Q&A Hero

Q: Price elasticity of demand (E) is expressed as (u00e2u02c6u2020 means change): A. E = Percentage change in price (%u00e2u02c6u2020 in P) Percentage change in quantity demanded (%u00e2u02c6u2020 in Q). B. E = Price (P) Quantity demanded (Q). C. E = Percentage change in quantity demanded (%u00e2u02c6u2020 in Q) Percentage change in price (%u00e2u02c6u2020 in P). D. E = Quantity demanded (Q) Price (P). E. E = Quantity demanded (Q) Price (P).

Q: Which of the following illustrates a shift in the demand curve?A. When prices remain the same, there is a significant decrease in demand.B. As the price is raised, the quantity demanded increases, assuming all else stays the same.C. When prices remain the same, there is an increase or decrease in demand.D. As the price is lowered, the quantity demanded decreases, assuming all else stays the same.E. An internal matter has forced a price change of some type, but it does not impact demand.

Q: A shift of the demand curve from D1 to D2 in Figure 11-3B above indicates A. fewer units are demanded at the given price. B. more units are demanded at the given price. C. the price has decreased. D. the price has increased. E. there is not enough information given to indicate what happened.

Q: Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 11-3B above? A. The firm increased its prices and consumers perceived the value of the product to be greater. B. There were fewer product substitutes available in the marketplace. C. Competitors in the market raised their prices. D. A recession occurred that raised consumers' incomes. E. The firm's price remained the same but changes occurred in consumer tastes.

Q: Figure 11-3BIn Figure 11-3B above, the demand curve shifts from D1 to D2. This most likely representsA. an increase in demand that did not require a change in price but was the result of a change in one or more demand factors.B. an increase in demand that required a decrease in price.C. no change in price and a decrease in demand that results from internal business practice changes.D. no change in demand or price but a greater profit due to economies of scale.E. an decrease in price from $8 to $6 per unit.

Q: Figure 11-3BFigure 11-3B above shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units from the demand curve D1 to the demand curve D2, the profitA. Figure 11-3B does not indicate what happens to profit when the quantity demanded changes.B. increases from $2 to $3 per unit.C. stays the same per unit.D. increases from $6 to $8 per unit.E. decreases from $8 to $6 per unit.

Q: Which of the following illustrates movement along the demand curve?A. Prices remain the same, but there is a significant increase in demand.B. Prices remain the same, but there is a significant decrease in demand.C. As the price is raised, the quantity demanded increases, assuming all demand factors stay the same.D. As the price is lowered, the quantity demanded increases, assuming all demand factors stay the same.E. Movement along the curve indicates that some significant event has taken place outside the organization that has affected demand.

Q: Figure 11-3A Figure 11-3A above shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit A. increases from $6 to $8 per unit. B. decreases from $8 to $6 per unit. C. stays the same per unit. D. increases from $2 to $3 per unit. E. impacts cannot be determined. Figure 11-3A does not indicate what happens to profit when the quantity demanded changes.

Q: Figure 11-3A Figure 11-3A above shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded A. increases from 2 to 3 million units per year. B. decreases from 3 to 2 million units per year. C. stays the same. D. increases from 6 to 8 million units per year. E. decreases from 8 to 6 million units per year.

Q: Mrs. Renfro's, Inc., sells 25 different relishes in 45 different states. It's Chipotle Corn Salsa is so popular that the company struggles to keep its resellers stocked. At $4.50 a jar, its price seems just right to consumers who savor its hot and spicy taste. The popularity of spicy food is an example of a __________ that Mrs. Renfro's has capitalized on here. A. barter factor B. demand factor C. supply factor D. consumer index E. macroeconomic environmental factor

Q: There are a lot of skateboards on the market, but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobiles. This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard is priced at $495, which leaves many consumers who might want to buy the Streetcarver (especially young males) unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the affect of __________ on sales. A. demand factors B. macroeconomic environmental factors C. barter factors D. supply factors E. exchange parameters

Q: Which of the following statements about the factors that influence demand is true? A. As the availability of close substitutes increases, the demand for a product increases. B. As real consumer income increases, the demand for a product increases. C. As the price of close substitutes increases, the demand for a product declines. D. Changing consumer tastes have little impact on the demand for a product. E. As real consumer income decreases, the demand for a product increases.

Q: While the demand factors of consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines A. where they buy. B. the degree of brand loyalty. C. the degree of repeat buys. D. what they can buy. E. their desire to buy.

Q: When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and A. consumer income. B. consumer psychographics. C. size of the target market. D. current political agendas. E. regulatory environment.

Q: All of the following are demand factors EXCEPT: A. the price of similar products. B. consumer tastes. C. consumer income. D. the availability of similar products. E. the number of distribution outlets carrying the product.

Q: Demand factors refer to A. the number of consumers who can afford to purchase a product or service. B. the price that should be charged for a given product. C. consumers' willingness and ability to pay for products and services. D. the number of consumers who want to purchase a product. E. the number of consumers who can purchase a product.

Q: Factors that determine consumers' willingness and ability to pay for products and services are referred to as A. supply factors. B. demand factors. C. affordability factors. D. elasticity factors. E. macro environmental factors.

Q: A demand curve graph typically appears as A. a parabola with the apex representing the highest price that can be charged without losing customers. B. a diagonal line going from upper left to lower right demonstrating that as price goes down, demand goes up. C. an inverted parabola with the lowest point representing the lowest price that can be charged and still meet the company's profit objectives. D. a diagonal line going from lower left to upper right demonstrating that as prices go up, demand goes up proportionately. E. two intersecting lines that identify the point at which supply and demand are exactly the same.

Q: The vertical axis of a demand curve graph represents __________. A. market growth rate B. relative market share C. price per unit D. potential profit in dollars E. quantity demanded

Q: The horizontal axis of a demand curve graph represents __________. A. market growth rate B. relative market share C. price per unit D. potential profit in dollars E. quantity demanded

Q: A demand curve refers to a graph that relates A. the quantity sold and price, which shows the maximum number of units that will be sold at a given price. B. the quantity sold and price, which shows the minimum number of units that must be sold to break even. C. the quantity sold and price, which shows the minimum number of units that must be sold in order to make a profit. D. total production costs to various price points in order to determine how many units must be sold in order to realize a predetermined profit. E. primary demand to selective demand.

Q: Marketing executives must translate estimates of customer demand into estimates ofA. personnel.B. advertising expenditures.C. ancillary product support.D. revenues the firm expects to receive.E. supply.

Q: Basic to setting a product's price is the extent of __________. This information is used in estimating the revenues the firm expects to receive. A. management's commitment to the product relative to other products in the line B. curiosity or interest potential consumers expressed during market testing C. customer demand for it D. the firm's promotional budget E. distribution requirements

Q: When Kroger, a national supermarket chain, uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29), it is attempting to A. drive its competition out of business. B. attract customers in hopes they will buy other products as well. C. fill its parking lot so its store will look successful. D. work with the local bottler to move products that are close to their expiration dates. E. help stimulate the local economy and generate good will with its customers.

Q: Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic. A. customary pricing B. below-market pricing C. prestige pricing D. penetration pricing E. loss-leader pricing

Q: Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as A. loss-leader pricing. B. bundle pricing. C. magnet pricing. D. predatory pricing. E. below-market pricing.

Q: Loss-leader pricing refers to A. a pricing method where the price the seller charges is below its customary price to attract customers. B. setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer. C. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well. D. a method of pricing based on a product's tradition, standardized channel of distribution, or other competitive factors. E. pricing a product between 8 and 10 percent lower than nationally branded competitive products.

Q: As the brand manager for Red Bull, what would you conclude from the information provided in the Price Premium Marketing Dashboard above? A. Red Bull has a price premium relative to Monster. B. Rockstar has a price premium relative to Monster. C. Red Bull engaged in price discounting relative to Monster and Rockstar from 2009 to 2010. D. Rockstar sold more product than Monster in 2010. E. In terms of dollar market share, Red Bull has a lower share than the "Other Brands" category.

Q: Price Premium Marketing Dashboard The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks. What is the price premium for Monster in 2009? A. 12.1% B. 0% C. -5.0% D. -5.6% E. -11.1%

Q: Price Premium Marketing Dashboard The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks. What is the price premium for Monster in 2010? A. -12.5% B. -7.5% C. -5.3% D. 0% E. 15.2%

Q: Price Premium Marketing Dashboard The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks. What is the price premium for Red Bull in 2009? A. 12.1% B. 0% C. -5.0% D. -5.6% E. -11.1%

Q: Price Premium Marketing Dashboard The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks. What is the price premium for Red Bull in 2010? A. -12.5% B. -7.5% C. -5.3% D. 0% E. 15.2%

Q: Companies use a price premium to assess whether their products and brands are priced above, at, or below the market. The price premium is the percentage by which the actual price charged for a specific brand exceeds or falls short of a benchmark established for a similar product or basket of products. This price premium equals: A. unit volume market share for a brand divided by dollar sales market share for a brand, minus 1. B. dollar sales market share for a brand divided by unit volume market share for a brand, plus 1. C. dollar sales market share for a brand divided by unit volume market share for a brand, minus 1. D. dollar sales market share for a brand, divided by unit volume market share for a brand, plus 1. E. dollar sales market share for a brand, divided by unit volume market share for a brand, minus the number of competitors against which a brand is being measured.

Q: Companies use a __________ to assess whether its products and brands are above, at, or below the market. A. customary price B. prestige price C. price premium D. price lining E. benchmark

Q: An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair-care products. The idea of the ad was that no one could tell which woman used the much cheaper Suave brand. By making price its selling point, Suave is most likely using __________. A. customary pricing B. loss-leader pricing C. prestige pricing D. skimming pricing E. below-market pricing

Q: Manufacturers of generic brands use which method of competition-oriented pricing? A. penetration pricing B. below-market pricing C. loss-leader pricing D. prestige pricing E. skimming pricing

Q: According to the textbook, Revlon cosmetics uses __________ pricing. A. above-market B. at-market C. below-market D. prestige E. everyday low

Q: Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, would probably use which competition-oriented pricing approach? A. customary pricing B. above-market pricing C. loss-leader pricing D. at-market pricing E. penetration pricing

Q: According to the textbook, clothing manufacturer Hart Schaffner & Marx and retailer Bloomingdale's use __________ pricing. A. above-market B. at-market C. below-market D. prestige E. everyday low

Q: For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of A. above-, at-, or below-market pricing. B. loss-leader pricing. C. penetration pricing. D. standard markup pricing. E. experience curve pricing.

Q: The __________ of a product is what customers are generally willing to pay, and is sometimes used as a benchmark for pricing. A. customary price B. asking price C. target price D. discount price E. market price

Q: Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as A. customary pricing. B. above-, at-, or below-market pricing. C. standard markup pricing. D. competitive margin pricing. E. experience curve pricing.

Q: Consumers buy water and soda from vending machines. Traditionally, the price of each of these products is about $1.25. If a marketer charges a significantly higher price for such products dispensed by vending machines, such as $2.00 per item, sales are likely to decline. Thus marketers tend to be very consistent in the prices they charge for vending machine products. This is an example of marketers employing a __________ strategy. A. below-market pricing B. skimming pricing C. penetration pricing D. loss-leader pricing E. customary pricing

Q: Southern gardeners normally pay $5 for a 2-cubit-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions - newspaper, grass clippings, or some other kind of ground covering. When pricing pine bark mulch, a garden-supply or home-improvement retailer should use A. customary pricing. B. at-market pricing. C. loss-leader pricing. D. penetration pricing. E. bundle pricing.

Q: What is the difference between and EDLP retailer and a High-Low retailer? Why does Carmex charge them a different price?

Q: Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as __________. A. cost-plus pricing B. customary pricing C. standard markup pricing D. loss leader pricing E. target profit pricing

Q: Which of the four approaches does Carmex use to set prices for its products?

Q: Customary pricing refers to A. a pricing method where the price the seller quotes includes all transportation costs. B. setting the same price for similar customers who buy the same product and quantities under the same conditions. C. deliberately selling a product below its list price to attract attention to it. D. setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors. E. pricing based on what the market will bear.

Q: Why do manufacturers offer seasonal discounts to channel members? Provide an example of how one would work.

Q: Rather than emphasize demand, cost, or profit factors, a price setter can stress what __________ is (are) doing. A. the service sector B. the market or competitors C. consumers D. suppliers E. the financial markets

Q: What are the four kinds of discounts that are especially important in marketing pricing strategy?

Q: All of the following are competition-oriented approaches to selecting an approximate price level EXCEPT: A. loss leader pricing. B. customary pricing. C. above-market pricing. D. skimming. E. at-market pricing.

Q: What are two special adjustments to the list or quoted price?

Q: Target return-on-investment (ROI) is frequently used by A. contractors. B. public utilities. C. business-to-business markets. D. supermarkets. E. small privately owned firms.

Q: What is the difference between a one-price policy and a flexible-price policy?

Q: Which of the following companies would be most likely to use target return-on-investment pricing? A. a farmer B. a florist shop C. a book publisher D. a veterinarian E. an automobile manufacturer

Q: What are the three major steps involved in setting prices?

Q: The __________ is the ratio of profit to the investment used to earn that profit. A. markup B. selling margin C. return on investment D. return on assets E. markdown

Q: Explain predatory pricing.

Q: Setting a price to achieve an annual target return-on-investment (ROI) is referred to as A. target return-on-investment pricing. B. target return-on-profit pricing. C. target return-on-sales pricing. D. target profit pricing. E. customary pricing.

Q: What is bait and switch? Give an example of it.

Q: Target return-on-investment pricing refers to A. setting a price that allows the firm to invest in research and development for next year. B. adding a fixed percentage to the cost of all items in a specific product class. C. setting prices to achieve a profit that is a specified percentage of the sales volume. D. setting a price to achieve an annual target ROI. E. setting a price based on an annual specific dollar target volume of profit.

Q: Describe the pricing constraints a firm is likely to face.

Q: What pricing method is often used because of the difficulty in establishing a benchmark of sales or investment to show how much of a firm's effort is needed to achieve the target? A. target return-on-investment pricing B. target return-on-sales pricing C. standard markup pricing D. target pricing E. loss-leader pricing

Q: Describe a profit objective used by many Japanese manufacturing firms.

Q: Setting a price to achieve a profit that is a specified percentage of the sales volume is referred to as __________. A. target return-on-investment pricing B. target return-on-sales pricing C. loss-leader pricing D. target pricing E. standard markup pricing

Q: The price-setting process includes identifying pricing objectives and constraints. Describe the reasons these objectives may change and give examples of objectives a firm may set.

Q: Target return-on-sales pricing refers toA. adjusting the price of a product so it is within 10% of its largest competitor.B. setting the price of a line of products at a number of different price points.C. adding a fixed percentage to the cost of all items in a specific product class.D. setting prices to achieve a profit that is a specified percentage of the sales volume.E. setting a price based on a specific annual dollar target profit volume.

Q: What are the six broad objectives that an organization may pursue that tie in directly to its pricing policies?

Q: The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle. He decides to offer a promotion, a $20 off coupon for an oil change mailed to 800 households within a two-mile radius. The cost of printing and mailing is $1,000. The normal cost of an oil change is $40. Materials and labor per oil change costs $15. If 200 customers use the coupon, what will be the total profit of the promotion based on the profit equation? A. ($4,000) B. ($1,000) C. $0 D. $1,000 E. $4,000

Q: Marketing managers often use break-even analysis to analyze the relationship between total revenue and total cost to determine profitability at various levels of output. What is the break-even formula? Use the formula to calculate how many DVD players a dealer must sell if her fixed costs are $100,000, unit variable costs are $150, and the selling price is $200.

Q: Lady Marion Seafood, Inc. sells 5-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a 5-pound package of salmon? A. $25.00 B. $33.94 C. $40.00 D. $48.00 E. $61.25

Q: What is the difference between fixed costs and variable costs?

Q: A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit? A. $520 B. $1,040 C. $1,880 D. $2,080 E. $10,000

Q: Explain why price elasticity is important to marketing managers.

Q: What is critical when using target profit pricing? A. a good estimate of demand B. a higher-than average price C. a low potential for currency exchange rates to change D. a lower-than average price E. a new or innovative product

Q: Price elasticity of demand measures how sensitive consumer demand and the firm's revenues are to changes in the product's price. Explain the difference between a product with elastic demand and a product with inelastic demand.

Q: Setting an annual target of a specific dollar volume of profit is referred to as __________. A. target profit pricing B. target return-on-investment pricing C. loss leader pricing D. at-, above-, or below-market pricing E. yield management pricing

Q: Distinguish between elastic demand and inelastic demand.

Q: Target profit pricing refers to A. adjusting the price of a product so it is in line with that of its largest competitor. B. setting an annual target of a specific dollar volume of profit. C. setting the price of a line of products at a number of different price points. D. adding a fixed percentage to the cost of all items in a specific product class. E. setting prices to achieve a profit that is a specified percentage of production costs.