BUAD 332 EXAM 3 ACTUAL QUESTIONS
AND CORRECT ANSWERS | NEW 2025
what is a narrow definition for price? - ANSWER price is the *amount of
money* charged for a product or service
what is a more broad definition for price? aka price = ________. - ANSWER
price is the *sum* of all the *values that consumers exchange* for the *benefits
of having or using the product*
price = SACRIFICE
there is a pair of boots sold on Amazon and at Dillard's for $88 with the same tax
and no shipping. are they the same price? <-- what question are we really asking
here? - ANSWER are they the same *sacrifice*?
- amazon's pair is cheaper because you dont have to go get them
- dillard's pair is cheaper because you dont hace to wait for them to be delivered,
and you can try them on before you buy them
*marketeres have to consider that customers will pick they product they get for
less sacrifice not always a cheaper price*
what 2 types of factors affect price decisions? what makes up each type? -
ANSWER 1. internal factors = marketing objectives, marketing mix strategies,
costs, organizational considerations
2. external factors = nature of market and demand, competition, other
environmental factors (economy, government, resellers, social concerns)
,what are 4 strategies marketers could use to respond to internal factors when
choosing the price for a product? what characterizes each? what's an example of
each? - ANSWER 1. *survival* strategy: low prices with hope it'll increase
demand; Amazon
2. *current profit maximization* strategy: choose the price that produces the
maximum current profit
3. *market share leadership* strategy: low as possible prices to become the
market share leader; Walmart
4. *product quality leadership* strategy: high prices to cover higher performance
quality and R&D; Marriot
what internal factors affect our price? - ANSWER TOTAL COSTS =
1. fixed costs +
2. variable costs
______ determines the floor of our price, but _________ determine the ceiling. -
ANSWER cost -- floor
customers -- ceiling
there is a spectrum of supply and demand situations that affect how a company
can set its prices. what are the 4 different stages on the spectrum and what
characterizes each? - ANSWER 1. *pure competition*: many buyers and sellers
who have little effect on price
2. *monopolistic competition*: many buyers and sellers who trade over a wide
range of prices and quality (blue jeans)
3. *oligopolistic competition*: few sellers who are sensitive to each other's pricing
and marketing (cell phones, airlines)
4. *pure monopoly*: single seller with control over price
, what is the goal of marketers when it comes to demand elasticity? why? -
ANSWER reduce price elasticity
- org. doesn't have to compete on cost
- able to compete on quality, brands, etc.
- customer's won't always seek the lowest price = price cuts won't be way to
increase demand
- brands aren't perceives as substitutable
- premium price can be charged
what are 2 the methods companies use for setting prices for new products? which
sets the product at a high price and which at a low price? - ANSWER 1. market
skimming = high price
2. market penetration = low price
what is goal of market skimming? what conditions must be in place for market
skimming to be effective? what's an example? - ANSWER - set a high price for
a new product in order to *skim max revenues from target market* resulting in
fewer but more profitable sales
- certain conditions:
1. product quality and image support price
2. costs aren't too high
3. competitors can't easily enter market to undercut the price
- example: APPLE WATCH is very high price esp. compared to other products in the
industry
AND CORRECT ANSWERS | NEW 2025
what is a narrow definition for price? - ANSWER price is the *amount of
money* charged for a product or service
what is a more broad definition for price? aka price = ________. - ANSWER
price is the *sum* of all the *values that consumers exchange* for the *benefits
of having or using the product*
price = SACRIFICE
there is a pair of boots sold on Amazon and at Dillard's for $88 with the same tax
and no shipping. are they the same price? <-- what question are we really asking
here? - ANSWER are they the same *sacrifice*?
- amazon's pair is cheaper because you dont have to go get them
- dillard's pair is cheaper because you dont hace to wait for them to be delivered,
and you can try them on before you buy them
*marketeres have to consider that customers will pick they product they get for
less sacrifice not always a cheaper price*
what 2 types of factors affect price decisions? what makes up each type? -
ANSWER 1. internal factors = marketing objectives, marketing mix strategies,
costs, organizational considerations
2. external factors = nature of market and demand, competition, other
environmental factors (economy, government, resellers, social concerns)
,what are 4 strategies marketers could use to respond to internal factors when
choosing the price for a product? what characterizes each? what's an example of
each? - ANSWER 1. *survival* strategy: low prices with hope it'll increase
demand; Amazon
2. *current profit maximization* strategy: choose the price that produces the
maximum current profit
3. *market share leadership* strategy: low as possible prices to become the
market share leader; Walmart
4. *product quality leadership* strategy: high prices to cover higher performance
quality and R&D; Marriot
what internal factors affect our price? - ANSWER TOTAL COSTS =
1. fixed costs +
2. variable costs
______ determines the floor of our price, but _________ determine the ceiling. -
ANSWER cost -- floor
customers -- ceiling
there is a spectrum of supply and demand situations that affect how a company
can set its prices. what are the 4 different stages on the spectrum and what
characterizes each? - ANSWER 1. *pure competition*: many buyers and sellers
who have little effect on price
2. *monopolistic competition*: many buyers and sellers who trade over a wide
range of prices and quality (blue jeans)
3. *oligopolistic competition*: few sellers who are sensitive to each other's pricing
and marketing (cell phones, airlines)
4. *pure monopoly*: single seller with control over price
, what is the goal of marketers when it comes to demand elasticity? why? -
ANSWER reduce price elasticity
- org. doesn't have to compete on cost
- able to compete on quality, brands, etc.
- customer's won't always seek the lowest price = price cuts won't be way to
increase demand
- brands aren't perceives as substitutable
- premium price can be charged
what are 2 the methods companies use for setting prices for new products? which
sets the product at a high price and which at a low price? - ANSWER 1. market
skimming = high price
2. market penetration = low price
what is goal of market skimming? what conditions must be in place for market
skimming to be effective? what's an example? - ANSWER - set a high price for
a new product in order to *skim max revenues from target market* resulting in
fewer but more profitable sales
- certain conditions:
1. product quality and image support price
2. costs aren't too high
3. competitors can't easily enter market to undercut the price
- example: APPLE WATCH is very high price esp. compared to other products in the
industry
