Question 1

Matthew told the manager of his gas station to always adjust prices to match those charged by the other convenience store across the street. Matthew is using a ________ pricing strategy.

Accepted Answer

Matthew is using a status quo pricing strategy, which involves keeping prices the same as the competition. This strategy aims to maintain market share and avoid price wars.

Question 2

Isabella knows that her customers always shop for top-of-the-line leather purses and price is not a consideration. She decides to price her line of purses and wallets above those of her closest competition in order to capture those customers who only look for the best. What type of strategy is Isabella using?

Accepted Answer

Isabella is using premium pricing strategy by pricing her line of purses and wallets above those of her closest competitors to capture customers who only look for the best quality.

Question 3

The price elasticity of demand for a specific brand of deodorant is 1. The market for this product is considered

Accepted Answer

The answer of The price elasticity of demand for a...

Question 4

Christine owns a bakery where she sells donuts. Two blocks down there is another bakery that sells donuts for $1 less than Christine. Christine decides to lower her price and match the other bakery. What type of pricing orientation is Christine implementing?

Accepted Answer

Christine is using competitor-oriented pricing by matching the price of the other bakery.

Question 5

Traditional demand curve economic theory is used by marketers to understand ________ in the five Cs of pricing.

Accepted Answer

Traditional demand curve economic theory focuses on consumer behavior and their willingness to pay for a product or service, which is essential in understanding the consumer aspect of the five Cs of pricing.

Question 6

When firms set prices similar to those of major competitors, they are following a strategy of

Accepted Answer

When firms set prices similar to those of major competitors, they are following a strategy of competitive parity. This means that they are trying to match the prices of their competitors to remain competitive in the market. This strategy is often used to avoid price wars and maintain market share.

Question 7

Bryce would love to own a Lamborghini someday but he knows if he has to ask how much they cost, he probably can't afford it today. Products like Lamborghini automobiles are most likely to be associated with

Accepted Answer

Prestige pricing is the practice of pricing a product higher than its competitors' or its cost in order to give the perception of high quality and exclusivity. Lamborghini automobiles are a prime example of a product that is priced using prestige pricing.

Question 8

Buying response to a teeth whitening product is considered to be elastic. This would suggest dropping the price would result in:

Accepted Answer

Since the response to a teeth whitening product is elastic, it means that customers are sensitive to changes in price. Dropping the price would result in increased sales of the product since customers would be more likely to purchase it at a lower price.

Question 9

When Amy decides how to price new products in her cosmetics store, she measures the value of her product offerings against those of the other stores in her area. Amy uses a ________ pricing strategy.

Accepted Answer

Amy uses a competitor-oriented pricing strategy by measuring her product offerings' value against those of the other stores in her area. With this method, she sets her prices based on what her competitors are charging for similar products.

Question 10

According to a typical demand curve, the higher the price,

Accepted Answer

According to the law of demand, as prices increase, the quantity of goods or services demanded decreases. Therefore, the higher the price, the lower the quantity consumers will buy.

Question 11

When it comes to measuring consumers' price sensitivity, products are viewed as either

Accepted Answer

Products are viewed as either elastic or inelastic in terms of consumer price sensitivity. Elastic products are those for which a change in price results in a significant change in quantity demanded by consumers, while inelastic products are those where a change in price has little to no effect on quantity demanded. Understanding which category a product falls into can inform pricing strategies and help businesses make informed decisions about adjusting prices.

Question 12

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

Accepted Answer

Setting prices based on how customers develop their perceptions of value is known as value-based pricing. This strategy requires consistent advertising and distribution strategies to help customers understand the value they are getting for their money. This approach can be effective in pricing strategies as it helps to differentiate the product from competitors and can allow the marketer to charge a premium price.

Question 13

Sabrina's is an upscale running gear store. Prices are based on customers' beliefs about the value of the gear. The store focuses on a limited target market and provides excellent customer service. Sabrina's is using a ________ pricing strategy.

Accepted Answer

Sabrina's is using a customer-oriented pricing strategy because they are basing their prices on customers' beliefs about the value of the gear and focusing on providing excellent customer service to a limited target market.

Question 14

French luxury goods manufacturer and retailer Hermès is known for making expensive leather goods. But paying $300,168 for a handbag at auction, which is over the standard retail price of $280,000, is extraordinary, and not for the casual shopper. The handbag is considered a

Accepted Answer

The handbag is priced significantly higher than the standard retail price and is considered a prestige product, not accessible to the casual shopper due to its high price point.

Question 15

Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on

Accepted Answer

Marketers use a demand curve to analyze how many units will be sold at any given price point. A demand curve illustrates how the quantity of a product demanded by consumers varies with its price. By analyzing the shape of the demand curve, marketers can determine the market's price sensitivity and identify the optimal price point for maximizing sales and profits.

Question 16

For which of the following is demand likely to be least sensitive to price increases?

Accepted Answer

Prescription drugs are often essential for people's health and wellbeing, and therefore demand is less likely to be sensitive to price increases. People may not have the option to switch to a cheaper alternative and may be willing to pay a higher price for the medication they need.

Question 17

A demand curve shows the relationship between ________ during a specific period of time.

Accepted Answer

A demand curve shows the relationship between price and demand during a specific period of time. It illustrates the quantity of a product that consumers are willing and able to purchase at different price levels. As the price of a product increases, the quantity demanded typically decreases, and vice versa.

Question 18

A demand curve is built on the assumption that

Accepted Answer

The demand curve is built on the assumption that everything else remains the same except for price and demand. This means that factors such as income, fixed costs, and advertising do not have an impact on the demand curve. The demand curve simply shows how much of a product consumers are willing and able to buy at different price points, assuming all other factors remain constant.

Question 19

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.

Accepted Answer

Westin is using a competitive parity pricing strategy, in which they match the pricing of their direct competitor, Crown Plaza hotels, in order to remain competitive in the high-end resort market. This allows Westin to maintain market share and avoid losing customers to Crown Plaza due to pricing differences.

Question 20

A "no haggle" pricing policy that makes a transaction easier for the buyer is a type of ________ pricing strategy.

Accepted Answer

A "no haggle" pricing policy that makes a transaction easier for the buyer is customer-oriented because it prioritizes the convenience and satisfaction of the customer over potentially maximizing profits or sticking with the status quo.

Quiz 14: Pricing Concepts for Capturing Value