MGT 103: Chapter 13 UPDATED ACTUAL
Questions and CORRECT Answers
Elements that make up a price - CORRECT ANSWER - -it must generate enough sales
dollars to pay for the cost of developing, producing, and marketing the product
-customers must be willing to pay it
-it must earn a profit for the company
price - CORRECT ANSWER - the money or other considerations exchanged for the
ownership or use of a product or service.
barter - CORRECT ANSWER - the practice of exchanging products and services for other
products and services rather than for money
price transparency - CORRECT ANSWER - a consumer's near-instant access to
competitors prices for the same offering\
Price equation - CORRECT ANSWER - Price= List Price-(incentives and allowances)+
extra fees
To generate profits, firms find: - CORRECT ANSWER - 1) suppliers whose inefficiencies
and lower hourly wages can reduce the prices the buying firms must pay
2) new markets to increase revenues
Value - CORRECT ANSWER - the ratio of perceived benefits to price
(perceived benefits/price)
value pricing - CORRECT ANSWER - the practice of simultaneously increasing product
and service benefits while maintaining or decreasing price.
, profit equation - CORRECT ANSWER - Profit=Total revenue-Total Cost
Profit=(Unit Price x Quantity sold) - (Fixed cost + Variable cost)
Six Important steps in setting prices(First) - CORRECT ANSWER - 1) Identify Pricing
Objectives and constraints
-Objective like profit, market share, and survival
-constraints like demand for product class and brand, newness, costs, and competition.
Six Important steps in setting price(Second) - CORRECT ANSWER - 2) Estimate demand
and revenue
-demand estimation
-sales revenue estimation
-price elasticity estimation
Six Important steps in setting price(Third) - CORRECT ANSWER - 3) Determine cost,
volume, and profit relationships
-cost estimation
-marginal analysis, in relation to profit
-Break-even analysis, in relation to profit
Pricing objectives - CORRECT ANSWER - involves specifying the role of price in an
organization's marketing and strategic plans.
Managing for long-run profits - CORRECT ANSWER - give up immediate profit by
developing quality products to penetrate competitive markets over the long term.
Target Return - CORRECT ANSWER - when a firm sets a profit goal
Questions and CORRECT Answers
Elements that make up a price - CORRECT ANSWER - -it must generate enough sales
dollars to pay for the cost of developing, producing, and marketing the product
-customers must be willing to pay it
-it must earn a profit for the company
price - CORRECT ANSWER - the money or other considerations exchanged for the
ownership or use of a product or service.
barter - CORRECT ANSWER - the practice of exchanging products and services for other
products and services rather than for money
price transparency - CORRECT ANSWER - a consumer's near-instant access to
competitors prices for the same offering\
Price equation - CORRECT ANSWER - Price= List Price-(incentives and allowances)+
extra fees
To generate profits, firms find: - CORRECT ANSWER - 1) suppliers whose inefficiencies
and lower hourly wages can reduce the prices the buying firms must pay
2) new markets to increase revenues
Value - CORRECT ANSWER - the ratio of perceived benefits to price
(perceived benefits/price)
value pricing - CORRECT ANSWER - the practice of simultaneously increasing product
and service benefits while maintaining or decreasing price.
, profit equation - CORRECT ANSWER - Profit=Total revenue-Total Cost
Profit=(Unit Price x Quantity sold) - (Fixed cost + Variable cost)
Six Important steps in setting prices(First) - CORRECT ANSWER - 1) Identify Pricing
Objectives and constraints
-Objective like profit, market share, and survival
-constraints like demand for product class and brand, newness, costs, and competition.
Six Important steps in setting price(Second) - CORRECT ANSWER - 2) Estimate demand
and revenue
-demand estimation
-sales revenue estimation
-price elasticity estimation
Six Important steps in setting price(Third) - CORRECT ANSWER - 3) Determine cost,
volume, and profit relationships
-cost estimation
-marginal analysis, in relation to profit
-Break-even analysis, in relation to profit
Pricing objectives - CORRECT ANSWER - involves specifying the role of price in an
organization's marketing and strategic plans.
Managing for long-run profits - CORRECT ANSWER - give up immediate profit by
developing quality products to penetrate competitive markets over the long term.
Target Return - CORRECT ANSWER - when a firm sets a profit goal
