Question 1

Operating in the southwestern states, PuddleJumper Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to
A) provide frequent travelers the added value of special fringe benefits.
B) cut costs and services in order to maintain profit margins.
C) reduce flights and in-flight services, and lay off employees.
D) determine the break-even price and charge slightly more than that.

Accepted Answer

It is usually difficult for small firms to compete against larger firms solely on the basis of price. Nonprice competition works much better.

Question 2

The company currently markets McDog T-bone, Lapdog Lunchtreats, Rover's Potroast, and Puppy Porterhouse in the dog food market. Prime Cuts will be an addition to the company's ________ in the dog food market.
A) product mix
B) product line
C) product time
D) product screen

Accepted Answer

The product line is a group of products that are physically similar or are intended for a similar market.

Question 3

Discuss the role of packaging in a firm's total product offer.

Accepted Answer

The answer of Discuss the role of packaging in a...

Question 4

From a marketing management perspective, what is the meaning of a total product offer? What are the important elements in the total product offer of your college or university?

Accepted Answer

The answer of From a marketing management perspective, what is...

Question 5

Gourmet Pets feels its target market is more concerned with perceived quality than actual product cost. They also feel that the newness of this concept offers an opportunity to make high profits since they are the first firm to enter this market, so they face no direct competition. Their decision to charge a high price is consistent with the ________ strategy.
A) market pricing
B) price leadership
C) skimming price
D) penetration price

Accepted Answer

A skimming price strategy is one in which a new product is priced high to make optimum profit while there is little competition.

Question 6

Consumer goods and services are generally classified into four specific categories. What are the four categories, and how do they differ? Illustrate by giving examples of products that are often included in each category.

Accepted Answer

The answer of Consumer goods and services are generally classified...

Question 7

Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts. The fixed costs of adding this product to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even point would be
A) 900 units.
B) 2,800 units.
C) 5,000 units.
D) There is not enough information to find the correct answer.

Accepted Answer

Fixed costs of $20,000/(selling price $6, variable costs $2) = 5000 units. The break-even point is that sales volume where total sales revenue equals total costs.

Question 8

What does a break-even point of 100 units mean to a firm?
A) The firm must sell 100 units to maximize its profits.
B) Fixed costs plus variable costs equals 100 units.
C) By producing 100 units, the firm can ensure that variable costs completely cancel its fixed costs.
D) If the firm sells 100 units, its total revenues will equal its total costs.

Accepted Answer

The break-even point is the sales volume where revenues from sales equal all costs.

Question 9

Gourmet Pets hopes to use its special packaging and extensive advertising to create a perception in the minds of consumers that Prime Cuts is a superior product, even though the actual quality of meat used in the product is virtually no different from competing brands. The company is attempting to develop
A) differential segmentation.
B) cognitive dissonance.
C) product differentiation.
D) pioneer marketing.

Accepted Answer

Product differentiation is the creation of real or perceived product differences.

Question 10

Kayla wants to know how many units she must sell to cover all of her costs. She indicates to you that her selling price is $25 per unit, her fixed costs are $7,000, and the variable costs per unit are $15. What is her break-even point?
A) 400 units
B) 500 units
C) 700 units
D) 1,150 units

Accepted Answer

$7,000 fixed costs/($25 selling price - $15 variable costs) = 700 units.

Question 11

What is a brand? What is a brand name? What is meant by brand equity?

Accepted Answer

The answer of What is a brand? What is a...

Question 12

Cheryl is considering adding a rack of greeting cards to her product offerings at The Bitty Bookstore. Her fixed costs associated with adding the greeting cards would be $400. Variable costs per card are $1 each. The greeting cards will sell for $3 each. Helen's break-even point would occur at ________ cards sold.
A) 150
B) 200
C) 300
D) 450

Accepted Answer

The break-even point is calculated by dividing the total fixed costs by the difference between the selling price and the variable costs per card. In this case, Cheryl would need to sell 200 cards.

Question 13

Bennett has entered into a contract with the federal government to design a computer simulation model for training helicopter pilots. The contract calls for the final price to be set at a fixed percentage profit over and above her cost of production. This seems to represent a
A) cost-based pricing strategy.
B) supply and demand formula.
C) demand-based pricing strategy.
D) price leadership pricing strategy.

Accepted Answer

Cost-based pricing is based on production costs plus some margin of profit.

Question 14

As a graphic artist, Randy has just finished a new calendar. The calendar cost him $1.00 for the glossy paper, $3.00 for the six color production, and $.50 for the plastic wire that holds it together at the top. The labor in developing the design was 4 hours of work at $50/hour, and labor is being added to the rest of the fixed costs of $500.00. At a price of $15.00 per calendar, how many calendars will Nate need to produce and sell in order to break even (cover all his costs, but not make a profit)?
A) 670 calendars
B) 34 calendars
C) 46 calendars
D) 67 calendars

Accepted Answer

Break-even point = total fixed costs ÷ (price per unit - variable costs per unit). In this case, BEP= $700 ÷ ($15.00 per unit - $4.50 per unit). BEP = 66.66 or 67 calendars. [Variable costs in this problem = $1.00 + $3.00 + $.50 = $4.50.]

Question 15

Prime Cuts was the brainchild of Karen Terrier who guided all the marketing efforts of the product. She selected each element of the marketing mix such as the package, brand name, pricing, promotion, and placement decisions. Karen obviously serves in the job of
A) marketing consultant.
B) brand manager.
C) operations analyst.
D) marketing intermediary.

Accepted Answer

A brand manager has direct responsibility for all the elements of the marketing mix for one brand or one product line.

Question 16

Ariel owns a company that markets high-quality office supplies to businesses. She faces stiff competition from larger firms like Staples. Which of the following competitive strategies would probably work best for Ariel?
A) Keep costs as low as possible by offering a no-frills approach with little or no extra services.
B) Develop a skimming pricing strategy.
C) Utilize a high-low approach to pricing with a higher break-even point.
D) Focus on nonprice competition by offering better service with customers and work on building good customer relationships.

Accepted Answer

It is usually difficult for small firms to compete against larger firms solely on the basis of price. It is usually easy for larger firms to match price cuts, but much harder to match the image of a friendly responsive company that knows its customers on an individual basis. Achieving this type of relationship and providing superior service can allow small firms to charge high enough prices to prosper.

Quiz 14: Developing and Pricing Goods and Services

Operating in the southwestern states, PuddleJumper Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to

The company currently markets McDog T-bone, Lapdog Lunchtreats, Rover's Potroast, and Puppy Porterhouse in the dog food market. Prime Cuts will be an addition to the company's ________ in the dog food market.

Discuss the role of packaging in a firm's total product offer.

From a marketing management perspective, what is the meaning of a total product offer? What are the important elements in the total product offer of your college or university?

Consumer goods and services are generally classified into four specific categories. What are the four categories, and how do they differ? Illustrate by giving examples of products that are often included in each category.

What does a break-even point of 100 units mean to a firm?

Kayla wants to know how many units she must sell to cover all of her costs. She indicates to you that her selling price is $25 per unit, her fixed costs are $7,000, and the variable costs per unit are $15. What is her break-even point?

What is a brand? What is a brand name? What is meant by brand equity?

Bennett has entered into a contract with the federal government to design a computer simulation model for training helicopter pilots. The contract calls for the final price to be set at a fixed percentage profit over and above her cost of production. This seems to represent a

Prime Cuts was the brainchild of Karen Terrier who guided all the marketing efforts of the product. She selected each element of the marketing mix such as the package, brand name, pricing, promotion, and placement decisions. Karen obviously serves in the job of

Ariel owns a company that markets high-quality office supplies to businesses. She faces stiff competition from larger firms like Staples. Which of the following competitive strategies would probably work best for Ariel?