question
A product under nonprice competition would most likely not succeed in the market if
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it is easy to duplicate
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If a company provides price differentials that harm competition by giving one or more buyers a competitive advantage, it is committing
answer
price discrimination
question
Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson's Entertainment by 10 percent to allow for expenses associated with Robertson's promoting the games to consumers. This is an example of a ____ discount.
answer
trade
question
Markum Industries determines that for its air compressors the following results are achieved at a price of $250: total costs = $250,000; variable costs per unit = $100; fixed costs = $175,000. Given these figures, Markum would break even at ____ units.
answer
1167
question
If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where
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Marginal Revenue = Marginal Costs
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Generally, customers are most likely to rely on the price-quality association when
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they cannot judge the quality of the products for themselves
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Marketers generally view ____ as the minimum price a product can be sold for.
answer
costs
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Price is a key element in the marketing mix because it relates directly to
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the generation of total revenue
question
ACE Electronics introduces a new voice-activated personal computer that no longer requires a keyboard. ACE charges the high price of $11,000 per unit, thus generating large profits because it has a 20 percent market share. ACE's major problem in the future will most likely be
answer
competition
question
When marginal cost is equal to marginal revenue, the firm should
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stop producing additional units to maximize profits
question
When Cadillac buys headlights from Delco (both of which are divisions of General Motors), ____ pricing occurs
answer
transfer
question
The amount of profit a channel member expects depends on
answer
what the intermediary could earn if it were handling a competing product instead.
question
Which of the following is not a major factor for firms making price decisions?
answer
previous sales
question
Since Victoria's Secret has decided to use nonprice competition, it distinguishes its brand through all but which of the following?
answer
rebates
question
marginal analysis involves examining
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what happens to a firm's costs and revenues when production is changed by one unit
question
What equation shows organizations the relationship between price and profit?
answer
(Price ´ Quantity Sold) - Total Costs = Profits
question
Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing
answer
non price competition
question
price
answer
the value paid for a product in a marketing exchange
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barter
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the trading of products
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Profit (equation)
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Profit= total rev- total costs
Profit= (price x quantity sold) -total costs
Profit= (price x quantity sold) -total costs
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price competition
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emphasizing price as an issue and matching or beating competitor's prices
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nonprice competition
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emphasizing factors other than price to distinguish a product from competing brands
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demand curve
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a graph of the quantity of products expected to be sold at various prices if other factors remain constant
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price elasticity of demand (equation)
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% change in quantity demanded / % change in price
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price elasticity of demand
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a measure of the sensitivity of demand to changes in price
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fixed costs
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costs that do not vary with changes in the number of units produced or sold
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average fixed costs
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the fixed cost per unit produced
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variable costs
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costs that vary directly with changes in the number of units produced or sold
question
average variable costs
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the variable cost per unit produced
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total costs
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the sum of the average fixed and average variable costs time the quantity produced
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average total costs
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the sum of the average fixed cost and the average variable cost
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marginal cost
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the extra cost incurred by producing one more unit of a product
question
marginal revenue
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the change in total revenue resulting from the sale of an additional unit of a product
question
break even point
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the point at which the costs of producing a product equals the revenue made from selling the product
question
break even point (formula)
answer
breakeven point= fixed costs / price - variable costs
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internal reference price
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a price developed in the buyer's mind through experience with the product
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external reference price
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a comparison price provided by others
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value conscious
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concerned about price and quality of a product
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price conscious
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striving to pay low prices
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prestige sensitive
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drawn to products that signify prominence and status
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price discrimination
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employing price differentials that injure competition by giving one or more buyers a competitive advantage
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trade (functional) discount
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a reduction off the list price a producer gives to an intermediary for performing certain functions
question
quantity discounts
answer
deductions from the list price for purchasing in large quantities
question
cumulative discounts
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quantity discounts aggregated over a stated period of time
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noncumulative discounts
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one time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased
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cash discount
answer
a price reduction given to buyers for prompt payment or cash payment
question
seasonal discount
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a price reduction given to buyers for purchasing good or services out of season
question
allowance
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a concession in price to achieve a desired goal
question
geographic pricing
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reductions for transportation and other costs related to the physical distance between buyer and seller
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F.O.B. factory (free-on-board)
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the price of merchandise at the factory before shipment
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F.O.B. destination
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a price indicating the producer is absorbing shipping costs
question
uniform geographic pricing
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charging all customers the same price, regardless of geographic location
question
zone pricing
answer
pricing based on transportation costs within major geographic zones
question
base-point pricing
answer
geographic pricing that combines factory price and freight charges from the base point nearest the buyer
question
freight absorption pricing
answer
absorption of all or part of actual freight costs by the seller
question
transfer pricing
answer
prices charged in sales between an organizations units
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