BUAD 332 EXAM 3 UTK UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Price
Answer:
-Narrowly: price is the amount of money charged for a product
-Broadly: price is the sum of all values consumers exchange for a product/service
Question:
2. Price is ____not just money
Answer:
-Sacrifice
-Ex: ordering from Amazon vs Dillards
to order from Amazon you sacrifice time and ability to try on
to order from Dillards you sacrifice gas, time, selection, convenience, etc.
Question:
3. Factors affecting price
Answer:
Internal
-marketing objectives
-marketing strategies
-costs
External
-nature of market and demand
-competition
-economy, gov, resellers, social concerns
Question:
4. Marketing Objectives
Answer:
-survival
-current profit maximization
-market share leadership
-product quality leadership
,Question:
5. Survival
Answer:
-Low prices on products to quickly increase demand
-Ex: Amazon at beginning to build volume, they had high fixed costs
Question:
6. Current Profit Maximization
Answer:
choose the price that produces the maximum current profit
Question:
7. Market Share Leadership
Answer:
-low as possible prices to become the market share leader
-Ex: Walmart
Question:
8. Product Quality Leadership
Answer:
-high prices to cover higher performance quality and R&D
-Ex: Mercedes Benz
-Ex: Pharmaceuticals- $1000000 for the first pill and $50 for the rest
Question:
9. Internal Factors that Affect Price
Answer:
-Fixed cost
-overhead cost
-variable cost (always a bad idea to price below variable cost)
-raw materials
-TOTAL COSTS (sum of all)
Question:
10. ____ determine the floor, but ____ determine the ceiling
Answer:
Costs; Customers
Question:
11. Prices too low =
Answer:
no possible profit
, Question:
12. Prices too high =
Answer:
no possible demand
Question:
13. External Factors Affecting Pricing Decisions
Answer:
Nature of the Market
-Pure Competition
-Pure Monopoly
-Monopolistic Competition
-Oligopolistic Competition
Question:
14. Pure Competition
Answer:
-many buyers & sellers who have little effect on price
-Ex: Farmers and produce price
Question:
15. Pure Monopoly
Answer:
-single seller with huge influence on price
-Ex: KUB w/ natural gas; usually regulated by gov however
Question:
16. Monopolistic Competition
Answer:
-many buyers and sellers who trade over a range of prices, maximum flexibility for
marketers
-Ex: clothing
Question:
17. Oligopolistic Competition
Answer:
-few sellers who are sensitive to each other's pricing/marketing strategies
-Ex: Airlines & Cell Services
QUESTIONS AND CORRECT ANSWERS
Question:
1. Price
Answer:
-Narrowly: price is the amount of money charged for a product
-Broadly: price is the sum of all values consumers exchange for a product/service
Question:
2. Price is ____not just money
Answer:
-Sacrifice
-Ex: ordering from Amazon vs Dillards
to order from Amazon you sacrifice time and ability to try on
to order from Dillards you sacrifice gas, time, selection, convenience, etc.
Question:
3. Factors affecting price
Answer:
Internal
-marketing objectives
-marketing strategies
-costs
External
-nature of market and demand
-competition
-economy, gov, resellers, social concerns
Question:
4. Marketing Objectives
Answer:
-survival
-current profit maximization
-market share leadership
-product quality leadership
,Question:
5. Survival
Answer:
-Low prices on products to quickly increase demand
-Ex: Amazon at beginning to build volume, they had high fixed costs
Question:
6. Current Profit Maximization
Answer:
choose the price that produces the maximum current profit
Question:
7. Market Share Leadership
Answer:
-low as possible prices to become the market share leader
-Ex: Walmart
Question:
8. Product Quality Leadership
Answer:
-high prices to cover higher performance quality and R&D
-Ex: Mercedes Benz
-Ex: Pharmaceuticals- $1000000 for the first pill and $50 for the rest
Question:
9. Internal Factors that Affect Price
Answer:
-Fixed cost
-overhead cost
-variable cost (always a bad idea to price below variable cost)
-raw materials
-TOTAL COSTS (sum of all)
Question:
10. ____ determine the floor, but ____ determine the ceiling
Answer:
Costs; Customers
Question:
11. Prices too low =
Answer:
no possible profit
, Question:
12. Prices too high =
Answer:
no possible demand
Question:
13. External Factors Affecting Pricing Decisions
Answer:
Nature of the Market
-Pure Competition
-Pure Monopoly
-Monopolistic Competition
-Oligopolistic Competition
Question:
14. Pure Competition
Answer:
-many buyers & sellers who have little effect on price
-Ex: Farmers and produce price
Question:
15. Pure Monopoly
Answer:
-single seller with huge influence on price
-Ex: KUB w/ natural gas; usually regulated by gov however
Question:
16. Monopolistic Competition
Answer:
-many buyers and sellers who trade over a range of prices, maximum flexibility for
marketers
-Ex: clothing
Question:
17. Oligopolistic Competition
Answer:
-few sellers who are sensitive to each other's pricing/marketing strategies
-Ex: Airlines & Cell Services
