BUSI 502 Developing Pricing Strategies and Programs

BUSI 502 Developing Pricing Strategies and Programs GENERAL CONCEPT QUESTIONS; CHAPTER 14 Multiple Choice 1. communicates to the market the company’s intended value positioning of its product or brand. 2. Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with products. 3. Companies price their products in a number of ways. Small companies prices are set by the boss, in larger companies, pricing is handled by division and product-line managers. In industries where price is a key factor, companies often establish a department reporting to other internal departments. 4. Executives often complain that pricing is a big headache. One of the common mistakes made are: Price is not revised often enough to capitalize on market changes; price is set of the rest of the marketing mix rather than an intrinsic element of a marketing-positioning strategy. 5. “Power prices” use price as a key strategic tool. These “power pricers” have discovered the highly effect of price on the bottom line. 6. Purchase decisions are based on how consumers perceive prices and what they consider to be the price—not the marketer’s stated price. 7. The definition of prices is: In considering an observed price, consumers often compare it to an internal memory reference price or an external frame of reference (such as a posted “regular retail price”). Chapter 14: Developing Pricing Strategies and Programs 8. Many consumers use price as an indicator of . Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars. 9. Pricing cues, such as sale signs and prices that end in a 9, become less effective the more they are employed. Anderson and Simester maintain that they must be used judiciously on those items where consumers’ price knowledge may be poor. Which of the following is NOT one of these signs? 10. A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it . 11. Consumers often rank brands according to price tiers in a category. Within any tier, there is a range of acceptable prices, called . These provide managers with some indication of the flexibility and breadth they can adopt in pricing their brands within a particular price tier. Part 5: Shaping the Market Offerings 12. A firm has to consider many factors in setting its pricing policy. We list these as a six-step process. Which of the following is NOT one of these steps? : Hard 13. A firm first decides where it wants to position its market offering. A company can pursue any of five major objectives through pricing. Which of the following is NOT one of these objectives? 14. In market-penetration pricing, the company’s objective in pricing is to , believing that higher sales volume will lead to lower unit costs and higher long-run profits. 15. Market-skimming prices make sense under the following conditions EXCEPT . Chapter 14: Developing Pricing Strategies and Programs 16. The first step in estimating demand is to understand what affects price sensitivity. Generally speaking, customers are most price sensitive to products that cost a lot or are . 17. Consumers to low-cost products or items they buy infrequently. 18. The concept of the lowest means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining, operating, and servicing the product over its lifetime. 19. If demand hardly changes with a small change in price, we say that the demand is . 20. If demand changes considerably, we say that the demand is .