Question 1

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

When organizations set a price level that will just recover costs, it is said that their target return figure is zero.

Question 2

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

When organizations set a price level that will just recover costs, it is said that their target return figure is zero.

Question 3

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

Firms that provide critical public services have to face public or government agencies that review and approve prices. These firms sometimes pursue only satisfactory long-run targets.

Question 4

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 5

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 6

ProEdge Tech, a leading technology firm, has bluntly stated its pricing objective as: "Charge all the traffic will bear." This is an example of a
A) profit maximization objective.
B) unit sales growth objective.
C) growth in market share objective.
D) target return objective.
E) nonprice competition objective.

Accepted Answer

A profit maximization objective is stated as a desire to earn a rapid return on investment--or, more bluntly, to charge all the traffic will bear.

Question 7

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 8

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

A profit maximization objective seeks to get as much profit as possible. It might be stated as a desire to earn a rapid return on investment--or, more bluntly, to charge all the traffic will bear.

Question 9

Genetech Corp. has invested heavily to develop a patented new product. Genetech wants to achieve a rapid return on its investment. It probably should set a ______________ pricing objective.
A) profit maximization
B) target return
C) sales-oriented
D) status quo
E) None of these is a good answer

Accepted Answer

A profit maximization objective is stated as a desire to earn a rapid return on investment--or, more bluntly, to charge all the traffic will bear.

Question 10

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

Managers who aim for only satisfactory returns just want returns that ensure the firm's survival and convince stockholders they're doing a good job.

Question 11

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 investiment.

Question 12

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.

Question 13

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 14

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 15

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 these alternatives are correct.

Accepted Answer

A profit maximization objective seeks to get as much profit as possible.

Question 16

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 17

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 18

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

Pricing to achieve profit maximization doesn't always lead to high prices.

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

Question 20

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

A profit maximization objective seeks to earn "all the traffic will bear." If there are no competitors and the demand curve is inelastic, then profit maximization leads to high prices in the short run. But pricing to achieve profit maximization doesn't always lead to high prices. If the whole demand curve is fairly elastic, then penetration pricing may be better. There, the firm tries to sell the whole market at one low price.

Quiz 16: Pricing Objectives and Policies

A target return figure of zero implies:

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

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

A marketing manager may choose a pricing objective that is:

Target return pricing objectives:

ProEdge Tech, a leading technology firm, has bluntly stated its pricing objective as: "Charge all the traffic will bear." This is an example of a

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?

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

Genetech Corp. has invested heavily to develop a patented new product. Genetech wants to achieve a rapid return on its investment. It probably should set a ______________ pricing objective.

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

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

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

What is the objective of a target return strategy?

Profit maximization pricing objectives:

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

Pricing objectives should be explicitly stated because:

A profit maximization pricing objective

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: