PRICE

Question 1

defined as the set amount customers have to pay to purchase a product. Setting a price for a particular product entails many marketing decisions

Answer 1

Price

Question 2

There are various pricing approaches that marketers can adopt in their product offerings.
Marketers should carefully choose the most appropriate approach for their products depending on the situation.

Answer 2

Pricing Approaches

Question 3

The fixed and variable costs are determined as the basis of the selling price.

Answer 3

cost-based pricing

Question 4

are expenses that firms cannot do away with regardless of production volumes, such as water bills, electricity bills, and rent.

Answer 4

Fixed costs

Question 5

are direct expenses on materials and labor that are utilized in the production.

Answer 5

variable costs

Question 6

is then added based on the target sales volume, after which, the company determines the price. This approach normally utilizes a sales forecast instead of a demand forecast.

Answer 6

mark-up

Question 7

estimates the number of goods that can be sold within a specified period and the accompanying costs and the predicted profits.

Answer 7

Sales forecast

Question 8

estimates the market demand for a good in the future.

Answer 8

demand forecast

Question 9

or the state when company revenues equal the expenses, can also be determined based on the fixed and variable costs.

Answer 9

break-even point

Question 10

the prices of products are set based on the customer’s perceived value or the value that the customer feels he or she will attain from the good.

Answer 10

perceived value pricing

Question 11

determines his or her willingness to pay for the good. Unlike the cost-based approach, the customer’s perceived value is considered over the costs related to the goods.

Answer 11

customer’s perceived value

Question 12

the price of goods are based on the prices of competing goods. This pricing approach is mostly applicable in a market structure where there are several businesses engaged in selling a similar product. Usually, some companies become the market leaders in the industry and eventually set the price standard.

Answer 12

competiive pricing

Question 13

These are the goals that companies set as part of their marketing, strategy in promoting their goods to customers.

Answer 13

Marketing Objectives

Question 14

Some companies invest in research and development in the conceptualization of their goods. This is common for highly technical products or specialized services whose development often incurs high costs. These costs are considered in pricing the goods.

Answer 14

Research and Development Costs

Question 15

which the company operates, a uniform price is set for all sellers. In a monopolistic competitive market where there are many sellers, the goods must have some form of differentiation which the manufacturer uses as a basis for setting prices.

Answer 15

Market Structure

Question 16

Prices are also affected by the elasticity of demand or the relationship between consumer demand and the changes in the price of goods.

Answer 16

Elasticity of Demand

Question 17

passed by the government must also be considered in pricing the goods. These laws serve to restrict, reinforce, or simply monitor the prices set by sellers on their goods.

Answer 17

Laws

Question 18

if the consumers respond to a change in price. Goods that are usually subject to elastic demand are non-basic necessities.

Answer 18

elastic demand

Question 19

where a slight change in price might compel a shift in customer preference. This happens because consumers can easily find a more favorable substitute to the product.

Answer 19

perfectly elastic demand

Question 20

goods that experienced increased prices but can still elicit the same demand from consumers

Answer 20

perfectly inelastic demand

Question 21

individual products are put together to create one whole bundle or set which is then offered to customers. The resulting bundle is usually priced lower than the sum of the prices of the individual goods. Many companies actively use this pricing scheme since it improves the marketability of products to consumers.

Answer 21

product-bundle pricing

Question 22

It utilizes the by-product and is priced along with or separate from the main product. The purpose is to either maximize the profit from the raw materials or to augment the price of the main product.

Answer 22

by-product pricing.

Question 23

The main product is charged with a lower price but additional charges apply.

Answer 23

Main or Captive Product Pricing

Question 24

in which additional charges are paid to avail of added features of the product.

Answer 24

optional pricing

Question 25

involves the separation of goods and their variations into categories by creating price gaps to emphasize differences in quality. This serves to create a perception among consumers that there are different quality levels of the products. This, in turn, influences the customers' perceived value of the products.

Answer 25

Product Line Pricing

Question 26

a low initial price is set to attract customers, improve sales, and eventually eliminate competition. It is based on the law of demand which states that a lower price will result in higher demand.

Answer 26

market penetration pricing

Question 27

involves setting a high price for a product to gain as much profit as possible before the number of competitors offering the same product increases. The price is then lowered over time to adapt to the growing competition. This scheme is usually adopted by companies when releasing a new type of product to the market.

Answer 27

Market skimming