BUAD 332 EXAMINATION TEST 3 2026
QUESTIONS WITH VERIFIED ANSWERS
◉ 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
QUESTIONS WITH VERIFIED ANSWERS
◉ 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
