Question 1

Companies using target costing ________.

Accepted Answer

A)   first design a new product and then determine its cost
B)   tailor their products to be in line with the marketing mix
C)   routinely neglect customer value considerations
D)   avoid determining an ideal selling price until analyzing test market results
E)   start with an ideal selling price and then target costs that will ensure that the price is met

Question 2

Companies that adopt value-added pricing ________.

Accepted Answer

A)   consider value-added features as a fitting substitute for aggressive cost cutting
B)   set incredibly low prices to meet competition
C)   attach value-added features and services to differentiate their offers and support their higher prices
D)   overprice their products without any apparent justification
E)   underprice their products and lower quality to boost demand in the short-run

Question 3

Value-based pricing uses the sellers' perception of value as the key to pricing.

Accepted Answer

A) True 
 B)False

Question 4

Under ________, the market consists of many buyers and sellers trading in a uniform commodity.

Accepted Answer

A)   pure competition
B)   monopolistic competition
C)   oligopolistic competition
D)   a pure monopoly
E)   the dominant firm model

Question 5

When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ________.

Accepted Answer

A)   break-even pricing
B)   target profit pricing
C)   good-value pricing
D)   cost-plus pricing
E)   target return pricing

Question 6

A marketer's fixed costs are $400,000. The variable cost is $16 per unit, and the price of the product is $24 per unit. If the company wants to make a profit, how many units must it sell and at what price?

Accepted Answer

If the company wants...

Question 7

If demand is elastic rather than inelastic, sellers will consider lowering their prices.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)   variable
B)   inelastic
C)   highly elastic
D)   derived
E)   negative

Question 9

In the aftermath of the Great Recession, consumers ________.

Accepted Answer

A)   have become more value conscious
B)   have become less value conscious
C)   exhibit great interest in prestige pricing
D)   show no interest in price cutting
E)   rarely endorse value-for-money deals

Question 10

"Beyond the market and the economy, the company must consider several other factors in its external environment when setting prices." Explain this statement.

Accepted Answer

Beyond the market and the economy, the c...

Question 11

Department stores that practice everyday low pricing (EDLP) typically provide frequent sale days, early-bird savings, and bonus earnings for store credit-card holders.

Accepted Answer

A) True 
 B)False

Question 12

Underpriced products ________.

Accepted Answer

A)   produce less revenue than they would if they were priced at the level of perceived value
B)   sell poorly in the global marketplace
C)   produce more revenue than they would if they were priced at the level of perceived value
D)   mostly offer higher value than those with a high markup price
E)   are characterized by rapidly declining demand

Question 13

In customer value-based pricing, price is considered along with all other marketing mix variables before the marketing program is set.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the scenario below to answer the following questions.
Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand.
Considering that most young households have limited financial resources, Alden attempts to engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics, "we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The hand mixers are manufactured in two variants-a small handheld mixer with two rotating beaters and another that comes with an optional stand and an attached mixing bowl. Alden's temperature-controlled skillets are manufactured in a single style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low.
-If Alden raises the price of the handheld mixer by 2 percent and then the quantity demanded falls by 10 percent, what is the price elasticity of demand?

Accepted Answer

A)   -5
B)   -8
C)   -12
D)   5
E)   12

Question 15

Which of the following is true of value-based pricing?

Accepted Answer

A)   The targeted value and price drive decisions about what costs can be incurred and the resulting product design.
B)   Value-based pricing is mostly product driven.
C)   Value-based pricing involves setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for its effort and risk.
D)   The marketer usually designs a product and marketing program and then sets the price.
E)   A company using value-based pricing designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit.

Question 16

In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shop-owners. This exemplifies ________.

Accepted Answer

A)   pure competition
B)   monopolistic competition
C)   oligopolistic competition
D)   pure monopoly
E)   the dominant firm model

Question 17

Overhead costs ________ as the number of units produced increases.

Accepted Answer

A)   decrease
B)   increase steadily
C)   fluctuate
D)   remain the same
E)   increase rapidly

Question 18

Which of the following exemplifies a pure competitive market?

Accepted Answer

A)   a market where many buyers and sellers trade over a range of prices rather than a single market price
B)   a market where a single firm controls the larger fraction of the market share
C)   a market where a few powerful firms control the larger fraction of the market share
D)   a market characterized by only a few large sellers
E)   a market where many buyers and sellers trade in a uniform commodity

Question 19

The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n)  ________.

Accepted Answer

A)   pure competition
B)   monopolistic competition
C)   oligopolistic competition
D)   pure monopoly
E)   government monopoly

Question 20

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

Accepted Answer

A)   target profit pricing
B)   good-value pricing
C)   cost-based pricing
D)   break-even pricing
E)   penetration pricing

Exam 10: Pricing: Understanding and Capturing Customer Value

Value-based pricing uses the sellers' perception of value as the key to pricing.

Correct Answer
verified

The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n) ________.

Correct Answer
verified

A marketer's fixed costs are $400,000. The variable cost is $16 per unit, and the price of the product is $24 per unit. If the company wants to make a profit, how many units must it sell and at what price?

Correct Answer
verified
If the company wants...
View Answer

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

Correct Answer
verified

If demand is elastic rather than inelastic, sellers will consider lowering their prices.

Correct Answer
verified

Companies using target costing ________.

Correct Answer
verified

In customer value-based pricing, price is considered along with all other marketing mix variables before the marketing program is set.

Correct Answer
verified

"Beyond the market and the economy, the company must consider several other factors in its external environment when setting prices." Explain this statement.

Correct Answer
verified
Beyond the market and the economy, the c...
View Answer

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

Correct Answer
verified

In the aftermath of the Great Recession, consumers ________.

Correct Answer
verified

Which of the following exemplifies a pure competitive market?

Correct Answer
verified

Department stores that practice everyday low pricing (EDLP) typically provide frequent sale days, early-bird savings, and bonus earnings for store credit-card holders.

Correct Answer
verified

When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ________.

Correct Answer
verified

In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shop-owners. This exemplifies ________.

Correct Answer
verified

Overhead costs ________ as the number of units produced increases.

Correct Answer
verified

Correct Answer
verified

Underpriced products ________.

Correct Answer
verified

Under ________, the market consists of many buyers and sellers trading in a uniform commodity.

Correct Answer
verified

Companies that adopt value-added pricing ________.

Correct Answer
verified

Which of the following is true of value-based pricing?

Correct Answer
verified

Exam 10: Pricing: Understanding and Capturing Customer Value

Value-based pricing uses the sellers' perception of value as the key to pricing.

Correct AnswerverifiedShow Answer

The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n) ________.

Correct AnswerverifiedShow Answer

A marketer's fixed costs are $400,000. The variable cost is $16 per unit, and the price of the product is $24 per unit. If the company wants to make a profit, how many units must it sell and at what price?

Correct AnswerverifiedIf the company wants...View AnswerShow Answer

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

Correct AnswerverifiedShow Answer

If demand is elastic rather than inelastic, sellers will consider lowering their prices.

Correct AnswerverifiedShow Answer

Companies using target costing ________.

Correct AnswerverifiedShow Answer

In customer value-based pricing, price is considered along with all other marketing mix variables before the marketing program is set.

Correct AnswerverifiedShow Answer

"Beyond the market and the economy, the company must consider several other factors in its external environment when setting prices." Explain this statement.

Correct AnswerverifiedBeyond the market and the economy, the c...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In the aftermath of the Great Recession, consumers ________.

Correct AnswerverifiedShow Answer

Which of the following exemplifies a pure competitive market?

Correct AnswerverifiedShow Answer

Department stores that practice everyday low pricing (EDLP) typically provide frequent sale days, early-bird savings, and bonus earnings for store credit-card holders.

Correct AnswerverifiedShow Answer

When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ________.

Correct AnswerverifiedShow Answer

In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shop-owners. This exemplifies ________.

Correct AnswerverifiedShow Answer

Overhead costs ________ as the number of units produced increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Underpriced products ________.

Correct AnswerverifiedShow Answer

Under ________, the market consists of many buyers and sellers trading in a uniform commodity.

Correct AnswerverifiedShow Answer

Companies that adopt value-added pricing ________.

Correct AnswerverifiedShow Answer

Which of the following is true of value-based pricing?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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If the company wants...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Beyond the market and the economy, the c...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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