BUAD 332- Exam 3-Questions With All
Solved Solutions 2026 .
Narrowly, what is a price? - Answer Narrowly, price is the amount of money charged for a
product or service
Broadly, what is a price? - Answer Broadly, price is the sum of all values that consumers
exchange for the benefits of having or using the product or service
Price is not just money, think of price as - Answer sacrifice
Example of price - Answer $88 boots from amazon versus exact same pair at Dillards for $88 as
well.
The price here is wait-time, trying them on, or convenience.
The "lower price" depends on customer value
Internal factors affecting price decisions - Answer Marketing objectives
Marketing mix strategies
Costs
Organizational considerations
External factors affecting price decisions - Answer Nature of the market and demand
Competition
Other environmental factors (economy, government, re-sellers, social concerns)
In general, factors affection price decisions represent - Answer either a limitation or "wiggle
room"
Marketing objectives affecting pricing decisions - Answer 1. Survival
2. Current Profit Maximization
3. Market Share Leadership
4. Product Quality Leadership
Survival - Answer Low prices hoping to increase demand
,Current Profit Maximization - Answer Choose the price that produces the maximum current
profit
Market Share Leadership - Answer Low as possible prices to become the market share leader
Product Quality Leadership - Answer High prices to cover higher performance quality and R&D
Product Quality Leadership Example - Answer Pharmaceuticals
Fixed costs (overhead) - Answer Costs that don't vary with sales or production levels
Total costs - Answer Sum of the fixed and variable costs for any given level of production
Costs determine the... - Answer Floor
Customers determined the... - Answer Ceiling
External factors affecting Pricing decisions - Answer - Markets and Demand
- Competitors' costs, prices, and offers
- Other external factors: Economic conditions, reseller reactions, government actions and social
concerns
Market and demand factors affecting pricing decisions - Answer - Pure Competition
- Monopolistic competition
- Oligopolisitic competition
- Pure Monopoly
Pure Competition - Answer Many buyers and sellers who have little effect on the price
EX: Farming
Monopolistic Competition - Answer Many buyers and sellers who trade over a range of prices
EX: Jeans
Oligopolistic Competition - Answer Few sellers who are sensitive to each other's
pricing/marketing strategies
EX: Airlines
, Pure Monopoly - Answer Single seller
EX: KUB
Downward sloping demand curve indicates that - Answer As price gets lower, quantity
demanded gets higher.
MBA program example that contradicts a downward sloping demand curve - Answer UTK was
charging $25,000 15 years ago but then decided that they could raise the price to $45,000.
The applications increased because...
If its hard to judge quality, price is usually a signal of quality therefore a higher price indicates
better quality
Inelastic demand - Answer Demand hardly changes with a small change in price
Elastic demand - Answer Demand changes greatly with a small change in price
Marketers want to reduce price elasticity so that... - Answer - Brands will not be perceived as
easily substitutable
- Customers' wont always seek the lowest price
- Price cuts won't be the accepted way to increase demand
Brands will be perceived as unique and will create a "monopoly" in the customers' minds
and
Enhanced band equity will allow a premium price to be charged - Answer by reducing price
elasticity
Market Skimming Pricing Strategy - Answer Setting a high price for a new product to "skim"
maximum revenues from the target market
- Results in fewer, but more profitable sales
Market Skimming must be used under these conditions... - Answer - Product's quality and
image must support its higher price
- costs cant be sod high that the cancel the advantage of charging more
- Competitors shouldn't be able to enter the market easily and undercut the high price
Solved Solutions 2026 .
Narrowly, what is a price? - Answer Narrowly, price is the amount of money charged for a
product or service
Broadly, what is a price? - Answer Broadly, price is the sum of all values that consumers
exchange for the benefits of having or using the product or service
Price is not just money, think of price as - Answer sacrifice
Example of price - Answer $88 boots from amazon versus exact same pair at Dillards for $88 as
well.
The price here is wait-time, trying them on, or convenience.
The "lower price" depends on customer value
Internal factors affecting price decisions - Answer Marketing objectives
Marketing mix strategies
Costs
Organizational considerations
External factors affecting price decisions - Answer Nature of the market and demand
Competition
Other environmental factors (economy, government, re-sellers, social concerns)
In general, factors affection price decisions represent - Answer either a limitation or "wiggle
room"
Marketing objectives affecting pricing decisions - Answer 1. Survival
2. Current Profit Maximization
3. Market Share Leadership
4. Product Quality Leadership
Survival - Answer Low prices hoping to increase demand
,Current Profit Maximization - Answer Choose the price that produces the maximum current
profit
Market Share Leadership - Answer Low as possible prices to become the market share leader
Product Quality Leadership - Answer High prices to cover higher performance quality and R&D
Product Quality Leadership Example - Answer Pharmaceuticals
Fixed costs (overhead) - Answer Costs that don't vary with sales or production levels
Total costs - Answer Sum of the fixed and variable costs for any given level of production
Costs determine the... - Answer Floor
Customers determined the... - Answer Ceiling
External factors affecting Pricing decisions - Answer - Markets and Demand
- Competitors' costs, prices, and offers
- Other external factors: Economic conditions, reseller reactions, government actions and social
concerns
Market and demand factors affecting pricing decisions - Answer - Pure Competition
- Monopolistic competition
- Oligopolisitic competition
- Pure Monopoly
Pure Competition - Answer Many buyers and sellers who have little effect on the price
EX: Farming
Monopolistic Competition - Answer Many buyers and sellers who trade over a range of prices
EX: Jeans
Oligopolistic Competition - Answer Few sellers who are sensitive to each other's
pricing/marketing strategies
EX: Airlines
, Pure Monopoly - Answer Single seller
EX: KUB
Downward sloping demand curve indicates that - Answer As price gets lower, quantity
demanded gets higher.
MBA program example that contradicts a downward sloping demand curve - Answer UTK was
charging $25,000 15 years ago but then decided that they could raise the price to $45,000.
The applications increased because...
If its hard to judge quality, price is usually a signal of quality therefore a higher price indicates
better quality
Inelastic demand - Answer Demand hardly changes with a small change in price
Elastic demand - Answer Demand changes greatly with a small change in price
Marketers want to reduce price elasticity so that... - Answer - Brands will not be perceived as
easily substitutable
- Customers' wont always seek the lowest price
- Price cuts won't be the accepted way to increase demand
Brands will be perceived as unique and will create a "monopoly" in the customers' minds
and
Enhanced band equity will allow a premium price to be charged - Answer by reducing price
elasticity
Market Skimming Pricing Strategy - Answer Setting a high price for a new product to "skim"
maximum revenues from the target market
- Results in fewer, but more profitable sales
Market Skimming must be used under these conditions... - Answer - Product's quality and
image must support its higher price
- costs cant be sod high that the cancel the advantage of charging more
- Competitors shouldn't be able to enter the market easily and undercut the high price
