketing objectives including
- enhancing brand image
providing customer value
- obtaining adequate ROI or cash flow

question

greater price discretion exists

answer

earlier than later in the life cycle

question

* the price differentials of a firm's offerings to maintain perceived _______________ ________ among buyers

answer

value differences

question

value is the

answer

ration of perceived benefits to price

question

* consumers (automatically pr consciously) pair price with the perceived benefits

answer

derived from an offering to determine value

question

value=

answer

perceived benefits/price

question

* perception of quality

answer

price influencing consumers

question

* price affects consumer perceptions of

answer

prestige

question

as the price for an item increases

answer

the demand for it rises (scarcity)

question

* consumers determine value by judging the ____ and _____ of an offering relative to _____ that satisfy the same need

answer

worth and desirability/ substitutes

question

comparing the costs and benefits of substitute items gives rise to a

answer

"reference value"

question

* pricing private brands more then 20 to 25 percent below manufacturers brands causes

answer

consumers to view the lower price as an indicator for lower quality

question

price elasticity of demand

answer

measurers how responsive consumer demand is to changes in an offering's price

question

Price elasticity of demand (E)

answer

percentage change in quantity demanded/percentage change in price

question

* elastic demand

answer

the percentage change in quantity demanded is GREATER than the percentage change in price

question

* A small price reduction will result in a _____ increase in the quantity purchased and as a result total revenue will _____ ______

answer

large/rise significantly

question

* inelastic demand

answer

the percentage change in quantity demanded is LESS than the percentage change in price

question

* a small price reduction will result in a _____ increase in the quantity purchased , as a result, total revenue will rise very little

answer

small

question

Example of inelastic demand

answer

concert tickets to your favorite artist (monopoly)

question

example of elastic demand

answer

airline tickets, high competition, no monopoly

question

full-cost price strategies

answer

those that consider both variable and fixed costs (also called direct and indirect costs)

question

variable-costs price strategies

answer

those that take into account only the direct variable costs associated with an offering

question

*short-term,

answer

the relevant costs are variable, not total

question

*variable unit cost represents the

answer

minimum selling price

question

full cost price strategies

answer

- mark-up pricing
- break-even pricing
- rate-of-return pricing

question

markup pricing

answer

is determined simply by adding a fixed amount to the cost of the offering

question

break-even pricing

answer

equals the par-unit fixed costs plus the per unit variable costs of an offering

question

rate-of-return pricing

answer

Obtain a pre-specified rate of return on investment (ROI) for the organization.

question

variable cost price strategies are also known as

answer

contribution pricing

question

variable-cost price strategies are used when

answer

a firm operates under capacity and fixed costs are a great proportion of total costs

question

assumptions of variable-cost price strategies : ______, the relevant costs are variable, not total

answer

short-term

question

variable unit cost represents the _________ _____ _______

answer

minimum selling price

question

any price above this _____ contributes to fixed and profit

answer

minimum

question

fixed cost incurred whether or not an

answer

offering is sold

question

the incremental variable costs of serving one more customer are ______

answer

minimal

question

shift demand, may use different price schedules to shift

answer

behavior

question

conceptual new-offering pricing strategies are:

answer

-skimming pricing strategy
-penetration pricing strategy
-intermediate pricing strategy

question

skimming pricing strategy

answer

the price for a new offering is set very high initially and is typically reduced over time

question

penetration pricing strategy

answer

an offering is introduced at al low price

question

intermediate pricing strategy

answer

The price is set between the two extremes and is used in the vast majority of initial pricing decisions

question

skimming pricing strategy is appropriate for a new offering if:

answer

- it can be protected by patent or copyright
- the firm wants to quickly recoup its investment or fund other projects
- there is a realistic perceived value in it

question

marketers are advised to

answer

"look forward and reason backward" by envisioning patterns of future pricing moves, likely outcomes, and competitor countermoves

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