10 questions of ch 14
- 1. 1TOP 10 Learning Questions Ch 14: Developing Pricing Strategies and ProgramsBohong LiApril 15 ,2011
- 2. 1. Many consumers use price as an indicator of ________. Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars.A. Status B. QualityC. QuantityD. Ability E. Capability
- 3. 3Concept 1:Price-quality inferencessome consumers believe that price and quality are highly correlated whereas other consumers believe that price and quality are not highly correlated.
- 4. 1. Many consumers use price as an indicator of ________. Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars.A. Status B. QualityC. QuantityD. Ability E. Capability
- 5. 2. ______ is a type of consumer pricing psychology wherein consumers tend to process prices in a “left-to-right” manner rather than by rounding, e.g. stereo amplifier priced at 299 instead $300 as a price in the $200 range rather than $300 rangeA. Price CueB. Price endingC. Reference PriceD. Lower Bound PriceE. Price-quality inference
- 6. 6Concept 1:Price endings:price ending is a marketing practice based on the theory that certain prices have a psychological impact.Firms that are using high prices to signal quality are more likely to set those prices at round numbers (9-ending prices)
- 7. 2. ______ is a type of consumer pricing psychology wherein consumers tend to process prices in a “left-to-right” manner rather than by rounding, e.g. stereo amplifier priced at 299 instead $300 as a price in the $200 range rather than $300 rangeA. Price CueB. Price endingC. Reference PriceD. Lower Bound PriceE. Price-quality inference
- 8. 8Concept 1:Price cuesA price cue is defined as any marketing tactic used to persuade customers that prices offer good value compared to competitors’ prices, past prices or future prices.
- 9. 3. “Estimate costs” is one of the six steps in setting price. In the following steps, _____is the step after “estimate costs”?A. Determine demandB. Select pricing methodC. Analyze competitor price mixD. Select the price objectiveE. Select final price
- 10. 10Concept 2:Steps in Setting PriceSelect the price objectiveDetermine demandEstimate costsAnalyze competitor price mixSelect pricing methodSelect final price
- 11. 3. “Estimate costs” is one of the six steps in setting price. In the following steps, _____is the step after “estimate costs”?A. Determine demandB. Select pricing methodC. Analyze competitor price mixD. Select the price objectiveE. Select final price
- 12. 4. Which of the following statement is FALSE in considering a pricing objective?A. Survival: Prices are lowered to ensure inventory turnover but price must cover variable costs & fixed costs. B. Maximum current profit: price is set to maximize current profit, cash flow, or ROIC. Maximum Market Skimming: Prices start low and increased overtimeD. Maximum sales growth : low price is set assuming that marketing is price sensitiveE. Marketing penetration pricing: Goal is high sales volume
- 13. 13Concept 3:Step 1: Selecting the Pricing ObjectiveSurvivalMaximum current profitMaximum market shareMaximum market skimmingProduct-quality leadership
- 14. 14Survival:if the companies are plagued with overcapacity, intense competition, or changing consumer wants.Maximum current profit: if the companies estimate the demand and costs associated with alternative pricesMaximum market share: if they believe that a higher sales volume will lead to lower unites costs and higher long-run profit.Concept 3:Step 1: Selecting the Pricing Objective
- 15. 15Maximum market skimming: companies unveiling a new technology favor setting high prices, and slowly drop price over time.Product-quality leadership: products or services characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumers’ reach.Concept 3:Step 1: Selecting the Pricing Objective
- 16. 4. Which of the following statement is FALSE in considering a pricing objective?A. Survival: Prices are lowered to ensure inventory turnover but price must cover variable costs & fixed costs. B. Maximum current profit: price is set to maximize current profit, cash flow, or ROIC. Maximum Market Skimming: Prices start low and increased overtimeD. Maximum sales growth : low price is set assuming that marketing is price sensitiveE. Marketing penetration pricing: Goal is high sales volume
- 17. 5. When Sony introduced the world’s first high-definition television (HDTV) to the Japanese market in 1990, it was priced at $43,000. Then the price dropped steadily through the years—a 28-inch Sony HDTV cost just over $6,000 in 1993 and a 40-inch Sony HDTV about $1,200 in 2007. This is an example of___? A. SurvivalB. Maximum current profitC. Maximum market shareD. Maximum market skimmingE. Product-quality leadership
- 18. 18Concept 3:Step 1: Selecting the Pricing ObjectiveSurvivalMaximum current profitMaximum market shareMaximum market skimmingProduct-quality leadership
- 19. 19Survival:if the companies are plagued with overcapacity, intense competition, or changing consumer wants.Maximum current profit: if the companies estimate the demand and costs associated with alternative pricesMaximum market share: if they believe that a higher sales volume will lead to lower unites costs and higher long-run profit.Concept 3:Step 1: Selecting the Pricing Objective
- 20. 20Maximum market skimming: companies unveiling a new technology favor setting high prices, and slowly drop price over time.Product-quality leadership: products or services characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumers’ reach.Concept 3:Step 1: Selecting the Pricing Objective
- 21. 5. When Sony introduced the world’s first high-definition television (HDTV) to the Japanese market in 1990, it was priced at $43,000. Then the price dropped steadily through the years—a 28-inch Sony HDTV cost just over $6,000 in 1993 and a 40-inch Sony HDTV about $1,200 in 2007. This is an example of___? A. SurvivalB. Maximum current profitC. Maximum market shareD. Maximum market skimmingE. Product-quality leadership
- 22. 6. Which of the following is NOT true?A. The amount of fixed-cost per unit of activity decrease as volume increase.B. Variable costs, also known as overhead, differ greatly depending upon the level of production.C. The cost of electricity can be viewed as semi-variable cost.D. Total costs consist of the sum of the fixed and variable costs for any given level of production.E. Average cost is the cost per unit at that level production; it equals total costs divided by production.
- 23. Concept 5:Step 3: Estimating CostsTypes of CostsAccumulatedProductionActivity-BasedCost AccountingTarget CostingFrom Philip Kotler’s, Marketing Management, 13th Edition23
- 24. 24Fixed costsVariable costsTotal costsAverage costCost at different levels of productionConcept 5:Type of costsFrom Philip Kotler’s, Marketing Management, 13th Edition
- 25. 25Fixed costs:(also known as overhead) are items of cost that, in total, do not vary at all with volume. The fixed-cost per unit equals total fixed-cost divided by the number of units of volume.Variable costs:are items of cost that vary, in total, directly and proportionately with volume.Concept 5:Type of costs
- 26. 26Semi-variable costs:those costs include a combination of variable-cost and fixed-cost items. Electrical power is essential for the basic operation of the business in lighting and heating - this portion is a sunk cost that is foregone regardless of production. As demand ramps up, more energy is required to ramp up the production process in the use of machinery or large banks of computers for instance. Cost of electrical energy will then rise accordingly as production activities increase.Concept 5:Type of costs
- 27. 6. Which of the following is NOT true?A. The amount of fixed-cost per unit of activity decrease as volume increase.B. Variable costs, also known as overhead, differ greatly depending upon the level of production.C. The cost of electricity can be viewed as semi-variable cost.D. Total costs consist of the sum of the fixed and variable costs for any given level of production.E. Average cost is the cost per unit at that level production; it equals total costs divided by production.
- 28. 7.Which of the followings is TRUE?A. markup pricing works only if the marked-up price actually brings in the expected level of sales.B. Value pricing is made up of several elements, such as the buyers’ image of the product performance, the channel deliverables, the warranty quality, customer support, etc.C. Perceived value win loyal customers by charging a fairly low price for a high quality offering.D. In going-rate pricing, the firm bases its price largely on competitors' prices, charging less price than major competitors.E. In target-return pricing, the firm determines the price that would yield its target rate of return on equity.
- 29. Concept 6:Step 5: Selecting a Pricing MethodMarkup pricingTarget-return pricingPerceived-value pricingValue pricingGoing-rate pricingAuction-type pricingFrom Philip Kotler’s, Marketing Management, 13th Edition29
- 30. 7.Which of the followings is TRUE?A. markup pricing works only if the marked-up price actually brings in the expected level of sales.B. Value pricing is made up of several elements, such as the buyers’ image of the product performance, the channel deliverables, the warranty quality, customer support, etc.C. Perceived value win loyal customers by charging a fairly low price for a high quality offering.D. In going-rate pricing, the firm bases its price largely on competitors' prices, charging less price than major competitors.E. In target-return pricing, the firm determines the price that would yield its target rate of return on equity.
- 31. 8. A British aircraft manufacture sold planes to Brazil for 70% cash and the rest in coffee. The manufacture applies ______ as a countertrade form?A. BarterB. compensation dealC. Buyback arrangementD. OffsetE. Allowance
- 32. Concept 8:Price-Adaption Strategy 1&2 : Geographical Pricing& Discounts/AllowancesCountertradeDiscounts/AllowancesBarterCompensation dealBuyback arrangementOffsetCash discount
- 36. AllowanceFrom Philip Kotler’s, Marketing Management, 13th Edition32
- 37. Concept 8:CountertradeBarter: the buyer and seller directly exchange goods, with no money and no third party involved.
- 38. compensation deal: the seller receives some percentage of the payment in cash and the rest in product.33
- 39. Concept 8:CountertradeBuyback arrangement:the seller sales a plant, equipment or technology in other country and agrees to accept as partial payment products manufactured with the supplied equipment.
- 40. Offset: the seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period.8. A British aircraft manufacture sold planes to Brazil for 70% cash and the rest in coffee. The manufacture applies ______ as a countertrade form?A. BarterB. compensation dealC. Buyback arrangementD. OffsetE. Allowance
- 41. 9. Supermarkets and department stores often drop the price on well-known brands to stimulate additional store traffic. This is an example of ____?A. Special-event pricingB. Cash rebatesC. Low-interest financingD. Psychological discountingE. Loss-leader pricing
- 42. 37Loss-leader pricingSpecial-event pricingCash rebatesLow-interest financingLonger payment termsWarranties and service contractsPsychological discountingConcept 9:Price-Adaption Strategy 3 : Promotional PricingFrom Philip Kotler’s, Marketing Management, 13th Edition
- 43. Concept 9:Loss-leader pricingOne use of a loss leader is to draw customers into a store where they are likely to buy other goods. The vendor expects that the typical customer will purchase other items at the same time as the loss leader and that the profit made on these items will be such that an overall profit is generated for the vendor.A loss leader or leaderis a product sold at a low price (at cost or below cost) to stimulate other, profitable sales. It is a kind of sales promotion.
- 44. 9. Supermarkets and department stores often drop the price on well-known brands to stimulate additional store traffic. This is an example of ____?A. Special-event pricingB. Cash rebatesC. Low-interest financingD. Psychological discountingE. Loss-leader pricing
- 45. 10. Companies often adjust their basic price to accommodate differences in market situations. The following are differentiated pricings EXCEPT______?A. New-product pricingB. Customer-segment pricingC. Product-form pricingD. Channel pricingE. Location pricing
- 46. 41Customer-segment pricingProduct-form pricingChannel pricingLocation pricingTime pricingYield pricingConcept 10:Price-Adaption Strategy 4 : Differentiated PricingFrom Philip Kotler’s, Marketing Management, 13th Edition
- 49. 10. Companies often adjust their basic price to accommodate differences in market situations. The following are differentiated pricings EXCEPT______?A. New-product pricingB. Customer-segment pricingC. Product-form pricingD. Channel pricingE. Location pricing
- 50. 45TOP 2 Learning Questions Ch 14: Developing Pricing Strategies and ProgramsBohong LiApril 1 ,2011