CH9

Question 1

price

Answer 1

money exchanged for the ownership or use of a product

Question 2

price relationship to value

Answer 2

higher prices are assumed to provide greater benefits such as quality or durability

Question 3

skimming (D)

Answer 3

high initial price, then gradually reduce the price over time

Question 4

penetration(D)

Answer 4

low initial price to gain high market share

Question 5

prestige(D)

Answer 5

high price to attract quality or status conscious consumers

Question 6

odd-even (D)

Answer 6

pricing a few cents below and even number (399 instead of 400)

Question 7

target(D)

Answer 7

choosing a final price and then choosing suppliers to fit target price

Question 8

bundle(D)

Answer 8

combine 2 or more products for a lower price

Question 9

yield management(D)

Answer 9

varying prices based on time to match supply and demand

Question 10

standard mark up (C)

Answer 10

adding a fixed % to the cost of all items

Question 11

cost plus (C)

Answer 11

summing the total unit cost of providing a product/service and adding a specific amount to arrive at a price

Question 12

target profit pricing(P)

Answer 12

setting a profit target and then setting price to achieve then setting price to achieve the target profit

Question 13

target return on sales pricing(P)

Answer 13

setting price to achieve a target profit as a percentage of sales

Question 14

target return on investment pricing(P)

Answer 14

setting price to achieve a target profit as a percentage of investment in the product

Question 15

customary pricing(CM)

Answer 15

prices are generally the same for all competitors due to customary consumer price expectations

Question 16

above, at or below pricing (CM)

Answer 16

choosing to always have higher, the same, or cheaper prices than competitors

Question 17

loss-lead pricing(CM)

Answer 17

pricing some products low with the hope that consumers will also buy other profitable products

Question 18

demand curve

Answer 18

graph relating quantity sold and price, which shows how many units will be sold at a given price

Question 19

price elasticity

Answer 19

how sensitive consumer demand and firm revenues are to price change

Question 20

elastic

Answer 20

decrease/increase in price leads to increase/decrease in demand

Question 21

inelastic

Answer 21

increase/decrease in price has a minimal effect in demand

Question 22

setting a price

Answer 22

1. select an approximate price level (general pricing approach
2. set list price
3. make adjustments based on 2.
4. monitor and adjust prices accordingly