BUAD 332 EXAM SCRIPT 3 2026 COMPLETE
QUESTIONS AND ANSWERS
◉ 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
◉ what is the goal of market penetration? what conditions must be
present? what's an example? Answer: - set a low price for a new
product in order to *penetrate the market quickly and deeply*
- certain conditions:
1. market is highly price-sensitive
2. product and distribution costs falls as sales volume increases
3. competition is kept out and low price position maintained
- example: KINDLE FIRE is much cheaper than the iPad and does
essentially the same thing
◉ other than market skimming and market penetration, what are 4
other strategies for pricing and what characterizes each? what's an
example of each one? Answer: 1. *optional-product*: pricing
optional or accessory products sold with main product
(Volkswagen)
2. *captive-product*: pricing products high that must be bought with
the main product (razor blades)
, 3. *discount & allowance pricing*: sometimes companies encourage
specific customer behavior (seasonal discounts)
4. *psychological pricing*: considers the psychology prices and not
simply the economics, customers care about price less because
quality is so high (MBA)
◉ what are 2 reasons to initiate price changes? Answer: 1. price
cuts: when you hace excess capacity and you want to decrease the
market share or to dominate the market with lower prices
2. price increases: when your cost is inflated or you have too much
demand
◉ what is a definition for retailing? Answer: all the activities
involved in selling products or services directly to final consumers
for their personal use
*lousy definition to Dr. Moon* because retailers serve business
markets also!!
- Sam's Club & Staples serve small businesses
◉ retailers are classified based on the __________, ___________, _________,
and _______. Answer: 1. amount of service
2. breadth and depth of product lines
3. relative prices charged
4. how they are organized
QUESTIONS AND ANSWERS
◉ 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
◉ what is the goal of market penetration? what conditions must be
present? what's an example? Answer: - set a low price for a new
product in order to *penetrate the market quickly and deeply*
- certain conditions:
1. market is highly price-sensitive
2. product and distribution costs falls as sales volume increases
3. competition is kept out and low price position maintained
- example: KINDLE FIRE is much cheaper than the iPad and does
essentially the same thing
◉ other than market skimming and market penetration, what are 4
other strategies for pricing and what characterizes each? what's an
example of each one? Answer: 1. *optional-product*: pricing
optional or accessory products sold with main product
(Volkswagen)
2. *captive-product*: pricing products high that must be bought with
the main product (razor blades)
, 3. *discount & allowance pricing*: sometimes companies encourage
specific customer behavior (seasonal discounts)
4. *psychological pricing*: considers the psychology prices and not
simply the economics, customers care about price less because
quality is so high (MBA)
◉ what are 2 reasons to initiate price changes? Answer: 1. price
cuts: when you hace excess capacity and you want to decrease the
market share or to dominate the market with lower prices
2. price increases: when your cost is inflated or you have too much
demand
◉ what is a definition for retailing? Answer: all the activities
involved in selling products or services directly to final consumers
for their personal use
*lousy definition to Dr. Moon* because retailers serve business
markets also!!
- Sam's Club & Staples serve small businesses
◉ retailers are classified based on the __________, ___________, _________,
and _______. Answer: 1. amount of service
2. breadth and depth of product lines
3. relative prices charged
4. how they are organized
