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Flashcards in Exam 2 Deck (60):
1

Which of the following is true with regard to price?

Historically, price has had the least perceptible impact on buyer choice.

2

What sets the floor for product prices?

product costs

3

Cost-plus pricing ________.

involves adding a standard markup for profit

4

Herbie Inc., a firm manufacturing sandwich makers, has fixed costs of $250,000, variable costs of $20 per unit of output, and expected unit sales of 50,000 units. What is the unit cost of a sandwich maker manufactured by Herbie?

$25

5

Target return pricing is a variation of which of the following cost-oriented pricing approaches?

break-even pricing

6

The break-even volume is the point at which ________.

the total revenue and total cost curves intersect

7

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?

125,000

8

A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to break even?

$12

9

Which of the following is an internal factor that affects pricing decisions in a company?

the overall marketing strategy of the company

10

If demand hardly changes with a small change in price, the demand is ________.

inelastic

11

Buyers are less price sensitive when ________.

the product they are buying is unique

12

There was a 35 percent increase in demand for a product after the seller decreased its price by 14 percent. Therefore, the price elasticity of demand is ________.

-2.5

13

Price elasticity of demand is represented by ________ divided by ________.

percentage change in quantity demanded; percent change in price

14

Which of the following is true with regard to pure competition?

Under pure competition, no single buyer or seller has much effect on the going market price.

15

Under ________, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price.

monopolistic competition

16

Companies which set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

market-penetration pricing

17

Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

market-penetration pricing

18

Which of the following is true of product line pricing?

The price steps take cost differences between products in the line into account.

19

Which of the following companies uses product line pricing?

Mobile Point, which launched a range of cell phone models, each priced according to its features

20

Which of the following is true of optional product pricing?

It involves pricing accessory products sold with the main product

21

Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two of the firm's models share the same specifications. What type of pricing does Multiprint use?

captive product pricing

22

Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

by-product

23

Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

product bundle pricing

24

Which of the following is a price adjustment strategy?

discount and allowance pricing

25

Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly?

cash discount

26

A(n) ________ refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

allowance

27

________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.

Promotional

28

Which term refers to prices that buyers carry in their minds and check with when they look at a given product?

reference prices

29

What type of pricing is being used when a company temporarily prices its product below the list price to create buying excitement and urgency?

promotional pricing

30

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

dynamic pricing

31

Which of the following is true of FOB-origin pricing?

It is an expensive alternative for customers in distant locations.

32

When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.

maintain its current prices and profit margin

33

When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.

price fixing

34

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

predatory pricing

35

________ occurs when a seller states price savings that are not actually available to consumers.

Deceptive pricing

36

Thinking Cap Corp. prices its various cap designs at different price levels, ranging from $2.05 to $5.95. This is an example of optional product pricing.

False

37

Consumers who have no past experience with a product are especially likely to judge it by its price.

True

38

In segmented pricing, the difference in prices is based on differences in costs.

False

39

A ________ is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

marketing channel

40

________ play an important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities.

intensive distribution

41

Lifebelt Insurance sells insurance only through its door-to-door salespeople. What type of marketing channel does Lifebelt use?

direct

42

Plasticine Palace supplies its products exclusively to Arts & Crafts, a chain of stationery stores across the country. The chain then makes the plasticine available to end-consumers. This is an example of ________.

disintermediation

43

The greater the number of channel levels in a marketing channel, the ________.

greater the channel complexity

44

Conflict which occurs among firms at the same level of the marketing channel is known as ________ conflict.

horizontal

45

Managers at the Imperial Hotel-Chicago complained that the chain's overall image was hurt because Imperial Hotel-Dallas was overcharging guests and providing poor service. The Imperial Hotel was experiencing ________ conflict

horizontal

46

When KFC came into conflict with its franchisees over the brand's "Unthink KFC" repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken, KFC experienced ________ conflict.

vertical

47

Which of the following is true of conventional distribution channels?

Channel members seek to maximize their own profits.

48

A(n) ________ marketing system consists of producers, wholesalers, and retailers acting as a unified system.

vertical

49

Movie Giants offers DVD rentals through its Web site. It also offers DVD rentals via Star City stores. This is an example of a(n)________ distribution system.

multichannel

50

Which of the following is a disadvantage of adding new channels in a multichannel distribution system?

decreasing control over the system

51

________ occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.

Disintermediation

52

The Bookworm began delivering books directly to customers through mail instead of selling through "brick-and-mortar" companies. This is an example of ________.

disintermediation

53

________ distribution is a strategy in which producers of convenience products and raw materials stock their products in as many outlets as possible.

Intensive

54

Whitelight stocks its toothpastes in all convenience stores across the country. This is an example of ________ distribution.

intensive

55

With which of the following strategies would a company give only a limited number of dealers the right to distribute its products in their territories?

exclusive distribution

56

For which of the following would a company use an exclusive distribution strategy?

luxury cars

57

When a seller requires its dealers to abstain from handling competitors' products, it is called ________.

exclusive dealing

58

________ management refers to the management of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.

Supply chain

59

Which of the following is NOT a major logistics function?

product designing

60

Producers use intermediaries because they create greater efficiency in making goods available to target markets.

True