Chapter 15 Flashcards
(30 cards)
Which of the following marketing mix variables is the only one that directly generates revenue for a firm? a) Product b) Promotion c) Place d) Price
d) Price
What is the primary purpose of setting pricing objectives for an organisation? a) To confuse competitors b) To maximise advertising spend c) To define what the company wants to achieve with its pricing d) To minimise production costs
c) To define what the company wants to achieve with its pricing
Which pricing objective focuses on generating the highest possible revenue, potentially at the expense of profit? a) Maximising profits b) Maximising market share c) Maintaining the status quo d) Maximising sales
d) Maximising sales
.
When a company sets its prices to gain a larger percentage of the total sales within its industry, what pricing objective are they primarily pursuing? a) Maximising profits b) Maximising market share c) Maximising sales d) Achieving a target return on investment
b) Maximising market share
Which of the following is NOT typically considered a factor in the external environment that affects pricing decisions? a) Competition b) Economy c) Government regulations d) Production costs
d) Production costs
.
The sensitivity of buyers to changes in price is referred to as: a) Market demand b) Competitive pricing c) Price elasticity of demand d) Value perception
c) Price elasticity of demand
What is the term for state laws that require sellers to maintain a minimum price level for similar products, aiming to protect smaller businesses? a) Predatory pricing laws b) Bait-and-switch regulations c) Unfair trade laws d) Price discrimination laws
c) Unfair trade laws
What is the illegal pricing strategy where a company sets very low prices with the intention of driving competitors out of business? a) Price fixing b) Price skimming c) Predatory pricing d) Price gouging
c) Predatory pricing
The point at which a company’s total revenue equals its total costs is known as the: a) Profit margin b) Revenue threshold c) Breakeven point d) Cost equilibrium
c) Breakeven point
.
Which of the following is an example of a fixed cost for a business? a) Raw materials b) Labour costs c) Sales commissions d) Rent
d) Rent
Which of the following is the formula for calculating the contribution per unit? a) Total Revenue - Total Fixed Costs b) Selling Price + Variable Costs c) Selling Price – Variable Costs d) Total Costs / Number of Units Sold
c) Selling Price – Variable Costs
What type of introductory pricing strategy involves setting a high initial price for a new product to attract less price-sensitive customers and potentially recover development costs quickly? a) Penetration pricing b) Competitive pricing c) Price skimming d) Cost-plus pricing
c) Price skimming
Which introductory pricing strategy involves setting a low initial price to gain a large market share quickly? a) Price skimming b) Premium pricing c) Penetration pricing d) Value pricing
c) Penetration pricing
A pricing strategy where a certain amount of profit is added to the total cost of a product to determine its price is called: a) Value pricing b) Prestige pricing c) Cost-plus pricing d) Demand-backward pricing
c) Cost-plus pricing
What is the term for an amount added to the cost of a product to set the final price? a) Discount b) Rebate c) Markup d) Allowance
c) Markup
Pricing a product slightly below a whole dollar amount (e.g., £5.99 instead of £6.00) is known as: a) Prestige pricing b) Psychological pricing c) Odd-even pricing d) Demand-based pricing
c) Odd-even pricing
Setting a higher price for a product to signal that it is of high quality is referred to as: a) Economy pricing b) Prestige pricing c) Competitive pricing d) Value pricing
b) Prestige pricing
What pricing approach involves determining the price based on what customers are willing to pay and then designing the offering around that price? a) Cost-based pricing b) Value-based pricing c) Demand backward pricing d) Going-rate pricing
c) Demand backward pricing
The process where companies submit offers to buy or sell products at prices specified in sealed envelopes, with the most favourable bid typically being chosen, is called: a) Negotiated pricing b) Dynamic pricing c) Sealed bid pricing d) Auction pricing
c) Sealed bid pricing
When products like commodities are priced at the same level regardless of the seller or buyer, this is known as: a) Competitive parity pricing b) Going-rate pricing c) Uniform pricing d) Standard pricing
b) Going-rate pricing
The strategy of selling multiple products or services together at a single price that is lower than the sum of their individual prices is called: a) Product line pricing b) Price lining c) Price bundling d) Loss leader pricing
c) Price bundling
2.
What pricing strategy is used when customers are required to buy specific replacement parts or services for a product they have already purchased, often at a higher margin? a) Predatory pricing b) Skimming pricing c) Captive pricing d) Discount pricing
c) Captive pricing
Deciding how to price a company’s related products or services, such as options on a car, is part of: a) Psychological pricing b) Geographical pricing c) Product mix pricing d) Promotional pricing
c) Product mix pricing
A pricing strategy where customers pay two separate charges for a product or service (e.g., a base rate plus usage fees for a mobile phone plan) is called: a) Segmented pricing b) Variable pricing c) Two-part pricing d) Tiered pricing
c) Two-part pricing
