Question 1

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

Stocking allowance is typically offered to retailers, not final consumers. The other options (service, repair facilities, credit, packaging) could all be considered "something of value" for final consumers.

Question 2

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 3

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 price setting methods. This helps ensure consistency and transparency in the pricing strategies and helps the company align its pricing with its overall business objectives. Additionally, it helps management track progress towards achieving these objectives and make necessary adjustments to pricing policies as needed.

Question 4

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 be in line with the company-level and marketing objectives, as they guide the overall strategy of the company. Pricing should be used to achieve specific goals, such as maximizing profits or market share, and these goals should align with the overall objectives of the company. Regulatory policies, industry standards, and market price leader actions may influence pricing decisions, but they should not be the sole determining factor in setting pricing objectives. Shareholder expectations and market practices are important for financial performance, but they should also be considered in the context of overall company objectives.

Question 5

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 manufacturer is using a target return pricing objective, as they have set a specific profit margin they want to achieve based on their investment in research and development.

Question 6

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 these alternatives are correct.

Accepted Answer

All the statements correctly describe aspects of seeking a profit maximization pricing objective. A) refers to setting prices as high as possible without losing customers, B) acknowledges the need to understand how quantity demanded varies with price, C) explains that a monopoly (no competitors) with inelastic demand can set high prices, and D) mentions that aiming for market penetration might involve setting lower prices initially to attract customers.

Question 7

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

The answer of Which of the following is LEAST LIKELY...

Question 8

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 level of profit as a percentage of sales revenue. Meeting competition, sales growth, nonprice competition, and growth in market share are all more focused on market share, sales volume, or competitive positioning, rather than profitability.

Question 9

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 toll is dropped when the cost of the bridge is paid, meaning the target return figure is zero, as the goal is to only cover the cost of the bridge, not to make a profit.

Question 10

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

Setting a target return figure of zero means that the price level is set to only recover costs, without any additional profit. This could be a strategy used by businesses launching new products or entering new markets, where the focus is on gaining market share rather than generating immediate profits. Setting negligible sales targets (A) or a price to match industry standard profit margins (D) would not necessarily result in a target return figure of zero. Setting a price to attain previous year's high profitability (C) or at which competition will be zero (E) are not relevant to the concept of target return figure of zero.

Question 11

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 seeks to generate a specific level of profit, meaning the company sets the price at a certain level to achieve their desired profit. Profit maximization objective seeks to generate the highest profit possible, whereas value objective seeks to provide the best possible value to customers. Sales-oriented objective focuses on maximizing sales revenue, and status quo objective maintains the current price and may focus on maintaining market share.

Question 12

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.

Question 13

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 strategy is used by companies that have a specific desired level of profit and want to adjust their pricing to ensure they achieve that level of profit. This strategy takes into consideration the cost of production, distribution, and selling of the product or service and adds a desired level of profit to determine the price.

Question 14

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

The pricing objective chosen by a marketing manager depends on the situation and can be any of the options listed. For example, if the goal is to quickly gain market share, a sales-oriented pricing objective may be chosen. If the goal is to maintain the current market position, a status quo-oriented pricing objective may be chosen. And if the goal is to maximize profit, a profit-oriented pricing objective may be chosen. Ultimately, the choice will depend on the specific circumstances and goals of the company.

Question 15

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's objective of increasing its return on investment indicates that it is seeking a target return pricing objective, which involves setting prices to achieve a specified return on investment or level of profitability. This is different from growth in sales or market share, as those objectives focus on increasing revenue or market presence rather than profitability. Maximize profits may also be a pricing objective, but the specific goal of increasing return on investment aligns with target return. Nonprice competition is not related to Fidelity's goal of increasing profitability.

Question 16

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

Target return pricing objectives may simplify the management of large producers with many divisions or departments by providing a clear profit goal for each unit.

Question 17

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

Branded merchandise, such as free gifts or promotional items, can be offered as something of value to final consumers as part of the price equation. This can help create brand loyalty and incentivize customers to choose a particular product over competitors.

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

The pricing objective of target return involves a producer seeking to obtain a certain percentage of return on their investment, which aligns with the situation described in the question. Choices A, B, and E refer to other pricing objectives that do not involve a specific return on investment, while profit maximization involves setting prices to maximize total revenue or profit, rather than a specific return on investment.

Question 19

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, Inc. is following the target return pricing objective, where the company sets prices to earn a specific return on investment.

Question 20

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

"All the traffic will bear" pricing objective is about charging as much as possible for the product or service without losing customers. This pricing approach is focused on maximizing profits, making option B the correct choice.

Quiz 16: Pricing Objectives and Policies

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

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

Pricing objectives should be explicitly stated because:

Pricing objectives should flow from, and fit in with,

Seeking a profit maximization 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 is a profit-oriented 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

A target return figure of zero implies:

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

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

What is the objective of a target return strategy?

A marketing manager may choose a pricing objective that 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?

Target return pricing objectives:

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

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

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?

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