Question 1

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) Non price competition
D) Target return
E) Share of market

Accepted Answer

The company is following a target return pricing objective, which means it sets prices to achieve a specific return on investment. In this case, the company has set its prices to earn a 20 percent return on investment.

Question 2

Seeking a profit maximization pricing objective:
A) will help a firm to earn "all the traffic will bear."
B) requires some knowledge of the firm's demand curve to be implemented effectively.
C) with no competitors and an inelastic demand curve is likely to lead to "high" prices in the short run.
D) may lead to a low penetration price.
E) All of the above are true.

Accepted Answer

All of the statements are true.

Question 3

Profit maximization pricing objectives:
A) almost always lead to high prices.
B) are generally not in the public interest.
C) seek to get as much profit as possible.
D) may be stated as a desire to achieve rapid sales growth.
E) All of the above.

Accepted Answer

Profit maximization pricing objectives seek to get as much profit as possible.

Question 4

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 pricing objective that seeks a specific level of profit is called a target return objective. This means that the company sets a price with the goal of generating a particular level of profit, based on factors such as costs, competition, and customer demand.

Question 5

Some top managers seek only enough profits to convince stockholders that they are "doing a good job." The pricing objective of such managers is:
A) satisfactory profits.
B) status quo.
C) nonprice competition.
D) profit maximization.
E) meeting competition.

Accepted Answer

The pricing objective of managers who seek only enough profits to convince stockholders that they are "doing a good job" is to achieve satisfactory profits. This approach does not necessarily aim for maximum profits but rather for a level of earnings that are deemed acceptable and sufficient to maintain the confidence of the company's investors.

Question 6

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 Corp wants to increase its ROI from 6% to 10%, which means they have a specific target return in mind for the year. Therefore, Fidelity Corp is seeking a target return pricing objective. The other pricing objectives listed are not relevant to Fidelity Corp's current goal of increasing its ROI.

Question 7

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 is a profit-oriented pricing objective as it focuses on achieving a specific return on investment or profit margin for the company. Meeting competition, sales growth, nonprice competition, and growth in market share are all non-profit oriented pricing objectives as they do not directly focus on maximizing profits.

Question 8

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

The pricing objective of obtaining a percentage return on investment is known as target return pricing.

Question 9

An "all the traffic will bear" pricing objective is a ______________ objective.
A) target return
B) profit maximization
C) growth in market share
D) meeting competition
E) nonprice competition

Accepted Answer

The "all the traffic will bear" pricing objective is focused on maximizing profits by charging the highest possible price that customers are willing to pay for a product or service. This pricing objective is not based on market share, target return on investment, meeting competition or nonprice competition strategies.

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 the above--depending on the situation.
E) None of the above.

Accepted Answer

A marketing manager may choose any pricing objective (sales-oriented, status-quo oriented, or profit-oriented) depending on the situation. For example, if a company wants to increase its market share, it may choose a sales-oriented pricing objective by setting lower prices than its competitors. Similarly, if a company is facing intense competition, it may opt for a status-quo-oriented pricing objective to maintain its market share. On the other hand, if a company wants to maximize its profits, it may choose a profit-oriented pricing objective by setting prices that cover all the costs and provide a reasonable profit margin. Therefore, the answer is D.

Question 11

Profit maximization pricing objectives:
A) can only be achieved when the producer's price is high.
B) may be in the interest of both producers and consumers.
C) usually focus on low prices as that is what is required to draw in a larger base of customers.
D) are never used in combination with penetration pricing.
E) can only be achieved by using cost-plus pricing approaches.

Accepted Answer

Profit maximization pricing objectives aim to set prices at a level where profits are maximized, which can sometimes align with consumer interests if it leads to better products or services.

Question 12

A profit maximization pricing objective
A) is a sales-oriented pricing objective.
B) does not always lead to high prices.
C) can never be socially responsible.
D) is often stated as percentage of market share.
E) is a status quo oriented pricing objective.

Accepted Answer

Profit maximization pricing objective does not always lead to high prices as it depends on various factors such as competition, consumer demand, and production costs.

Question 13

A government agency charges motorists a toll for using a bridge. The toll is dropped when the cost of the bridge is paid. In other words, the government's target return figure was
A) twenty percent.
B) one.
C) ten percent.
D) hundred percent.
E) zero.

Accepted Answer

The answer of A government agency charges motorists a toll...

Question 14

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 the above.

Accepted Answer

Target return pricing objectives may simplify the management of large producers with many divisions or departments because it allows each division to set its own profit goals and adjust pricing accordingly. Option A is incorrect as setting very high return targets can make it difficult to compete with other firms offering lower prices. Option B is incorrect as industry leaders may still use target return pricing objectives to maintain their market position. Option C is incorrect as nonprofit organizations may still want to generate enough revenue to cover their operating costs and achieve their mission.

Question 15

A target return figure of zero implies:
A) setting negligible sales targets.
B) setting a price level that will just recover costs.
C) setting a price that helps attain previous year's high profitability.
D) setting a price that would match the industry standard profit margin.
E) setting a price at which competition will be zero.

Accepted Answer

A target return figure of zero implies that the company is only seeking to recover their costs and is not looking for any profit. Therefore, setting a price level that will just recover costs would be the best choice.

Question 16

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

The pricing objective being used in this scenario is target return, as the goal is to achieve a specific return on investment.

Question 17

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

The objective of a target return strategy is to achieve a specific level of profit. This can be done by setting a target return on investment (ROI) and adjusting price, sales volume, or both to achieve that target. The other options listed are not the main objective of a target return strategy.

Question 18

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 have a direct impact on a firm's pricing policies and pricing methods. It is important to explicitly state these objectives to ensure that they align with the overall business strategy and that pricing decisions are consistent with the firm's goals. While pricing objectives may also signal to competing firms and consumers, these are not the main reasons for explicitly stating them. It is not required by law to state pricing objectives, although firms may choose to do so for transparency and communication purposes.

Question 19

A marketing manager for a large company who wants to compare the financial performance of different divisions of the firm would probably pursue which of the following pricing objectives?
A) Status quo
B) Market share
C) Target return
D) Profit maximization
E) Sales growth

Accepted Answer

A marketing manager who wants to compare the financial performance of different divisions of the firm would likely pursue a target return pricing objective, which aims to earn a specific level of profit or return on investment. This would allow the manager to evaluate each division's financial performance based on its ability to meet the target return, rather than just comparing sales or revenue numbers.

Question 20

Caught between the threat of antitrust action, stockholder demands, and public interest groups, some large corporations set a(an) ______________ pricing objective.
A) increasing target return
B) "aggressive" competition
C) profit maximization
D) increasing market share
E) satisfactory long-run target return

Accepted Answer

When large corporations are faced with threats of antitrust action, stockholder demands, and public interest groups, they may choose a pricing objective that satisfies a long-run target return rather than focusing solely on profit maximization or increasing market share. This approach allows the corporation to maintain a consistent level of profitability while also considering the public interest and avoiding antitrust scrutiny. Therefore, option E, satisfactory long-run target return, is the best choice.

Quiz 17: Pricing Objectives and Policies

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?

Seeking a profit maximization pricing objective:

Profit maximization pricing objectives:

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

Some top managers seek only enough profits to convince stockholders that they are "doing a good job." The pricing objective of such managers is:

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?

Which of the following is a PROFIT-ORIENTED pricing objective?

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

An "all the traffic will bear" pricing objective is a ______________ objective.

A marketing manager may choose a pricing objective that is:

Profit maximization pricing objectives:

A profit maximization pricing objective

A government agency charges motorists a toll for using a bridge. The toll is dropped when the cost of the bridge is paid. In other words, the government's target return figure was

Target return pricing objectives:

A target return figure of zero implies:

What is the objective of a target return strategy?

Pricing objectives should be explicitly stated because:

A marketing manager for a large company who wants to compare the financial performance of different divisions of the firm would probably pursue which of the following pricing objectives?

Caught between the threat of antitrust action, stockholder demands, and public interest groups, some large corporations set a(an) ______________ pricing objective.