Question 1

Which of the following best defines the goal of a sales-oriented pricing objective?
A) Increasing the target return on a product
B) Gaining the maximum profit on a product
C) Increasing the market share of a product
D) Stabilizing prices across different markets for a product
E) Gaining a greater return on the investment in a product

Accepted Answer

A sales-oriented objective seeks some level of unit sales, dollar sales, or share of market-without referring to profit.

Question 2

A pricing objective that seeks a specific level of profit is a:
A) profit maximization objective.
B) value objective.
C) sales-oriented objective.
D) target return objective.
E) status quo objective.

Accepted Answer

A target return objective sets a specific level of profit as an objective.

Question 3

Pricing objectives should flow from, and fit in with,
A) shareholder expectations and market practices.
B) regulatory policies.
C) industry standards.
D) company-level and marketing objectives.
E) market price leader actions.

Accepted Answer

Pricing objectives should flow from, and fit in with, company-level and marketing objectives.

Question 4

Which of the following is not an example of price?
A) college tuition
B) doctor's fee
C) apartment rent
D) interest on a loan
E) All of these are examples of price.

Accepted Answer

Price is the amount of money that is charged for "something" of value.

Question 5

Which of the following is "something of value" that might be offered to FINAL CONSUMERS as part of the "price equation"?
A) Sufficient margin to allow for profit
B) Push money
C) Competitive advantage
D) Branded merchandise
E) None of these is a good answer.

Accepted Answer

As stated in Exhibit 16-2, branded merchandise is something of value offered to customers as part of the price equation.

Question 6

A focus on a target return or return on investment are characteristic of _____ pricing objectives.
A) profit-oriented
B) sales-oriented
C) status-quo oriented
D) purchase oriented
E) market-share oriented

Accepted Answer

A target return objective sets a specific level of profit as an objective. The profit also depends on the return on the invested amount. Hence, target return and the return on investment are characteristic of profit oriented pricing objectives.

Question 7

KeyLine, Inc., engages primarily in the manufacture of touch-sensitive LCD monitors. The company prices its products so that it earns a 20 percent return on investment. Which pricing objective is the company following?
A) Meet competition
B) Unit sales growth
C) Nonprice competition
D) Target return
E) Share of market

Accepted Answer

KeyLine follows a target return objective that sets a specific level of profit as an objective.

Question 8

Organizations that intend to keep their prices fixed as they are content with their market share and profits will most likely adopt a _____ pricing objective.
A) profit oriented
B) monetary gain oriented
C) sales oriented
D) target return oriented
E) status quo oriented

Accepted Answer

Managers satisfied with their current market share and profits sometimes adopt status quo objectives-don't-rock-the-pricing-boat objectives. This don't-rock-the boat thinking is most common when the total market is not growing.

Question 9

Target return pricing objectives:
A) usually are very high for firms facing heavy competition.
B) aren't used by industry leaders because they can maximize profits.
C) would never make sense for a nonprofit organization.
D) may simplify the management of large producers with many divisions or departments.
E) All of these alternatives are correct.

Accepted Answer

A target return objective has administrative advantages. Performance can be compared against the target. Some companies eliminate divisions, or drop products, that aren't yielding the target rate of return.

Question 10

A marketing manager may choose a pricing objective that is:
A) sales oriented.
B) status quo oriented.
C) profit oriented.
D) any of these-depending on the situation.

Accepted Answer

As stated in Exhibit 16-4, a marketing manager may choose any of the above pricing objectives depending on the situation.

Question 11

Which of the following is NOT a "Something of Value" which might be offered to FINAL CONSUMERS in the "price equation"?
A) Stocking allowance
B) Service
C) Repair facilities
D) Credit
E) Packaging

Accepted Answer

As stated in Exhibit 16-2, physical good, service, repair facilities, credit, packaging, assurance of quality, and warranty are all something of value but stocking allowance is not.

Question 12

Pricing objectives should be explicitly stated because:
A) they have a direct effect on pricing policies as well as price setting methods.
B) they are signals given to competing firms.
C) they form the basis of shareholder expectations about a firm's prospects.
D) it is required by law.
E) they are signals given to consumers.

Accepted Answer

Pricing objectives should be explicitly stated because they have a direct effect on pricing policies as well as the methods used to set prices.

Question 13

Almost any business transaction in a modern economy involves:
A) an exchange at a list price.
B) "dumping."
C) an exchange of money-the money being the Price-for something of value.
D) a loss of consumer surplus.
E) an exchange in which price serves as a measure of quality.

Accepted Answer

Price is the amount of money that is charged for "something" of value. Almost every business transaction in our modern economy involves an exchange of money-the Price-for something.

Question 14

Fidelity Corp. earned a 6 percent return on investment last year and wants to increase it to 10 percent this year. Which of the following pricing objectives is Fidelity seeking?
A) Target return
B) Growth in sales
C) Growth in market share
D) Maximize profits
E) Nonprice competition

Accepted Answer

Fidelity follows a target return objective that sets a specific level of profit as an objective.

Question 15

Why should pricing objectives be explicitly stated?
A) They have a direct effect on pricing policies and the methods used to set the price.
B) It provides direction for company-level objectives.
C) Explicitly stating objectives provides legal protection for the firm.
D) Most state laws require explicitly stating legal objectives.
E) Firms should always choose profit-oriented pricing objectives.

Accepted Answer

Pricing objectives should be explicitly stated because they have a direct effect on pricing policies as well as the methods used to set prices.

Question 16

Which of the following is a profit-oriented pricing objective?
A) Meeting competition
B) Sales growth
C) Target return
D) Nonprice competition
E) Growth in market share

Accepted Answer

Target return objective is a profit-oriented pricing objective since it sets a specific level of profit as its objective.

Question 17

Which of the following is LEAST LIKELY to be in the "Something of Value" part of the "price equation" for CHANNEL MEMBERS?
A) Service-repair facilities
B) Rebates
C) Price-level guarantees
D) Promotion aimed at customers
E) Convenient packaging for handling

Accepted Answer

As stated in Exhibit 16-3, all of the above are something of value offered to channel members as part of the price equation except rebates.

Question 18

Which of the following pricing objectives is a producer seeking when the producer tries to obtain some percent return on his investment?
A) Status quo
B) Meeting competition
C) Profit maximization
D) Target return
E) Growth in market share

Accepted Answer

A target return objective sets a specific level of profit. This amount can be stated as percentage of sales or percentage of capital investment.

Question 19

What is the objective of a target return strategy?
A) A specific share of the market.
B) A specific level of profit.
C) A specific sales volume.
D) A specific share of competitors' sales.
E) A specific mindshare of consumers.

Accepted Answer

A target return objective sets a specific level of profit as an objective.

Question 20

A manufacturer spends a large amount of money on research and development leading to the introduction of a product that is likely to present the firm with a breakthrough opportunity. The manufacturer prices the product with the goal of achieving a 20 percent return on its investment. Which of the following types of pricing objectives is the company using?
A) Target return
B) Profit maximization
C) Nonprice competition
D) Meeting competition
E) Dollar or unit sales growth

Accepted Answer

A target return objective sets a specific level of profit as an objective.

Quiz 16: Pricing Objectives and Policies

Which of the following best defines the goal of a sales-oriented pricing objective?

A pricing objective that seeks a specific level of profit is a:

Pricing objectives should flow from, and fit in with,

Which of the following is not an example of price?

Which of the following is "something of value" that might be offered to FINAL CONSUMERS as part of the "price equation"?

A focus on a target return or return on investment are characteristic of _____ pricing objectives.

KeyLine, Inc., engages primarily in the manufacture of touch-sensitive LCD monitors. The company prices its products so that it earns a 20 percent return on investment. Which pricing objective is the company following?

Organizations that intend to keep their prices fixed as they are content with their market share and profits will most likely adopt a _____ pricing objective.

Target return pricing objectives:

A marketing manager may choose a pricing objective that is:

Which of the following is NOT a "Something of Value" which might be offered to FINAL CONSUMERS in the "price equation"?

Pricing objectives should be explicitly stated because:

Almost any business transaction in a modern economy involves:

Fidelity Corp. earned a 6 percent return on investment last year and wants to increase it to 10 percent this year. Which of the following pricing objectives is Fidelity seeking?

Why should pricing objectives be explicitly stated?

Which of the following is a profit-oriented pricing objective?

Which of the following is LEAST LIKELY to be in the "Something of Value" part of the "price equation" for CHANNEL MEMBERS?

Which of the following pricing objectives is a producer seeking when the producer tries to obtain some percent return on his investment?

What is the objective of a target return strategy?