Chapter 1

Question 1

Refers to the total cost for customers to acquire the product and may involve both monetary and psychological costs such as the time and effort expended in the acquisition.

Answer 1

Price

Question 2

It determines the value of a good or service to the buyers even to the sellers

Answer 2

Price

Question 3

It is the amount of
money needed in order to acquire a product or service and its accompanying service.

Answer 3

Price

Question 4

It is the amount of money charged for a product or service or the sum of the values that consumers
exchange for the benefits of having or using the product or service.

Answer 4

Price

Question 5

The only element in the marketing ix the produces revenue

Answer 5

Price/pricing

Question 6

expenses that vary directly with the level of production

Answer 6

Variable Costs

Question 7

overhead costs are expenses that do not vary even if the level of production or sales changes

Answer 7

Fixed costs

Question 8

not directly attributed to creating a product
or service.

Answer 8

Fixed costs

Question 9

Five steps in developing pricing strategy

Answer 9

1. Objective
2. Broad pricing Policy
3. Price Strategy
4. Implementing Price Strategy
5. Price Adjustments

Question 10

The firm is interested in sales growth and/or maximizing market share.

Answer 10

Sales Based

Question 11

The concern of the company is to increase sales by offering new product design, product lines, and promotional items

Answer 11

Sales Based

Question 12

The firm is interested in maximizing profit, earning a satisfactory profit,
optimizing the return on investment, or securing an early recovery of cash

Answer 12

Profit-Based

Question 13

Its thrust is to satisfy the investors/stockholders by providing them an immediate return of investment.

Answer 13

Profit Based

Question 14

The firm seeks to avoid reasonable government actions, minimize
the effects of competitor actions, maintain good channel relations, discourage the entry of competitors, reduce demands from suppliers, and stabilize prices

Answer 14

Status quo Based

Question 15

The goal of the company
is to maintain a good image of the community by creating projects/programs that protect
its welfare and goodwill

Answer 15

Status Quo Based

Question 16

provides procedures, rules, and methods to act in one specific situation. It links prices with the target market, image, and other marketing elements. It makes sure that pricing decisions are coordinated by other sellers.

Answer 16

Broad Price Policies

Question 17

Broad Price policies include

Answer 17

Penetration and Skimming Pricing

Question 18

uses low prices to capture/attract the larger/mass market for a
product or service

Answer 18

Penetration Pricing

Question 19

The preference of the mass majority of the market will be the basis of the price set

Answer 19

Penetration Pricing

Question 20

uses high prices to attract the market segment more concerned with
product quality, uniqueness, or status than price

Answer 20

Skimming Pricing

Question 21

The seller chooses a high price in order
to determine who will really patronize the product.

Answer 21

Skimming Pricing

Question 22

are ways or some actions to accomplish the goals and objectives of the company
in gaining profit

Answer 22

Pricing Strategies

Question 23

Price strategy can be classified into three different categories:

Answer 23

1. Cost based price strategy
2. Demand based price strategy
3. Competition based price strategy

Question 24

is when the firm sets prices by computing merchandise, services, and overhead costs than adding the desired profit to those figures

Answer 24

Cost Based Price Strategy

Question 25

True or False After combining all the expenses incurred during the production of the product, the seller must also decide the best profit as part of the price of a product is part of Cost Based pricing.

Answer 25

TRUE

Question 26

T or F Cost Based pricing is when the firm sets prices after researching consumer desires and makes sure the range of prices is acceptable to the target market.

Answer 26

False. Demand based is when the firm sets prices after researching consumer desires and makes sure the range of prices is acceptable to the target market.

Question 27

The firms conduct researches regarding the saleability of the product. If the product meets the criteria of the market, the firm can raise the price of the product because it can assure profit based on the market demand This is under what strategy?

Answer 27

Demand based Price strategy

Question 28

is when the firm sets prices in relation to the competitors. The entrepreneur must research the prices set by their competitors.

Answer 28

Competition Based Price Strategy

Question 29

________is the firm readiness to sell the product which would be effective if given an attractive price strategy

Answer 29

Implementing Price strategy

Question 30

when one price is maintained over an extended period of time. Normally the price of the product will not be easily changed.

Answer 30

Customary Pricing

Question 31

The entrepreneur must consider the price of the product which is affordable to the majority of buyers.

Answer 31

Customary pricing

Question 32

is when the price responds to cost fluctuations or differences in demand.

Answer 32

Variable Pricing

Question 33

The entrepreneur must consider the law of demand and supply. If there are sufficient supplies and few demands, the price will increase and vice versa

Answer 33

Variable Pricing

Question 34

is when the price is charged to all customers buying the product or service under similar conditions

Answer 34

One Price Policy

Question 35

The entrepreneur will set one price for all products available for sale even though they differ from design.

Answer 35

One price policy

Question 36

is based on the customer's ability to negotiate or buy the power of the customer

Answer 36

Flexible pricing

Question 37

The entrepreneur must meet the needs and wants of the customer so that they need to adjust the price just to ensure continued patronage and loyalty.

Answer 37

Flexible Pricing

Question 38

is prices set at levels below even values. The entrepreneur uses odd numbers to attract customers in pricing a product

Answer 38

Odd pricing

Question 39

is when the consumers believed that high price represents high quality and low prices represent low quality

Answer 39

Price quality association

Question 40

is when customers set price floors and will not buy at prices below those floors. Above price ceilings, items would seem too expensive.

Answer 40

Prestige pricing

Question 41

The entrepreneur must consider that products must follow the price floor and ceiling set by the government.

Answer 41

Prestige pricing

Question 42

Is selling key items at low prices to gain consumer loyalty within its product line.

Answer 42

Leader pricing

Question 43

Under the pricing strategy, it is hoped that the customers will buy regularly priced products together with the specially priced one. The entrepreneur must be aggressive to win the respect of the competitors so as they can value the actions that will take place

Answer 43

Leader pricing

Question 44

is when the entrepreneur offers discounts to consumers for buying in large quantities.

Answer 44

Multiple Unit pricing

Question 45

The entrepreneur must consider that selling more units will produce more profits. To prevent overstocking and maintain proper inventory, selling in bulk can increase profit and promote growth

Answer 45

Multiple Unit pricing

Question 46

is when instead of setting one price for a single model of a good or service, the firm sells two models of different quality and features at different prices

Answer 46

Price Lining

Question 47

is when the firm offers a basic product, options, and customer service for one total price

Answer 47

Price Bundling

Question 48

when the firm sells by individual components and allows customer to decide what to buy

Answer 48

Unbundled Pricing

Question 49

The entrepreneur will set the price of the product item from the other. It can be sold separately and individually.

Answer 49

Unbundled Pricing

Question 50

is when the prices are set depending on the distance of the buyer to the seller. Normally this activity is done if both parties are or from each other.

Answer 50

Geographic Pricing

Question 51

when the buyer pays for all freight charges regardless of the distance.

Answer 51

FOB Factory

Question 52

The buyer must be willing to pay all the expenses incurred during the transfer of the product from one place to another

Answer 52

FOB Factory

Question 53

is when buyers pay the same delivered price for the same quantity of goods. The entrepreneur shall consider the number of goods in setting the price of the product.

Answer 53

Uniform Delivered Pricing

Question 54

is when the buyers within the geographic zone pay a uniform delivered price. The entrepreneur must provide the same measure of charges to one particular location

Answer 54

Zone Pricing

Question 55

when the cost of transporting the goods is computed from the base point nearest buyer

Answer 55

Base point pricing

Question 56

price agreements, including discounts, the timing of payments, and credits agreements

Answer 56

Terms of Payment

Question 57

are a reduction in the selling price given to customers for varying reasons: paying in cash, performing certain functions, buying in large quantities, and off-season buying

Answer 57

Discounts

Question 58

Changes in cost, competitive conditions and consumer demand require changes in price.

Answer 58

Price Adjustments

Question 59

are regularly quoted prices to customers, as in catalogs, price tags, and purchase orders

Answer 59

List Prices

Question 60

happen when the contract which allows price increase after the sale is concluded before delivery is made

Answer 60

Escalator clause

Question 61

The seller must communicate to the buyer that there is a price adjustment due to some reasons and must agree to the new price

Answer 61

Escalator clause

Question 62

is supplementary to list prices.

Answer 62

Surcharge

Question 63

These are additional charges added to the total price. The seller can include this or disregard to better gain customer loyalty and profitability of the company

Answer 63

Surcharge

Question 64

happens when the company is raising regular selling prices because demand is unexpectedly high, or costs are rising

Answer 64

Mark-ups

Question 65

are reductions from original selling prices to meet lower prices of competitors, overstocking, shop-worn merchandise, and increase customer traffic

Answer 65

Markdowns

Question 66

setting the price steps between various products in a product line based on cost difference between the products, customer evaluations of different features and competitor‘s price

Answer 66

Product line pricing

Question 67

the pricing is along with the main product.

Answer 67

Optional product pricing

Question 68

setting a price for products that must be used along with a main products that must be use along with a main products, such as blades for razor and film for a camera.

Answer 68

Captive product pricing

Question 69

setting a price in order to make the main product‘s price more competitive

Answer 69

By-product pricing

Question 70

combining several products and offering the bundle at a reduced price.

Answer 70

Product bundle pricing

Question 71

a straight reduction in price on purchase during a stated period of time.

Answer 71

Discount and allowance pricing

Question 72

selling a product or service at two or more prices, where the difference in prices is not based on different cost

Answer 72

Segmented pricing

Question 73

A pricing approach that considers the psychology of prices and not simply the economics; the price is used to something about product

Answer 73

Psychological pricing

Question 74

temporarily pricing products below the list price and sometimes even below cost to increase short ruin sales

Answer 74

Promotional Pricing

Question 75

A company also must decide how to price its products for customers located in different parts of the country or world.

Answer 75

Geographical Pricing

Question 76

Companies that market products internationally must decide what prices to charge in the different countries

Answer 76

International Pricing

Question 77

Supermarkets and department stores often drop the price on well Known brands to stimulate additional store traffic

Answer 77

Loss-leader pricing

Question 78

Sellers will establish special prices in certain seasons to draw in more customers

Answer 78

Special Event pricing

Question 79

True or false Manufacturers of loss-leader brands typically object because this practice can dilute the brand image and bring complaints from retailers who charge the list price.

Answer 79

True

Question 80

Sellers will establish special prices in certain seasons to draw in more customer

Answer 80

Special event pricing

Question 81

Auto companies and other consumer-goods companies offer this to encourage purchase of the manufacturers‘ products within a specified time period.

Answer 81

Cash Rebates

Question 82

can help clear inventories without cutting the stated list price.

Answer 82

Rebates

Question 83

Instead of cutting its price, the company can offer this to attract customers

Answer 83

Low interest financing

Question 84

Sellers, especially mortgage banks and auto companies, stretch loans over longer periods and thus lower the monthly payments

Answer 84

Longer Payment

Question 85

Companies can promote sales by adding a free or low- cost warranty or service contract.

Answer 85

Warranties and service contracts

Question 86

This strategy involves setting an artificially high price and then offering the product at substantial saving

Answer 86

Psychological discounting

Question 87

Different customer groups are charged different prices for the same product or service. For example, museums often charge a lower admission fee to students and senior citizens

Answer 87

Customer segmented pricing

Question 88

Different versions of the product are priced differently but not proportionately to their respective costs.

Answer 88

Product form pricing

Question 89

Some company‘s price the same product two different levels based on image differences at

Answer 89

Image pricing

Question 90

Coca-Cola carries a different price depending on whether it is purchased ill a fine restaurant, a fast-food restaurant, or a vending machine

Answer 90

Channel Pricing

Question 91

The same product is priced differently at different locations even though the cost of offering at each location is the same

Answer 91

Location Pricing

Question 92

Prices are varied by season, day, or hour.

Answer 92

Time pricing

Question 93

To determine the right price:

Answer 93

1. The customer's perception of the value of the kind of business firm; 2. The costs involved such as overhead, storage, financing, production, and distribution; and, 3. The profit objectives of the firm

Question 94

this method covers all costs, variable and fixed, plus an extra increment to deliver profit

Answer 94

Cost plus pricing

Question 95

this is a method of pricing where the firm sets prices based on buyer desires. The range acceptable to the target market is determined.

Answer 95

Demand pricing

Question 96

this method of pricing calls for price-setting on the basis of prices charged by competitors

Answer 96

Competitive pricing

Question 97

This is a form of cost-oriented pricing in which the firm sets prices by adding per-unit merchandise costs, operating expenses, and desired profit

Answer 97

Market Pricing

Question 98

what are the two factors that influence Price determination

Answer 98

Internal and External

Question 99

True or False The marketing objectives, marketing mix strategy, and the cost-plus pricing strategy is under external factors

Answer 99

False. The marketing objectives, marketing mix strategy, and the cost-plus pricing strategy is under Internal factors

Question 100

What are the external factors in pricing strategy?

Answer 100

Market demand Competitors' strategy Economic and other social concerns