MKTG 361 Exam 4 Questions with Correct Answers Already Passed
What is Price? What does it represent? - Answers Cost to the customer; represents value assessed by
marketers
products all have value and can be assessed on the ___ of price - Answers metric
What makes price unique in the market mix? - Answers only part that generates revenue
Revenue Generation - Answers Function of marketing mix that creates income
Financial Price - Answers Measurement of value commonly used in product exchanges
Profit Formula - Answers =Total revenue (price * quantity sold)- total costs
Prestige Pricing - Answers emphasize quality; Setting high prices to create premium brand image
Value Pricing - Answers Emphasizing bargains for price-conscious consumers
Price Competition - Answers Strategically pricing based on competitor's pricing; products must be very
similar
What can a company achieve with lower pricing? - Answers increased sales/market share, brand
awareness, customer loyalty
What can result from a price war? - Answers caused by frequent and fierce price changes to boost
market share; risk of reduced profits
what can a company achieve with a higher price? - Answers unique value proposition
What does a Demand Curve show? - Answers Shows relationship between price and quantity demanded
What is the X and Y axis of a demand curve? - Answers x-price
y-quantity
demand curve is combined with ___ curves to find the _____ - Answers supply; equilibrium price
equilibrium price - Answers price buyers and sellers are both willing to offer
What does D1 represent? - Answers
What would cause a shift to D2? - Answers more/less quantity demanded
(T/F) Some organizations anticipate demand fluctuations and develop new products and prices to meet
customers' changing needs. - Answers true
4 factors that influence demand? - Answers 1. Changes in buyers' needs
, 2. Variations in the effectiveness of other marketing-mix variables
3. Presence of substitutes
4. Dynamic environment
Price Elasticity of Demand - Answers Measures sensitivity of quantity demanded to price changes
Formula for price elasticity - Answers %ΔQuantityDemanded / %ΔPrice
Fixed Costs - Answers Expenses unaffected by changes in units produced
Variable Costs - Answers Expenses varying with units produced
Marginal Cost - Answers Cost of producing one additional unit
Marginal Revenue - Answers Change in total revenue from selling one more unit
Break Even Point - Answers Costs equal revenue from selling product
Contribution Margin - Answers Selling price per unit minus variable cost per unit
Cost-based pricing - Answers -setting price based on costs of producing
Customer Value Based Pricing - Answers Pricing based on buyer perception, not seller cost
market-skimming pricing - Answers setting a high price for a new product to skim maximum revenues
layer by layer from the segments willing to pay the high price; the company makes fewer but more
profitable sales
market penetration pricing - Answers setting a low price for a new product in order to attract a large
number of buyers and a large market share
Pricing for a product mix is challenging because each product within the mix has different ___, ___, &
___. - Answers demand, cost, and competitors.
product line pricing - Answers setting price steps between various products in a product line based on
cost differences between the products, customer evaluations of different features, and competitors'
prices; success lies in catering to customer segment
optional product pricing - Answers pricing optional or accessory products along with the main product. A
strategy where you sell your core product at a low cost and then encourage consumers to buy more
accessories, features, or complementary products
captive product pricing - Answers strategy devised to attract a large volume of customers to a one-time
purchase of a lower-priced core (or main) product that requires accessory (or captive)products for the
main product to function.
What is Price? What does it represent? - Answers Cost to the customer; represents value assessed by
marketers
products all have value and can be assessed on the ___ of price - Answers metric
What makes price unique in the market mix? - Answers only part that generates revenue
Revenue Generation - Answers Function of marketing mix that creates income
Financial Price - Answers Measurement of value commonly used in product exchanges
Profit Formula - Answers =Total revenue (price * quantity sold)- total costs
Prestige Pricing - Answers emphasize quality; Setting high prices to create premium brand image
Value Pricing - Answers Emphasizing bargains for price-conscious consumers
Price Competition - Answers Strategically pricing based on competitor's pricing; products must be very
similar
What can a company achieve with lower pricing? - Answers increased sales/market share, brand
awareness, customer loyalty
What can result from a price war? - Answers caused by frequent and fierce price changes to boost
market share; risk of reduced profits
what can a company achieve with a higher price? - Answers unique value proposition
What does a Demand Curve show? - Answers Shows relationship between price and quantity demanded
What is the X and Y axis of a demand curve? - Answers x-price
y-quantity
demand curve is combined with ___ curves to find the _____ - Answers supply; equilibrium price
equilibrium price - Answers price buyers and sellers are both willing to offer
What does D1 represent? - Answers
What would cause a shift to D2? - Answers more/less quantity demanded
(T/F) Some organizations anticipate demand fluctuations and develop new products and prices to meet
customers' changing needs. - Answers true
4 factors that influence demand? - Answers 1. Changes in buyers' needs
, 2. Variations in the effectiveness of other marketing-mix variables
3. Presence of substitutes
4. Dynamic environment
Price Elasticity of Demand - Answers Measures sensitivity of quantity demanded to price changes
Formula for price elasticity - Answers %ΔQuantityDemanded / %ΔPrice
Fixed Costs - Answers Expenses unaffected by changes in units produced
Variable Costs - Answers Expenses varying with units produced
Marginal Cost - Answers Cost of producing one additional unit
Marginal Revenue - Answers Change in total revenue from selling one more unit
Break Even Point - Answers Costs equal revenue from selling product
Contribution Margin - Answers Selling price per unit minus variable cost per unit
Cost-based pricing - Answers -setting price based on costs of producing
Customer Value Based Pricing - Answers Pricing based on buyer perception, not seller cost
market-skimming pricing - Answers setting a high price for a new product to skim maximum revenues
layer by layer from the segments willing to pay the high price; the company makes fewer but more
profitable sales
market penetration pricing - Answers setting a low price for a new product in order to attract a large
number of buyers and a large market share
Pricing for a product mix is challenging because each product within the mix has different ___, ___, &
___. - Answers demand, cost, and competitors.
product line pricing - Answers setting price steps between various products in a product line based on
cost differences between the products, customer evaluations of different features, and competitors'
prices; success lies in catering to customer segment
optional product pricing - Answers pricing optional or accessory products along with the main product. A
strategy where you sell your core product at a low cost and then encourage consumers to buy more
accessories, features, or complementary products
captive product pricing - Answers strategy devised to attract a large volume of customers to a one-time
purchase of a lower-priced core (or main) product that requires accessory (or captive)products for the
main product to function.
