Question 1

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.
A) sales orientation
B) target profit
C) target return
D) status quo
E) competitive parity

Accepted Answer

Naomi is using a target return pricing strategy, which involves setting a price that will generate a specific return on investment. In this case, the goal is to earn at least a 20 percent return on investment for all industrial building supplies sold. This differs from a target profit strategy, which involves setting a price to achieve a specific profit goal, regardless of the return on investment. A sales orientation strategy focuses on maximizing sales volume without considering profitability, while a status quo strategy involves maintaining the current price level. Competitive parity strategy involves setting prices based on competitors' prices.

Question 2

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 wines as
A) an indicator of quality.
B) a reflection of status quo pricing.
C) an indicator of the variety.
D) a measure of scarcity.
E) a measure of the income effect.

Accepted Answer

Margaret is not knowledgeable about wine, so she may use the price of the wine as an indicator of quality. This is a common misconception, but in reality, price is not always a reliable indicator of quality. However, it is still a common practice for people who are not experts in wine to use price as a guide when selecting a bottle to bring as a gift to a fancy dinner party.

Question 3

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage. Earl perceived price as ________ for a good or service, while most consumers recognize price as the ________ made to acquire a good or service.
A) the money paid; overall sacrifice
B) a variable cost; fixed cost
C) a fixed cost; variable payment
D) the overall sacrifice; monetary payment
E) the break-even amount; total cost

Accepted Answer

Earl's behavior illustrates that he views price primarily as the monetary amount paid for a good, whereas the general consumer perspective is that price represents the total sacrifice (including time, effort, and money) made to obtain a product.

Question 4

A high/low pricing strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

Accepted Answer

This is the definition of a high/low pricing strategy.

Question 5

All of the following are included in the full price of a product or service except
A) taxes.
B) shipping.
C) travel costs.
D) the price of alternative products and services.
E) value of the consumer's time.

Accepted Answer

The full price of a product or service includes taxes, shipping, travel costs, and the value of the consumer's time. The only option that is not included in the full price is the price of alternative products and services, as that is a factor that is separate from the specific product or service being considered.

Question 6

A ________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.
A) sales orientation
B) target profit
C) target return
D) status quo
E) maximizing profits

Accepted Answer

The strategy described in the question is maximizing profits, as it involves measuring various factors to determine the price level that will result in the highest return. The other options (sales orientation, target profit, target return, and status quo) do not necessarily involve this type of detailed analysis to determine pricing strategies.

Question 7

When a retail store rarely sells deeply discounted or sale products, it is known as "everyday low pricing."

Accepted Answer

"Everyday low pricing" is a pricing strategy where the store offers consistently low prices on products, rather than relying on frequent sales and discounts.

Question 8

All of the following are included in the five Cs of pricing except
A) customers.
B) channel members.
C) cost.
D) collaboration.
E) company objectives.

Accepted Answer

The five Cs of pricing are customers, cost, company objectives, competition, and channel members. Collaboration is not one of the Cs of pricing.

Question 9

Historically, prices were
A) the center of attention in almost all marketing strategies.
B) analyzed and changed constantly.
C) calculated to minimize contribution per unit.
D) allowed to vary seasonally as cross-shopping tendencies fluctuated.
E) rarely changed except in response to radical shifts in market conditions.

Accepted Answer

Historically, prices were rarely changed except in response to radical shifts in market conditions. Pricing strategies were not as important as they are today, and companies focused more on production and distribution rather than setting and changing prices.

Question 10

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard's job to examine the firm's pricing strategy to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard's effort?
A) industry-oriented
B) sales-oriented
C) competitor-oriented
D) innovation-oriented
E) customer-oriented

Accepted Answer

Bernard's objective is to maximize market share even at the expense of profits in the short run, indicating a sales-oriented objective.

Question 11

When Delta increases its average fares, American Airlines and United often follow with similar increases. This is an example of
A) competitor orientation.
B) customer orientation.
C) status quo pricing.
D) adding value.

Accepted Answer

The answer of When Delta increases its average fares, American...

Question 12

In developing marketing strategies, why is price often the most challenging of the four Ps to manage?
A) because most managers feel it is the least important element of the marketing mix
B) because it is the least understood element of the marketing mix
C) because it has to be based on the promotion budget for the product
D) because it is difficult to calculate markups for products
E) because managers don't understand the relationship between benefits and costs

Accepted Answer

Price is often the most challenging of the four Ps to manage because it involves understanding the market demand and setting a price that customers are willing to pay while also covering the costs and generating a profit for the company. It requires a deep understanding of customer behavior, competition, and cost structures, making it the least understood and most complex element of the marketing mix.

Question 13

Firm A has set very low prices for its products in an attempt to drive its competitor, Firm B, out of business. This is known as monopolistic pricing.

Accepted Answer

This is actually an example of predatory pricing, which involves setting low prices in order to drive competitors out of business and gain a monopoly position in the market. Monopolistic pricing, on the other hand, refers to the practice of setting prices higher than the competitive level in order to maximize profits in a market with limited competition.

Question 14

Tess is the marketing manager for a fast-food restaurant chain. She uses a target return pricing strategy because her firm's primary objective is to
A) increase profits.
B) increase sales.
C) decrease competition.
D) build customer satisfaction.
E) broaden the product line.

Accepted Answer

Tess uses a target return pricing strategy in order to increase profits, which is the primary objective of the firm. This strategy involves setting a price that will allow the company to achieve a certain level of profit, based on a desired return on investment. Therefore, the correct answer is A (increase profits).

Question 15

Gary is the marketing manager for an automobile dealership. His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent. His firm is using a ________ orientation.
A) profit
B) sales
C) competitive
D) customer satisfaction
E) product development

Accepted Answer

The firm's primary goal of increasing market share indicates a sales orientation, where the focus is on selling as many products as possible to increase revenue.

Question 16

Consumers generally believe that ________ is one of the most important factors in their purchase decisions.
A) promotion
B) place
C) product
D) perception
E) price

Accepted Answer

Price is one of the most important factors in purchase decisions as consumers are always looking for the best value for their money.

Question 17

Sellers using an EDLP pricing strategy often communicate their strategy through the creative use of a reference price.

Accepted Answer

EDLP (Everyday Low Pricing) strategy focuses on providing consistently low prices without frequent sales or discounts, thus reducing the emphasis on a reference price comparison.

Question 18

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.
A) a customer orientation
B) a status-quo pricing structure
C) competitive parity
D) a competitor orientation
E) consumer parity

Accepted Answer

CarMax exhibits a customer orientation by providing a pricing structure that focuses on the convenience and satisfaction of potential used car buyers. The "no-haggle" pricing structure simplifies the process of buying a used car and adds value to the customer's experience.

Question 19

For market penetration pricing to work, the product or service must be perceived as breaking new ground in some way.

Accepted Answer

Market penetration pricing is a pricing strategy where the product or service is priced lower than its competitors to gain market share. While it doesn't necessarily require the product to be breaking new ground, it does require a competitive advantage such as lower cost or higher quality. However, breaking new ground could certainly be an additional advantage for market penetration pricing.

Question 20

Unlike product, promotion, or place, price is the only part of the marketing mix
A) that offers the opportunity for an oligopoly.
B) that is subject to gray market manipulation.
C) that leads to competition.
D) that generates revenue.
E) that is determined by the consumer.

Accepted Answer

Price is the only part of the marketing mix that generates revenue for a company. The other elements, such as product, promotion, and place, contribute to the overall marketing strategy but do not directly generate revenue.

Quiz 14: Pricing Concepts for Establishing Value

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.

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 wines as

Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage. Earl perceived price as for a good or service, while most consumers recognize price as the made to acquire a good or service.

A high/low pricing strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

All of the following are included in the full price of a product or service except

A ________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

When a retail store rarely sells deeply discounted or sale products, it is known as "everyday low pricing."

All of the following are included in the five Cs of pricing except

Historically, prices were

When Delta increases its average fares, American Airlines and United often follow with similar increases. This is an example of

In developing marketing strategies, why is price often the most challenging of the four Ps to manage?

Firm A has set very low prices for its products in an attempt to drive its competitor, Firm B, out of business. This is known as monopolistic pricing.

Tess is the marketing manager for a fast-food restaurant chain. She uses a target return pricing strategy because her firm's primary objective is to

Gary is the marketing manager for an automobile dealership. His boss tells him the firm's primary goal is to increase its local market share from 15 to 30 percent. His firm is using a ________ orientation.

Consumers generally believe that ________ is one of the most important factors in their purchase decisions.

Sellers using an EDLP pricing strategy often communicate their strategy through the creative use of a reference price.

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.

For market penetration pricing to work, the product or service must be perceived as breaking new ground in some way.

Unlike product, promotion, or place, price is the only part of the marketing mix