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The five Cs of pricing include all of the following except
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commissions
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As the marketing vice president of her firm, Jana is considering implementing a companywide pricing policy that all products must achieve a target profit margin of 15 percent so the firm can achieve its overall growth objectives. What type of company objective is this?
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Profit orientation
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Jana's firm is entering a new market, and she plans to set prices to take sales away from the established market leader even though it will mean profits might suffer. This corresponds to which of the following company objectives?
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Sales orientation
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________ is a tactic in which a firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best, or for whom price does not matter.
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Premium pricing
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Best Buy will match competitor prices for customers who bring in proof that a particular product is being sold at a lower price by a competitor, thus using
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status quo pricing
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Jack works for a firm in the northwestern region that is clearly the market leader, and he has determined he must implement a regionwide price reduction of all product lines to discourage new firms from entering the lucrative market. Which of the following company objectives is involved?
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Competitor orientation
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A ________ orientation explicitly invokes the concept of value, such as when a firm uses a "no-haggle" pricing structure to make the purchase process simpler and easier.
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customer
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For the sake of expediency, marketers creating a _________ assume that the firm will not increase its expenditures on advertising and that the economy will not change in any significant way.
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demand curve
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The market for a product is generally viewed as ________ when its price elasticity is greater than −1.
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inelastic
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With ________ products and services, a higher price might lead to a greater quantity sold, but only up to a certain point.
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prestige
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________ measures how changes in price affect the quantity of the product demanded.
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Price elasticity of demand
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In the trucking industry, demand for fuel remains relatively stable even in times when the price of fuel increases, indicating that demand for fuel in this segment is
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inelastic
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In a(n) _______ demand scenario, relatively small changes in price will generate fairly large changes in the quantity demanded.
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elastic
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Airlines that offer lower fares on seats shortly before the flight's departure date to fill empty seats are utilizing what type of pricing tactic?
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Dynamic pricing
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In the past, Jaleel's vacation time has been spent at home catching a few local attractions when she could afford them. This year, she received a big bonus at work and has decided to finally take the trip to Europe that she has always dreamed about. Jaleel's purchasing behavior has changed due to
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the income effect
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Which of the following explains why the demand for Blu-ray discs increases when the demand for Blu-ray players increases?
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The complementary products effect
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________ indicates that the demand for related products can either be positively or negatively related.
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Cross-price elasticity
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Variable costs are affected by
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production levels
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Marta estimates that the fixed costs associated with opening her new hair salon are $100,000. She expects the salon to attract 500 new customers in the first year, each of which will cost $25 to service. Marta expects to generate $50,000 per year in revenue. For Marta, the total cost of opening her hair salon and staying in business for one year will be
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112,500
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In break-even analysis, when the break-even point is reached _______ is (are) zero.
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profits
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If the fixed costs of manufacturing a new jet ski are $24,000, the sales price is $9,000, and the variable cost per unit is $1,000, the break-even point is
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3 units
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The ________ is the price less the variable cost per unit.
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contribution per unit
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________ involves determining the point at which the number of units sold generates just enough revenue to equal the total costs.
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Break-even analysis
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In ________, one firm provides the product or service in a particular industry, which results in less price competition.
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a monopoly
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In the soft drink industry only a few firms dominate, which is characterized as
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an oligopoly
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When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is engaged in
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predatory pricing
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The most common form of competition is ________, where many firms compete for customers in a given market but with differentiated products.
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monopolistic competition
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Standardized products such as grains and minerals, which consumers perceive as substitutable, are characteristic of
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pure competition
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Sometimes reactions to prices in oligopolistic markets can result in a _________, which occurs when two or more firms compete primarily by lowering their prices.
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price war
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Firms usually implement ________ when they have a particular profit goal as their overriding concern.
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target profit pricing
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In terms of a pricing strategy, ________ adds value by reducing consumers' search costs; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores.
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EDLP
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When using a market penetration strategy, as sales continue to grow, the costs continue to drop, allowing even further reductions in the price. This is due to
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experience curve effects
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A local pizza parlor located on campus offers a student rate for its pizza lunch special. This is a form of
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price discrimination and is legal
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The more substitutes that exist in a market,
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the more sensitive consumers will be to changes in the price of a particular product.
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A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy, especially if the strategy
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is supported by consistent advertising and distribution strategies
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If a firm in a purely competitive market can differentiate its product or service, it becomes part of a(n) ______ market.
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monopolistically competitive
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In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high.
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True
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Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wine as
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an indicator of quality
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In one year, the Hotel by the Shore incurred $100,000 in fixed costs. Because the hotel booked 10,000 room nights, its total variable cost is $100,000 (10,000 room nights × $10 per room). Thus, its total cost is
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200,000
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Sharon knew that her established customers liked her product much better than her competitor's. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Sharon was considering
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premium pricing
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Which of the following markets is most likely to be characterized by oligopolistic competition in the United States?
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smartphone service providers
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In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. When it comes to pricing, Westin tends to charge its guests similar rates to what the Crown Plaza hotels charge. Westin is using a _________ pricing strategy.
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competitive parity
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A customer orientation toward pricing implicitly invokes the concept of
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value
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Raymond estimates that the fixed costs associated with opening a new bank branch are $500,000. He expects the branch to attract 1,000 new customer accounts in the first year, each of which will cost $50 per year to service. He also expects to generate $100,000 per year in revenue. For Raymond, the total cost of opening the new branch and remaining open for one year will be
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550,000
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Natalie operates on a pretty tight budget. She is a price-conscious shopper and usually buys store or generic brands to save money. Recently, however, Natalie was given a pretty substantial raise. As such, she has altered her shopping patterns and now regularly buys more expensive, name-brand goods. This is an example of
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the income effect
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The observation that consumers are generally more sensitive to price increases than to price decreases suggests that
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it is easier to lose customers with a price increase than to gain customers with a price decrease
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All of the following are included in the five Cs of pricing except
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collaboration
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If the demand for a quantity of a product decreases, the demand for the complementary product will
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decrease
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A reference price is
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the price against which buyers compare the actual selling price
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The Coffee Express company is located in a business district with few customers on the weekend. To attract customers on Saturday and Sundays, it reduces its prices on these two days. This is an example of
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dynamic pricing
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When CarMax promises a "no-haggle" pricing structure, it exhibits _________ because it provides additional value to potential used car buyers by making the process simple and easy.
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a customer orientation
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What situation is occurring if a 1 percent decrease in price produces a 5 percent increase in the quantity demanded?
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demand is price elastic
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Unlike product, promotion, or place, price is the only part of the marketing mix
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thats generates revenue
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Bill is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of
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complementary products
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A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in the quantity demanded. What type of demand does this reflect?
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inelastic
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When it comes to measuring consumers' price sensitivity, products are viewed as either
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elastic or inelastic
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Managers of Wendy's fast-food restaurants keep track of prices at competitors such as McDonald's, Burger King, and Arby's, knowing that a decrease in the prices at these other fast-food restaurants will
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decrease demand for Wendy's products
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The contribution per unit is
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price minus variable cost per unit
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Consider a bakery like Entenmann's: The majority of the ___________ costs are the cost of the ingredients, primarily flour.
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variable
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According to a typical demand curve, the higher the price,
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the lower the quantity demanded
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Historically, prices were
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rarely changed except in response to radical shifts in market conditions
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If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is
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price inelastic
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If all three grocery stores in town decide to charge the same price for a gallon of milk, what type of pricing tactic is being used?
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horizontal price fixing
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For which of the following products would consumers be least sensitive to price increases?
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prescription drugs
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Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______ pricing strategy.
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target return
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Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that
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an increase in the price of natural gas will increase demand for his electrical heating systems
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