BUSML 3250 Final Exam Review
What is a price? - Answer-The amount of money charged for a product or service.
What is value-based pricing? - Answer-Price is considered along with other marketing mix variables
before the marketing program is set
What are the steps in (customer) value-based pricing? - Answer-1. Assess customer needs and value
perceptions
2. Set target price to match customer perceived value
3. Determine the costs that can be incurred
4. Design product to deliver value at target price
What is cost-based pricing? - Answer-Setting prices based on the costs of producing, distributing, and
selling the product plus a fair rate of return for effort and risk
What are the steps in cost-based pricing? - Answer-1. Design a good product
2. Determine product costs
3. Set price based on cost
4. Convince buyers of product's value
What is competition-based pricing? - Answer-Setting prices based on competitors' strategies, prices,
costs, and market offerings
, What is a demand curve? - Answer-A curve that shows the number of units the market will buy in a
given time period, at different prices that might be changed
What are the different types of demand? - Answer-Elastic Demand - demand is very sensitive to changes
in price
Inelastic Demand - demand is not so sensitive to small changes in price (insulin, people need it, demand
won't change)
What is the price elasticity of demand? - Answer-A measure of the sensitivity of demand to changes in
price
What is good-value pricing? - Answer-Offering just the right combination of quality and good service at a
fair price
What is value-added pricing? - Answer-Attaching a value-added features and services to differentiate a
company's offers and charging higher prices
What is an example of value-added pricing? - Answer-AMC Premium Theaters - prices are higher, but
customers pay for the value-added activities - such as food delivered to seat, better seating, extra space,
etc.
What are the three different types of costs? - Answer-Fixed Costs
Variable Costs
Total Costs
What are fixed costs? - Answer-Costs that do not vary with production or sales level
What are variable costs? - Answer-Costs that vary directly with the level of production
What is a price? - Answer-The amount of money charged for a product or service.
What is value-based pricing? - Answer-Price is considered along with other marketing mix variables
before the marketing program is set
What are the steps in (customer) value-based pricing? - Answer-1. Assess customer needs and value
perceptions
2. Set target price to match customer perceived value
3. Determine the costs that can be incurred
4. Design product to deliver value at target price
What is cost-based pricing? - Answer-Setting prices based on the costs of producing, distributing, and
selling the product plus a fair rate of return for effort and risk
What are the steps in cost-based pricing? - Answer-1. Design a good product
2. Determine product costs
3. Set price based on cost
4. Convince buyers of product's value
What is competition-based pricing? - Answer-Setting prices based on competitors' strategies, prices,
costs, and market offerings
, What is a demand curve? - Answer-A curve that shows the number of units the market will buy in a
given time period, at different prices that might be changed
What are the different types of demand? - Answer-Elastic Demand - demand is very sensitive to changes
in price
Inelastic Demand - demand is not so sensitive to small changes in price (insulin, people need it, demand
won't change)
What is the price elasticity of demand? - Answer-A measure of the sensitivity of demand to changes in
price
What is good-value pricing? - Answer-Offering just the right combination of quality and good service at a
fair price
What is value-added pricing? - Answer-Attaching a value-added features and services to differentiate a
company's offers and charging higher prices
What is an example of value-added pricing? - Answer-AMC Premium Theaters - prices are higher, but
customers pay for the value-added activities - such as food delivered to seat, better seating, extra space,
etc.
What are the three different types of costs? - Answer-Fixed Costs
Variable Costs
Total Costs
What are fixed costs? - Answer-Costs that do not vary with production or sales level
What are variable costs? - Answer-Costs that vary directly with the level of production
