FINALS - PART 1

Question 1

It is the amount that the customer pays for a product

Answer 1

PRICE

Question 2

it is the amount of money exchanged for something of value

Answer 2

PRICE

Question 3

makes products available to the target market and reflects the value of the product. It is the sum of values that consumers exchange for the benefit of having or using the product.

Answer 3

PRICE

Question 4

is the only marketing mix element that produces revenue, while others represent cost. Hence, a deep understanding of this marketing mix should be given importance.

Answer 4

PRICING MIX

Question 5

is the total amount that a company gets based on quantity sold multiplied by selling price.

Answer 5

SALES

Question 6

is the total income/ profit that the company keeps after all the expenses have been paid for. Simply put: sales minus expense equals revenue.

Answer 6

REVENUE

Question 7

are costs incurred due to the operations of the business; they do not fluctuate with the volume of sales.

Answer 7

FIXED COSTS

Question 8

is the level of income that is desired by the company. This usually comes out in percentage form as the amount of mark-up placed on top of the fixed and variable cost of a product.

Answer 8

PROFIT MARGIN

Question 9

are costs that vary based on volume or quantity. Bigger quantities of the same order will cost less than smaller quantities of the same specifications. This concept is commonly known as economies of scale.

Answer 9

VARIABLE COSTS

Question 10

is the point wherein total cost is equal to total revenue. A company incurs a loss if cost exceeds revenue and generates an income when revenue exceeds costs. It is important to know the break-even point, especially for a new product, so that it is clear to management at what volume of sales is the company starting to earn an income

Answer 10

BREAK-EVEN POINT

Question 11

The setting of prices should incorporate a calculation of how much it costs the organization to produce the product or the service (Hudson 2008). Both variable and fixed costs should be included in the price. Cost efficiency should be achieved rather than cutting quality for lower costs.

Answer 11

COSTS

Question 12

Companies go into business for survival, profit maximization, high rate of return of investment, brand equity growth, and an adequate share of the market. Some organizations such as foundations and national parks may set low fees because they are not commercial in nature.

Answer 12

ORGANIZATIONAL AND MARKETING OBJECTIVES

Question 13

Price is affected by the interplay of the other variables in the marketing mix. High prices should mean higher quality products and services, elite distribution channels, and more personalized promotions. For products priced in the lower bracket, expectations on product and service quality, distribution channels, and promotional strategies need to be tempered relative to the product’s price.

Answer 13

Other Marketing Mix Variables

Question 14

Buyers have different perceptions of product quality and value based on branding and image. Price affects buyer perceptions. The higher the price, the higher the buyer’s expectations of quality are.’

Answer 14

BUYER PERCEPTIONS OF VALUE AND PRICE

Question 15

Knowing what the ________ is offering is an important factor in the success of a business. In highly price-sensitive markets, companies try to win customers by setting a lower price than that of the competition.

Answer 15

COMPETITION

Question 16

can either cause a company to maintain its low prices or increase its prices.

Answer 16

GOVERNMENT REGULATIONS AND TAXES

Question 17

Tourism caters to a highly segmented marketplace. Pricing needs to address the differences in the nature of such markets as well as the differences in the demand of each market segment.

Answer 17

NATURE OF THE MARKET AND DEMAND

Question 18

Different markets have different levels of price sensitivity. Hence, a one-pricefits-all market would not be recommended.

Answer 18

Pricing in Different Markets

Question 19

The concept of elasticity of demand is shown in this formula:

Price elasticity of demand:

Answer 19

% change in quantity demanded/% change in price

Question 20

price increases or decreases normally have an effect on the level of sales of the product

Answer 20

Price Elasticity of Demand

Question 21

If demand increases when price decreases, then the product is

Answer 21

ELASTIC

Question 22

If demand stays the same even if there is a price cut, then the product is

Answer 22

INELASTIC

Question 23

In the tourism industry, as prices fall, demand increases; hence, products are

Answer 23

ELASTIC

Question 24

Consumer demand is highly sensitive to price changes. Price elasticity may be affected by customers perception of product uniqueness, availability of substitutes, and how consumers budget.

TRUE OR FALSE

Answer 24

TRUE

Question 25

These factors may include but are not limited to political instability, calamities, environmental issues, etc.

Answer 25

Other Environmental Factors

Question 26

A company may be experiencing a deep crisis in which the most basic reason for its marketing efforts is merely to survive. The crisis may be a recession, an economic crisis, or stiff competition.

Answer 26

Survival

Question 27

Some companies seek to use marketing for short-term financial gains. Gains such as ____________ improved cash flows, and swift return on investment are mostly for short-term financial gains.

Answer 27

current profit maximization

Question 28

Some companies build on marketing strategies that will help the company gain a huge market share and become a market leader in its product category. This objective seeks to enjoy low costs because of high volume which will eventually lead to long-term gains.

Answer 28

MARKET SHARE LEADERSHIP

Question 29

Establishing a positive brand image leads to high awareness and perception of quality.

Answer 29

Brand Equity Growth

Question 30

Some companies want their brands to be associated with high quality. Marketing strategies seek to make some brands known as the best service providers in their category since consumers are willing to pay more for good quality.

Answer 30

Product-quality Leadership

Question 31

is an approach that aims to cover costs and make a profit.

Answer 31

Cost-based pricing

Question 32

When using __________, the fixed and variable costs are computed, and a mark-up is added.

Answer 32

cost-based pricing

Question 33

This kind of pricing approach is when price is determined using the break-even price and projecting a target profit.

Answer 33

Break-even Analysis and Target Profit Pricing

Question 34

Some companies base their prices on the product's value as perceived by the consumers.

Answer 34

Buyer-based Pricing (Value-based)

Question 35

This approach looks at what price competitors are putting on their products and services. Companies base their price mainly against the price pegged by their main competitors. Less attention is paid to costs, margins, and demand.

Answer 35

Competition-based pricing

Question 36

are ways by which tourism businesses offer products and services at the "right" price. Some considerations in coming up with the right price include the stage in the product life cycle, market demand, competition, and company objectives.

Answer 36

PRICING STRATEGIES

Question 37

is used when the product or service is positioned to be luxurious and elegant.

Answer 37

Prestige pricing

Question 38

Companies employ the ___________ strategy when the market is price insensitive. Consumers become price insensitive when demand is high and supply is low.

Answer 38

market skimming pricing

Question 39

is used when setting a low initial selling price to penetrate the market quickly and attract many buyers for a large market share. Some start-up companies use this strategy since they have lower operating costs than bigger companies. It is an aggressive way of attracting consumers to try your product by making it is cheaper than the existing products in the market. However, its quality should be on par with the competition to ensure repeat sales.

Answer 39

Market penetration pricing

Question 40

This kind of strategy also attracts customers to purchase a product that they may not purchase if it is not part of the bundle.

Answer 40

Product Bundling Pricing

Question 41

is a strategy used to attract buyers to purchase because of the reduced rate of the bundle compared to the total cost of the items if purchased individually

Answer 41

Product Bundling Pricing

Question 42

are rates given to frequent or high-volume users to attract them to purchase the products. Some companies have a demand for a product in large quantities through a single purchase or for a continuous period of time throughout the year.

Answer 42

Volume Discounts

Question 43

This strategy addresses the seasonality aspect of the tourism product. A price reduction is given to buyers who purchase services out of season when the demand is lower (Kotler et al. 2017) or way ahead of time.

Answer 43

Discounts Based on Time of Purchase

Question 44

Kotler et al. (2016) define ____________ as the segmentation of the market and pricing differences based on the price elasticity characteristics of the segments. In this strategy, the company sells a product or service at two or mone prices.

Answer 44

Discriminatory Pricing

Question 45

Psychological aspects like prestige, reference prices, round figures, and the psychology of the consumer.

Answer 45

Psychological Pricing

Question 46

offers discounts and short-term incentives especially during the introductory stage of the product or during special activities such as anniversaries or festivals. It gives the guests a reason to avail the product and promotes a positive image of the property.

Answer 46

Promotional Pricing

Question 47

is offering the price below competitors permanently, unlike promotional pricing where the price is lowered temporarily.

Answer 47

Value Pricing

Question 48

is a systematic approach to matching demand for services with an appropriate supply in order to maximize revenues

Answer 48

REVENUE MANAGEMENT

Question 49

With advancements in technology, ____________ has become more scientific and less gut feel based.

Answer 49

REVENUE MANAGEMENT

Question 50

TRUE OR FALSE: Product is perishable; thus, it is better to sell the room / seat at a low price than leave it empty.

Answer 50

TRUE

Question 51

TRUE OR FALSE: Capacity is fixed daily. In no way can rooms or seats be increased on a specific day to meet demand.

Answer 51

TRUE

Question 52

TRUE OR FALSE: Demand fluctuates and is uncertain depending on the days of the week and seasons of the year.

Answer 52

TRUE

Question 53

TRUE OR FALSE: Different market segments have different lead times for purchase. Conventions and conferences have longer preparation time that can span from anywhere between one year to three years, while a business traveler can book even just a week prior to travel.

Answer 53

TRUE

Question 54

TRUE OR FALSE: There is flexibility in pricing hotel rooms and airline seats. The market accepts that hotel room and airline seat rates may vary depending on purchase lead time and seasonality. Hence, a thorough knowledge of one's market segments, their purchase behavior, their travel motivations, and their price acceptability is important to ensure business success. Forecasting demand is also crucial to the success of managing revenue

Answer 54

TRUE

Question 55

is a form of discriminatory pricing wherein some of the market segments pay higher or lower prices than other tourists for the same tourism products and services in order to ensure optimal yield from the available inventory. It aims to manage revenue by controlling prices and capacity.

Answer 55

YIELD MANAGEMENT

Question 56

addresses the perishability of tourism products and services. It entails a thorough knowledge of the different market segments, demand, and booking patterns as well as price sensitivity of each market segment. It enables organizations to sell possibly vacant rooms at reduced rates during off-peak but also maximizes its revenue during peak periods.

Answer 56

YIELD MANAGEMENT

Question 57

A hotel has a fixed number of rooms per day and a variety of market segments with different price ranges.

Answer 57

CALCULATING YIELD

Question 58

Some destinations that have lost market share through different external and internal reasons may recover from their loss through price combined with effective promotions

Answer 58

Market Recovery Through Price

Question 59

are usually less welcomed than price cuts by customers.

Answer 59

Price increases

Question 60

is the amount that a customer pays for products and services. It is the value placed on something that is measured in monetary terms.

Answer 60

PRICE

Question 61

is used by tourism establishments to maximize revenues by matching demand and supply.

Answer 61

Revenue management

Question 62

can be used as a market recovery strategy.

Answer 62

Price