Marketing Study Set 20

Business

Quiz 11 :

Pricing

Quiz 11 :

Pricing

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A profit maximization strategy is used during the growth and maturity stages of the product life cycle.
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True False
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False

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Cost-plus pricing is not a very effective strategy for maximizing profits.
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True False
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True

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Prices are generally more elastic in the early stages of the product life cycle and increasingly inelastic in the later stages of the product life cycle.
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True

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Unbundling provides value for customers who are focused on a specific price point rather than the complete product offering.
True False
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Break-even analysis is an accurate measure of price sensitivity.
True False
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Customers are more price sensitive the higher the product's price is relative to the customers' price expectation.
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Underpricing is a pricing strategy whereby companies charge an amount just below cost in order to generate sales in the introductory stage of a product's life cycle.
True False
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Price elasticity of demand is a measure of price sensitivity.
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Once a firm has established its break-even point for a product, it has a starting point for estimating how much revenue it must generate to earn a profit.
True False
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Rent on an office building would be considered a fixed cost, while sales commissions would be considered a variable cost.
True False
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While shopping, Lucie sees a pair of jeans on sale for $29.99. She is excited because she has purchased this particular brand of jeans several times in the past for $40.00. In this instance, $40.00 is Lucie's fixed cost.
True False
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Dynamic pricing is a pricing strategy that involves pricing a product higher than competitors to signal that it is of higher quality.
True False
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Shrinkflation is when manufacturers "shrink" or reduce the price of their products during times of inflation.
True False
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Volume maximization is the same thing as penetration pricing.
True False
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An escalator clause ensures that the customer does not incur financial hardship as a result of increases to the cost of a product.
True False
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Loss-leader pricing involves selling a product at a price that causes the firm a financial loss.
True False
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A recreational watersports dealer reduced the price of its new jet skis by $1,000 in hopes of generating more sales. However, the lower price only resulted in a few more sales of the jet skis. This represents an elastic demand situation.
True False
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An odd pricing tactic prices items in odd dollar amounts, such as $4.95, instead of in even amounts, like $4.88.
True False
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The change in total revenue that results from selling one additional product unit is referred to as price sensitivity.
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Promotion is one of the most important strategic decisions a firm faces because it reflects the value the product delivers to consumers as well as the value it captures for the firm.
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