Chapter 10 Managing Price And Customer Cost Test Bank Docx

Applied Marketing, 2e (Padgett)

Chapter 10 Managing Price and Customer Cost Perceptions

1) Positioning influences the way customers see value in a product or service, and while the price is of major concern to the marketer, price has much less influence than effective positioning for the customer.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

2) Customer perceptions are more important than reality in setting prices.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

3) A marketer has assembled costs related to the cost of goods sold, the selling and marketing costs, and the costs of keeping the buildings running effectively. He or she is now ready to set the price of the product.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

4) Elastic demand characterizes discretionary items where a small change in the price of the items will have a noticeable effect on the number sold.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Knowledge

5) While marketers must pay attention to the prices charged by competitors and the expectations of customers, the effective way to attract customers at fair prices is to emphasis benefits and non-price elements.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

6) A significant disadvantage of cost-based pricing is that it is difficult to get accurate information about what customers would consider the true price.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Knowledge

7) Successful value-based pricing relies on thorough market research more than on the company's internal costs.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy; Pricing Strategies for New Products

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

8) One of the major problems marketers face with pricing is that although there are many "wrong" prices, there isn't one "right" price.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Knowledge

9) The closing of small businesses due to the actions of larger retailers such as Walmart or Amazon has created an environment where enforcement of violations is becoming stronger.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions; Protecting Companies from Negative Pricing Practices

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

10) Temporary market conditions can affect pricing, and this has become a defense of the practice of price discrimination.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions; Protecting Companies from Negative Pricing Practices

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

11) While consumers gain from artificially low prices in predatory pricing and price wars, they are harmed by the illegal practice of price-fixing.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

12) It is not unusual to see price mark-downs such as 50% off. A company does not to establish that products were sold at price as long as it can show it had been offered at that price for a reasonable period of time.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Knowledge

13) Consumers are familiar with the Manufacturer's Suggested Retail Price (MSRP), but it might be illegal to sell products at that price.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

14) The ratio to help you determine how much the sale of each unit will make in covering the fixed costs is the margin.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations; Terms You Need to Know

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

15) Experienced marketers hope to emulate entrepreneurs with a strong intuition for pricing without using financial tools.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations; Terms You Need to Know

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

16) ________ is one of the most difficult decisions in the marketing mix, since it directly influences customer perceptions of value.

A) Strategy

B) Costs

C) Market characteristics

D) Pricing

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

17) Price is a measure of the relative value of an item for both the customer and the ________.

A) seller

B) market characteristics

C) costs

D) owner

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

18) Price is related to ________ for both the buyer and seller.

A) market characteristics

B) cost

C) value

D) strategy

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

19) ________ must consider costs from both sides to set an acceptable price.

A) Customers

B) Sellers

C) Marketers

D) Owners

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

20) Marketers manage all elements of the marketing mix as customers will decide to buy not just on the price tag but on the perceived value and

A) competitive costs.

B) associated perceived costs.

C) information search costs.

D) brand feature costs.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

21) Which of the four Ps is the most objective assessment of the value of a product?

A) Product

B) Price

C) Place

D) Promotion

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

22) Which of the following statements accurately describes the price-customer cost relationship?

A) Money is the only potential cost from the customer's view.

B) Price is related to cost for the seller, but not the buyer.

C) Price is a measure of the relative value of an item for both the customer and the seller.

D) Marketers must consider costs from both sides to set an acceptable price.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

23) For an exchange to take place, a marketer knows that

A) both the buyer and seller see value being created in the exchange.

B) money needs to change hands.

C) the buyer must know exactly what he or she is receiving.

D) competitors cannot match the total offering.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

24) John is trying to figure out what to charge customers in the landscaping business he is starting. He knows what the labor costs are, and how to include the materials (plants, mulch, etc.) that he will use in the price. He thought he could add these two together, add an amount for profit and general expenses, and he'd have a fair price. Is he right?

A) Yes. He has the major items covered and incidentals can be covered in the general expenses.

B) No. He needs to ensure the price covers the tools needed for the job.

C) Yes. For a small or start-up business, pricing should be kept as simple as possible.

D) No. He needs to calculate any other expenses and add those into the price.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

25) Auctions are successful because

A) marketers don't need to set prices.

B) customers prefer to compete with one another.

C) customers have different perceived value for products.

D) marketers can avoid costly couponing and price promotions.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

26) An exchange will not take place until

A) both the buyer and seller feel both will realize additional value in a transaction.

B) the physical product can be delivered or the service rendered.

C) the buyer has made the purchase, and it meets expectations.

D) all direct and indirect costs have been included in the price.

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

27) Which of the following is NOT one of the four primary factors that influence price?

A) Customer perceptions

B) Company costs

C) Analyst expectations

D) Market characteristics

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Knowledge

28) Which of the following is NOT one of the primary factors that influence price?

A) Customer expectation

B) Company costs

C) Marketers

D) Competition

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

29) An expectation about the price of a given product is known as

A) pricing strategy.

B) reference price.

C) quote.

D) market price.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

30) To be financially successful, companies must also consider their own costs when setting

A) fixed costs.

B) variable costs.

C) strategy.

D) prices.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

31) How a price is presented can also influence customer price

A) feedback.

B) decisions.

C) perceptions.

D) comparisons.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

32) ________ change with quantity sold and are generally tied to the product sold.

A) Fixed costs

B) Variable costs

C) Reference costs

D) Marketing costs

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

33) Unlike variable costs, which vary with the quantity sold, ________ costs don't change based on sales.

A) reference

B) marketing

C) product

D) fixed

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

34) The four primary factors that influence prices are customer perceptions and expectations, company costs, market characteristics, and

A) the costs of the marketing mix.

B) competition.

C) selling costs.

D) taxes.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

35) What is the term for the costs of a product that change with each good sold?

A) Unit cost

B) Variable costs

C) Cost of goods sold

D) Break-even margin

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Internal Costs

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

36) Tracy's marketing team is doing long-range planning on their product, and they are using the product life cycle as a framework. Using this marketing tool, what usually happens to prices over the life of the product?

A) Prices increase until the end of the maturity phase, then drop rapidly.

B) Prices decrease after the introduction cycle.

C) Prices are lowest at introduction and rise gradually until the end of the mature stage.

D) Prices will hold steady until a critical mass of competitors enter the market.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Market Characteristics

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

37) Which of the following terms refers to the relative influence of price on demand?

A) Price sensitivity

B) Reference price

C) Fixed cost

D) Variable cost

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

38) All of the following are primary factors that influence prices, EXCEPT

A) customer perceptions or expectations.

B) company costs.

C) reference price.

D) market characteristics.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Comprehension

39) All of the following are marketing costs that are considered fixed costs, EXCEPT

A) sales salaries.

B) sponsorships.

C) commissions.

D) research and development costs.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Comprehension

40) You buy a can of beer from a vendor at Wrigley Field in Chicago. You are startled by the $9.50 price tag since you are used to paying between $6.00 and $7.50 at Great American Ballpark in Cincinnati. Which of the following most likely describes your beer buying experience?

A) Cultural differences influenced the stadium beer prices.

B) Past experience created a reference price for stadium beer.

C) Wrigley Field incurs higher fixed costs than does Great American Ballpark.

D) Great American Ballpark is in the midst of a price war involving stadium beer.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

41) Which of the following statements accurately describes internal costs and their effect on price?

A) Variable costs include sales salaries, advertising, and sponsorships.

B) Fixed costs include commissions, price discounts, and coupons.

C) Variable costs do not change based on product sales.

D) Fixed costs must be allocated across the quantity of product the company intends to sell.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

42) Which market is most sensitive to changes in price?

A) Gasoline

B) Salt

C) Air travel

D) Milk

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

43) If you go to a fancy steak house and see a hamburger on the menu for $1.19 or if you go to a fast food restaurant and see a hamburger on the menu for $24.00, you'd think something was not right. Marketers understand you are comparing those posted menu prices to your own

A) learned dining costs.

B) reference price.

C) perceived cost.

D) expected value.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

44) Your reference price will become more accurate and reflect real prices when

A) you have found a similar item online.

B) you have experience related to the product.

C) you have consulted your friends, family and colleagues.

D) you are not emotionally involved in making the purchase.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

45) Simon is reviewing the marketing department's budget and expenses, and some figures would not fit easily into fixed or variable costs categories. Paul gave him an easy way to distinguish between the two, which was to determine

A) if the costs are part of the marketing mix, then they are variable costs.

B) if the costs are linked to things that cannot be easily moved, then they are fixed expenses.

C) if the cost can be assigned on a per unit basis, then it is a variable cost.

D) if it is a cost associated with headquarters, then it is a fixed cost.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

46) The product life cycle curve can help marketers determine pricing. In general, as a product matures, the price will go down as

A) competitors exit the market.

B) costs to make the product go down as it matures.

C) inelastic prices are now becoming more elastic.

D) all profits have been realized in a product, and the firm is moving to harvest the remaining value.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

47) Price wars are usually harmful to firms because non-loyal customers will switch to whichever product has a lower price, and loyal customers

A) take advantage of lower prices, which diminishes profit.

B) will abandon the product as the image becomes cheapened.

C) will often pursue legal remedies.

D) will stay out of the market until prices stabilize.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

48) While it is relatively easy to determine variable costs as they are linked to the units produced, fixed costs are more difficult to determine as

A) much of the information is confidential and not readily available to the marketer.

B) there are no formulas to work with.

C) they must cover all the expenses of the firm and it may be difficult to get accurate estimates.

D) depreciation on fixed assets can vary with accounting practices.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

49) You are shopping. You find something that interests you and that you don't usually purchase. You'll do a quick internal search for information to see if the price offered seems reasonable. The term for this expectation for the product is a(n)

A) reference price.

B) recalled estimate.

C) comparative price.

D) expected cost.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Customer Perceptions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

50) The compensation for the CEO or owner of a firm must be included in the price the customer will pay. This expense is an example of

A) executive expenses.

B) variable costs.

C) fixed costs.

D) indirect expenses.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Internal Costs

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

51) Who usually wins in a price war?

A) The firm that started lowering the prices

B) The firm that responded after another firm lowered prices

C) The ultimate consumer who buys the product

D) The retailer who can capitalize on the lowest wholesale price

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Competition

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

52) When you are making a reasonably large purchase, you will probably go online to get some idea of the price. This is an example of which factor that influences a marketer's pricing?

A) Customer expectations

B) Comparatives

C) Externalities

D) Competition

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting; Competition

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

53) All of the following are considered variable costs, EXCEPT

A) expected unit sales.

B) manufacturing costs per unit.

C) sales promotion costs.

D) sales commissions.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

54) You work at a new retailer that is planning to use "compare at" price tags on each item of clothing. Based on your reading, what is the best way to ensure that these reference price comparisons are done legally?

A) Ensure that the merchandise was once sold for that price.

B) Ensure that the "compare at" price equals the base price for similar goods.

C) Ensure that each markup covers both fixed and variable costs.

D) Ensure that the pricing is the same for all customers at all stores.

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

55) Ignacio owns a successful food truck business selling smoothies. Karina just began her competitive food truck business and sells smoothies at lower prices than does Ignacio. What is Ignacio's best response?

A) Ignacio should avoid a price war with Karina and focus on the non-price benefits of his smoothies, like their organic and healthful ingredients.

B) Ignacio should recalculate his prices, paying specific attention to lowering his fixed costs. If possible, he should lower his prices to meet Karina's but go no lower.

C) Ignacio should focus on his variable costs and consider using lower-cost ingredients so that he can compete with Karina on price.

D) Counting on the brand loyalty of his customer base, Ignacio should use a price war to drive Karina out of business. At that point, he can return his prices to "normal."

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

56) When pricing existing products, the marketer must make three basic sets of decisions: the basis for setting the price, if the prices will change very much, and

A) how it relates to other products the company sells.

B) what the competition is doing.

C) how similar products in target retailers are priced.

D) how difficult or easy it will be to promote the price.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

57) A ________ strategy is defined as setting an initially high price and using gradual, timed price drops to make as much profit as possible over time by maximizing how much is made from each sale.

A) skimming.

B) price.

C) penetration.

D) value-based.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

58) Which of the following is defined as introducing a new product at a relatively low price with the intention of establishing a large market share before competitors can establish themselves?

A) Skimming strategy

B) Penetration pricing

C) Cost-based pricing

D) Value-based pricing

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

59) ________ prices provide consistency and decrease the price shopping of customers.

A) Prestige

B) Static

C) Cost-based

D) Value-based

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

60) Taking into consideration how the price of one product might influence the perception and price of another product is called price

A) calculating.

B) strategy.

C) prestige.

D) lining.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

61) When your grocery store advertises milk for 99 cents per gallon in order to lure you into the store with the hope that you will purchase other items at regular prices, it is called

A) loss-leader pricing.

B) high-low pricing.

C) everyday low pricing (EDLP).

D) bait-and-switch pricing.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

62) One of the most challenging pricing decisions a marketer faces is

A) knowing when the product is changing from the mature stage to the decline stage in the product life cycle.

B) keeping prices low without starting a price war.

C) establishing a price for new products without any market experience.

D) keeping track of the laws and regulations affecting pricing.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

63) When a new product is introduced to a market and is priced high with the intention of eventually lowering the price as the market becomes more competitive, marketers are using a pricing strategy known as

A) value-adding prices.

B) premium pricing.

C) rapid recovery.

D) skimming.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

64) Eduardo and David have developed a unique gaming accessory and are determining how to price it. Their market analysis has told them the accessory will appeal to a large number of gamers, it is relatively inexpensive to produce, and they already are thinking about how they could enhance the accessory to make it even more attractive. What kind of pricing strategy should they use?

A) Entrepreneurial

B) Penetration

C) Skimming

D) Contingent

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

65) An approach services use to set prices according to changing market conditions is known as

A) value-based pricing.

B) cost-based pricing.

C) premium pricing.

D) dynamic pricing.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

66) Chris and Lynn were watching sales slumping for their line of expensive, exotically-scented candles, and they had narrowed down their options to adjusting the price. Chris suggested the best thing to do would be to raise prices. Lynn thought Chris wasn't thinking clearly, but increasing prices to stimulate sales for luxury items is known as

A) reverse pricing logic.

B) prestige pricing.

C) enhanced value-based pricing.

D) dynamic pricing.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

67) Grace created innovative headphones with improved sound fidelity and greater comfort than any other product on the market. She has a good idea that none of current manufactures could create a product like hers any time soon, and she has a way of tracking the market to respond quickly to changes. She most likely will choose which kind of pricing strategy?

A) Discontinuous pricing strategy

B) Cost recovery strategy

C) Skimming strategy

D) Penetration strategy

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy; Pricing Strategies for New Products

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

68) A firm is assessing the pricing for all of its products of a specific product line in response to market pressures. This strategic review will need to assess pricing fundamentals–how pricing is set, how much flexibility the firm has to change prices, and

A) the success rate of past changes.

B) how the product line pricing fits with the company's other products.

C) how quickly competitors can respond.

D) how long it has been since the products were introduced to the market.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy; Pricing Strategies for New Products

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

69) Simon is the sales manager for a large resort. He had booked a block of rooms for a destination wedding at a package rate, he was able to charge the full rate for most customers, and he occasionally had to lower the price if he had unsold rooms as the time guests would arrive gets closer. The pricing strategy used was

A) dynamic pricing.

B) flexible pricing.

C) discriminatory pricing.

D) opportunistic pricing.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy; Pricing Strategies for New Products

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

70) Which of the following represents the primary difference between skimming and penetration strategies?

A) The stage of the product life cycle where the strategy works best

B) The market's initial response to the product's price and the long-term market developments

C) The level of competition in the current market

D) The perceived luxury or convenience of the product

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

71) Which of the following accurately describes a skimming strategy?

A) The product should appeal to the mass market.

B) It is best used for existing products.

C) To maintain market share, the company should be ready to improve the product.

D) Competition should be absent for an extended period after product launch.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

72) After the sold-out concert ends, you call for an Uber. You panic when the fare quoted to take you from the concert venue to your home is three times the fare that brought you from your home to the venue. What type of pricing strategy is Uber using in this example?

A) Prestige pricing

B) Static pricing

C) Dynamic pricing

D) High-low pricing

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

73) What is the primary similarity between cost-based and value-based pricing?

A) Both consider what customers expect to pay.

B) Both are easy to implement with or without knowledge of variable costs.

C) Both capture maximum profits possible.

D) Both are used to price existing products.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

74) Your firm is about to introduce a new product, and it is important to get a commanding share of the market to be able to set the standard. The development team believes it could add features to the product later, if needed. The firm has moved to a product development strategy and this is the first roll-out, so it is important to succeed. What would be the appropriate pricing strategy?

A) Developmental pricing

B) Incremental pricing

C) Penetration pricing

D) Market-based pricing

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy; Pricing Strategies for New Products

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

75) You are a brand manager for a line of headphones. You are tasked with pricing a new, improved set of wireless headphones that your company is releasing for the holidays. You have decided on using cost-based pricing since your variable costs are easily measured and obtained. You have also decided that prices will remain stable regardless of market conditions. What do you need to do next to complete your pricing task?

A) Ensure that the price of the improved wireless headphones is higher than the prices of your company's wired headphones or of your older wireless headphones. The higher price will denote higher value to the customers.

B) Consider using prestige pricing to enhance brand image and denote products of higher value than those of your competitors.

C) Investigate any potential legal issues related to the prices of your headphones.

D) Since this is a new product, decide whether to use a skimming strategy or a penetration strategy.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

76) One of the fundamental "building blocks" of pricing is an estimate or understanding of how many units can be sold in a given period–usually a year. This estimate is known as expected unit sales or

A) annual product sales.

B) demand forecast.

C) sales forecast

D) product forecast.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

77) The product of expected unit sales and variable unit cost is known as

A) total variable costs.

B) fixed costs.

C) variable costs.

D) expected unit sales.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

78) What is the first step in setting a base price?

A) Analyze competitor's prices, offers, value propositions

B) Estimate demand and revenue

C) Determine cost, volume, and profit relationship for different price points

D) Set pricing objectives

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Communication

Standard 2: Bloom's || Knowledge

79) Which of the following statements accurately describes base price?

A) It is the final price customers pay at the retail outlets.

B) It does not account for consumer value perceptions, a disadvantage.

C) It often is adjusted to achieve specific marketing goals.

D) It ignores competitive offerings, an advantage.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

80) Which of the following is an example of a common adjustment to the base price?

A) A designer purse line prices small, medium, and large bags with corresponding price points.

B) A bar offers half-price drinks and appetizers during happy hour from 4-7pm.

C) A luxury watch brand charges only prestige prices.

D) A manufacturer sells products for one price to a wholesaler, who then charges another price to the retailer.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

81) Damon is developing a marketing plan for the product he is managing. What calculation will he use to determine how many incremental sales he will have to make if he increases advertising efforts by three different amounts?

A) Bread-even analysis

B) Total variable costs

C) Total fixed costs

D) Unit contribution

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

82) Analyses and calculations use estimates and projections. These will be imprecise, but the calculations require precision. Which of the following is NOT an approach that marketers can use to get more precise estimates?

A) Marketing research

B) Forecasts from sales representatives in the field

C) Forecasts from trade associations

D) Executive opinions

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

83) All of the following are considered fixed costs, EXCEPT

A) rent.

B) advertising.

C) salaries.

D) sales promotion costs.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

84) Dante is developing a small business selling office supplies for home offices, and he needs to set prices for his full line of merchandise. What's the first step he needs to take?

A) Learning what competitors are charging for similar merchandise

B) Estimating demand and revenue

C) Commissioning market research

D) Setting pricing objectives

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps; Setting a Base Price

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

85) Gregory manages a men's clothing store, and he notices that men will buy suits without getting appropriate shirts and ties. To provide a financial incentive to get customers to get the complete outfit, he could try

A) offering discounts on the shirts or ties.

B) creating rebates if the customer buys more than one outfit.

C) developing one-time offers for regular customers.

D) bundling all three items for a price lower than for the three separately.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps; Common Adjustments to the Base Price

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

86) As brand manager for a popular ice cream, you offered a "buy one, get one half off" discount. Sales were substantial, but your boss is angry with you. What is the most likely reason?

A) The company lost money because brand-loyal customers would have bought the ice cream at the base price.

B) The company lost customers because it had positioned the product as one of prestige and lowering the price tarnished that image.

C) The company could be accused of predatory pricing.

D) The ice cream base price was considered an EDLP and should never be adjusted.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

87) Ming-tao was trying to figure out how much revenue he would have to bring in on a specific product to start earning a profit. He wanted to know the point at which the total sales at a given price level needed to produce zero profits, but cover costs. To determine the this, he needs to know the fixed costs and

A) markup.

B) expected unit sales.

C) contribution margin.

D) unit variable cost.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Synthesis

88) You own a small local restaurant that is popular with an older clientele. Your busiest hours are from 6pm until 8pm. Since your dining room is practically empty from 4pm until 6pm, you decide to make those "early bird" hours and offer drink and entrée specials during that time. Many of your regular customers are happy and have shifted their dining hours into the early bird range. After a few months, you note that sales increased, but you are losing money. What is the most likely reason?

A) You primarily are selling to your loyal customer base who would have purchased the meals at full price.

B) Your base price is set too low given the increased volume of restaurant clientele.

C) You considered the price only from the customer's perspective and not from your own as the seller.

D) Your customers prefer the price bundling provided in the early bird hours.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

89) The first step in setting a base price for a product is

A) estimate demand and revenue.

B) determine cost, volume and profit relationships for different price points.

C) analyze competitors' prices, offers and value propositions.

D) set pricing objectives.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

90) Which term refers to the act of setting prices below an item's variable cost with the goal of putting competitors out of business?

A) Predatory pricing

B) Bait and switch

C) Price-fixing

D) Price discrimination

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

91) Rick had solid information about the internal costs, volume and objectives he needed to set prices for the next year. Before he can set prices, he also needs to understand what is going on the market in general. He will examine the competitors' overall pricing, and he will need to research consumer demand for the products to know how the size of the total market and

A) the competitors' break-even points.

B) the demand for his product.

C) the impact of changing demographics.

D) the actual sales for the past three years.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

92) Sharie camped out all night outside a retailer to get an unbelievably low, advertised price on a hot-selling toy for her children. She was the first in line, but when the store opened, she was told there were no more available at that price, but there were some higher-priced toys. Since no one had gotten there before her, she couldn't believe it. This is an example of an illegal practice known as

A) false pricing.

B) deceptive pricing.

C) bait-and-switch pricing.

D) fraudulent pricing.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions; Protecting Companies from Negative Pricing Practices

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

93) Maya is setting prices for her home remodeling business. Over the course of the year, there are times of peak activities–such as pre-holidays–and times when consumers were not as interested in home remodeling. This is an issue throughout the industry, so she knows it isn't just her business. After she determines a base price for the service, she could stimulate demand during the slow periods by using

A) discounts.

B) bundling.

C) premium pricing.

D) no-cost consultations.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

94) Nevin has an electronics store with a focus on high-end audio and visual products. He knows he cannot compete with the "big box" stores to attract everyone, so he has focused on people who demand high quality in their electronics even though some can't easily afford it. He has already used rebates, especially those offered by the manufacturers. He doesn't want to lower his prices as a large part of his customer base can afford his prices. What other discounting option does Nevin have that makes sense for his business and won't undermine the base price?

A) Price lining

B) Financing

C) Buy-one-get-a-discount-on-the-second purchases

D) Refer-a-friend bonuses

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

95) Angie needed a new refrigerator after her old one stopped working and couldn't be repaired. At the appliance store, she ended getting a new refrigerator plus a new stove and dishwasher because the sales associate showed her that by buying all three, should could save money that she could save not buying any of the items separately. The store used what kind of adjustment to the base price?

A) Financing

B) Quantity discounting

C) Rebates

D) Bundling

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

96) A large regional chain of office-supply stores has developed a practice of setting lower prices than small stores can offer. If the chain can force the small stores out of business, the chain will then return prices to the previous or higher levels. The practice is known as

A) strategic discounting.

B) predatory pricing.

C) price discrimination.

D) flexible pricing.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions; Protecting Companies from Negative Pricing Practices

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

97) Which of the following accurately describes illegal pricing practices that affect competition?

A) Enforcement of violations has increased significantly in recent years.

B) The Robinson-Patman Act of 1936 introduced the earliest pricing regulations.

C) Laws regarding predatory pricing are the most easily enforceable.

D) Customers often are disgruntled when the government halts a company's predatory pricing scheme.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

98) An electronics store advertises a flat-screen television for an astonishingly low price in its after-Thanksgiving sale advertisements. Though you are first in line on sale day, you learn that the store never had that model in stock. The salesperson offers to sell you a similar television at a discounted, though higher, price. What term describes your experience?

A) Predatory pricing

B) Bait and switch

C) Price-fixing

D) Price discrimination

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

99) Which of the following accurately describes illegal pricing practices that affect customers?

A) MSRP references are now considered illegal.

B) The Robinson-Patman Act of 1936 introduced the first pricing regulations.

C) The Robinson-Patman Act of 1936 does not apply to services.

D) Companies cannot charge different prices for the same thing, even when attempting to meet competitors' prices.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Analysis

100) What is the best synthesis of the illegal practices of predatory pricing and price-fixing?

A) Competition plays a crucial role.

B) Customers ultimately benefit from lower prices.

C) Temporary market conditions are potential defenses.

D) Services provide a loophole wherein the practice may be lawful.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Synthesis

101) Businesses in the U.S. often compete on price, and competition can be very tough beyond pricing. Competing on price is an accepted practice in the marketplace and under the law. What is the name of the practice that goes beyond fair competition to drive another business out of the market by dropping prices to an extremely low level with the intention of destroying another business?

A) Loss-leader pricing

B) Domestic dumping

C) Predatory pricing

D) Monopolistic pricing

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Comprehension

102) Which of the following is calculated by multiplying expected unit sales by unit price?

A) Unit contribution

B) Markup

C) Total costs

D) Total revenue

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Communication

Standard 2: Bloom's || Comprehension

103) Some companies will drop prices to a point where competitors may question their motives. Although federal law prohibits predatory pricing and similar actions, the situations are rarely prosecuted because it is difficult to prove and

A) the fines are so low it's not worth the effort.

B) consumers gain from artificially low prices.

C) primary jurisdiction is often with the states.

D) few lawyers are qualified to prosecute or defend charges in this area.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

104) Daniel and Sarah were going to a movie, and they started discussing the way the theater offered discounts to senior citizens before 6:00 pm. Sarah commented, "That's discrimination. They see the same movie in the same seats. Why should they pay less?" Which of the following is NOT one of the explanations as to why this is not treated as discrimination?

A) Marketers can use pricing as a way to influence demand.

B) Services are not subject to the Robinson-Patman Act.

C) Marketing practice allows discounts as long as they do not discriminate within protected classes.

D) Senior citizens can rarely afford the costs of the full-priced tickets.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

105) Debra is trying to determine the optimum level for advertising for the next year, and among the tools she will use, she will certainly include

A) profit and loss analysis.

B) competitive response projections.

C) break-even sales and volumes.

D) media quantity discounts.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations; Terms You Need to Know

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

106) You have a small landscaping business. You pay $5,000 per month to lease land, $2,500 per month in growing materials, and $1,000 per month on promotional materials. You also pay your landscapers $4,000 per month. What are your total fixed costs for the year?

A) $108,000

B) $120,000

C) $126,000

D) $150,000

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

107) You expect to sell 3,000 units of Product XYZ at $5 per unit. Your total variable costs are $1 per unit and your fixed costs are $4,000 per year. What is your expected profit (or loss) on the venture?

A) ($34,000)

B) ($10,000)

C) $8,000

D) $15,000

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

108) You have 20 percent market share of an industry that sells 1,000 total units each year. You know that each unit contributes $2,000 to profits. If your fixed costs amount to $250,000, what is your profit or loss for the year?

A) $150,000

B) $400,000

C) $650,000

D) $1,750,000

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Application

109) You have a small business selling beaded bracelets. You charge $15 per bracelet and expect to sell 4,500 bracelets each year. You pay your one employee $1,500 per month. Other expenses include $500 per month for promotion and $6 per unit on craft materials. At what revenue amount will your business earn a profit of zero, but cover associated costs?

A) $24,000

B) $37,500

C) $40,000

D) $67,500

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

110) Alex and Monica decided on a Saturday morning to have four other couples over that evening for a cookout. After they figured out how many people would be coming, they began to plan what to serve. Alex found steaks on sale at about $3.00 a pound cheaper at a store about ten miles away. Monica said, "We'll just get the meat here instead along with the other supplies. That's not enough of a savings to go there." Marketers know that customers are concerned about more than just the actual per item price. What did Monica see in the total price to counteract what seems like a very good deal?

Learning Objective: 10.1 Define prices and the relationship between price and customer costs perceptions.

Section Reference: The Price-Customer Cost Relationship Influences of Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

111) What can be said of price spirals considering how they negatively affect businesses?

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

112) How does the stage in the product lifecycle influence pricing?

Learning Objective: 10.2 Describe the primary influences on price setting.

Section Reference: Influences on Price Setting

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

113) Which ideas validate the term prestige pricing?

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

114) Identify and discuss the conditions that must be met in order for skimming to be effective.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Evaluation

115) Identify and discuss the conditions that must be met in order for penetrative pricing to be effective.

Learning Objective: 10.3 Describe the differences between pricing strategies for new products versus existing products, and identify pricing strategy options in both cases.

Section Reference: Pricing Strategy

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Evaluation

116) Catherine had calculated and was using a set of prices to market her product line of baking pans and related items. Midway through the year, a competitor introduces an imported product line of comparable products at a much lower price. Catherine does not want to start a price war, but she knows she must respond. To determine what pricing options she has, she will need to re-examine all of the calculations she made. Which factors can she consider changing and which will remain the same?

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Synthesis

117) Assume you were tasked with calculating the outcome for the following question: How much profit or loss are you making if you have 15% market share? Why is this calculation important? Explain.

Learning Objective: 10.6 Calculate and apply the key financial indicators used to make pricing decisions.

Section Reference: Pricing Calculations

Standard 1: AACSB || Analytic

Standard 2: Bloom's || Evaluation

118) Identify and describe common adjustments to price that are used by marketers. Provide an example of each.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

119) Identify and discuss three of the six steps of the price-setting process.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Application

120) Marketers go through a great deal of time and effort to set accurate and reasonable bases prices. When they make adjustments to the base price, they do so for specific reasons. Identify three common adjustments marketers make to the base price and for each, briefly describe when that adjustment would make the most sense.

Learning Objective: 10.4 List and describe the six steps used to set a price, and describe the most common adjustments to arrive at a final price.

Section Reference: Price-Setting Steps

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Evaluation

121) Discuss predatory pricing, including definition. Include an example—either real life, or one that you make up—to illustrate this concept further.

Learning Objective: 10.5 List and describe the common legal issues related to pricing decisions.

Section Reference: Legal Issues Related to Price Decisions

Standard 1: AACSB || Reflective Thinking

Standard 2: Bloom's || Analysis

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