Question 1

When it comes to creating pricing strategy, marketers need to remember that one object of branding is to:

Accepted Answer

Decreasing the effect of price on product demand is a key objective of branding in a pricing strategy. Effective branding can make consumers less sensitive to price changes because they perceive the branded product as unique or superior.

Question 2

The first step in the procedure for determining the price of a product should be to:

Accepted Answer

Setting pricing objectives is the foundational step in the pricing process. It involves determining what the company wants to achieve with its pricing strategy, such as maximizing profit, increasing market share, or achieving a specific return on investment. This step guides all subsequent decisions in the pricing process.

Question 3

Which of the following is NOT a commonly used type of pricing objective?

Accepted Answer

"To break even" is not typically classified as a pricing objective. Pricing objectives usually focus on broader strategic goals such as maintaining market share, achieving a target return, stabilizing prices, or meeting competition. Breaking even is more of a financial objective or a minimum requirement for business viability rather than a strategic pricing goal.

Question 4

Which of the following is defined as a status quo-oriented pricing objective?

Accepted Answer

Meeting competition is a status quo-oriented pricing objective, as it focuses on maintaining current market positions and matching competitors' prices rather than seeking to maximize profits, increase market share, or achieve specific sales volumes or returns.

Question 5

The owner of a company that markets a line of mustard-based barbecue sauces was overheard talking to her husband, "Next year at this time when I look at this company's operating statement, I want to see that we have made more money than we ever thought possible." Assuming that the only way to achieve this goal is through pricing, this is an example of a _____ objective.

Accepted Answer

This statement reflects a profit maximization objective, as the owner's goal is to make more money than ever before, indicating a focus on maximizing profits.

Question 6

Which of the following is an example of a sales-oriented pricing objective?

Accepted Answer

Sales-oriented pricing objectives focus on increasing the volume of sales rather than focusing on profits or the competition. This can involve setting lower prices to attract more customers and boost sales volume.

Question 7

K-Block cooking charts are poster-sized recipes designed to encourage children to cook. The pricing objective for the manufacturer of K-Block cooking charts is "to sell 500 more packages of cooking charts than it sold last year." This objective is an example of a _____ pricing goal.

Accepted Answer

This objective is sales-oriented because it focuses on increasing the volume of sales (in this case, by 500 packages) rather than on profit margins, customer value, maintaining market position, or production costs.

Question 8

The pricing objective for Gregson Landscaping Service, is "to avoid price competition." This objective is an example of a _____ pricing goal.

Accepted Answer

The objective of avoiding price competition aligns with a status quo-oriented pricing goal, which focuses on maintaining existing prices and market share rather than aggressively competing on price.

Question 9

Charles Moses manages a business that sells computer software to physicians. Which of the following managerial goals is most compatible if he decides the firm's pricing objective is to achieve a target return?

Accepted Answer

Achieving a target return is directly related to earning a specific level of profit, such as a net profit of 8 percent on net sales before taxes, which aligns with option C. This goal focuses on financial outcomes directly tied to pricing strategies.

Question 10

A company that sells reconditioned personal computers has set the following pricing objective: "To earn a net profit equal to 6 percent of gross sales next year." Which type of profit-oriented pricing objective does this exemplify?

Accepted Answer

This objective is an example of the achievement of a target return, as the company aims to earn a specific percentage of profit (6 percent of gross sales) in the next year.

Question 11

Middlemen add a _____ to the cost they pay for a product in order to cover anticipated operating expenses and provide a desired profit for the period.

Accepted Answer

Middlemen add a markup to the cost they pay for a product. This markup covers their operating expenses and ensures they make a desired profit.

Question 12

Which of the following sayings best reflects the philosophy of an organization that has adopted the pricing goal of profit maximization?

Accepted Answer

"Charge all that the traffic will bear" best reflects the philosophy of profit maximization, as it implies setting prices as high as possible without reducing demand, thereby maximizing profits.

Question 13

Priceline's CEO seems to have a _____ pricing objective because his stated goal is to match 50 percent of all reasonable bids received with products made available from the Internet company.

Accepted Answer

The CEO's goal to match 50 percent of all reasonable bids with products indicates a focus on increasing sales volume, which aligns with a sales-oriented pricing objective. This objective prioritizes achieving a certain level of sales or market share.

Question 14

Which of the following statements about a profit-maximization pricing goal is True?

Accepted Answer

Profit maximization is a standard goal in economic theory and business practice, aiming to achieve the highest profit possible. It does not inherently conflict with ethical business practices or economic principles, and it is a common objective for companies. Other statements present misconceptions or overly specific scenarios not universally applicable to the concept of profit maximization.

Question 15

A pricing goal of increasing sales volume is typically adopted to:

Accepted Answer

The answer of A pricing goal of increasing sales volume...

Question 16

During the afternoons, many theaters charge less for a movie ticket than they do for an evening show. The theaters offer these special reduced rates in order to achieve a _____ pricing objective.

Accepted Answer

Theaters offer reduced rates during afternoons to attract more customers and increase sales, making it a sales-oriented pricing objective.

Question 17

The two primary manufacturers of microprocessors are Intel and AMD. To get a foothold in the market, AMD introduced its microprocessors at a price much lower than comparable Intel processors. AMD used a _____ pricing objective.

Accepted Answer

AMD's strategy of introducing its microprocessors at a lower price point than its competitor, Intel, to gain market share is an example of a sales-oriented pricing objective. This approach focuses on increasing sales volume and market penetration, often at the expense of immediate profits.

Question 18

If the marketing manager of Eden Foods, a marketer of organically-grown vegetables and fruits, wants to increase that company's market share by one percent during the next two years, it would be an example of a _____ pricing objective.

Accepted Answer

A sales-oriented pricing objective focuses on increasing the volume of sales or the market share, which aligns with the goal of increasing the company's market share by one percent.

Question 19

Which of the following pricing strategies can the manager of the Roast 'n Brew coffeehouse follow if she believes the store should have a sales-oriented goal?

Accepted Answer

A sales-oriented goal often involves strategies to increase sales volume rather than maximizing profits. Reducing price to build market share is a common approach to attract more customers and boost sales, aligning with a sales-oriented objective.

Question 20

Which of the following sayings could most closely reflect the philosophy of an organization that uses a sales-oriented goal?

Accepted Answer

A sales-oriented organization focuses on increasing sales volume and market share, which aligns with the idea of "grabbing a bigger slice of the pie."

Quiz 12: Price Determination