53. Which of the following is true about the price-sensitive segment?
a. They are deal prone.
b. They are inelastic.
c. Demand doesn’t change when the price changes.
d. They’ll buy our brand no matter what.
54. Which of the following is the formula for cost-plus pricing?
a. Unit cost/(1 – X%)
b. Unit cost × (1 – X%)
c. Unit cost + (1 – X%)
d. Unit cost – (1 – X%)
55. If your fixed costs (including marketing, advertising, R&D, depreciation, etc.) are high relative to variable
costs (which include labor or unit components), the strategic objective is to
a. maximize per unit margins.
b. eliminate advertising.
c. maximize sales volume.
d. raise the price as much as possible.
56. (Price – Variable costs) is also called
a. profit.
b. contribution per unit to fixed costs.
c. maximum sales volume.
d. fixed price units per contribution.
57. National Product Company is indecisive about what prices it should charge for items in its new product line.
The company wants the most accurate data on customers’ willingness to pay for its products. By using
__________, which can yield very precise estimates of demand and price sensitivities at numerous price points,
National Product Company can gather the data it needs to set prices.
a. survey data
b. conjoint analysis
c. online data
d. scanner data
58. Which of the following pieces of information is found in scanner data?
a. the quantities bought
b. price of competing products
c. customer’s willingness to pay
d. product characteristic that attracted the buyer
59. A survey asks the following two questions:
Q1 At $25.00, I definitely would not buy 1 2 3 4 5 6 7 definitely would buy
Q2 At $35.00, I definitely would not buy 1 2 3 4 5 6 7 definitely would buy
There is a segment of people who are not really interested in the product regardless of the price. What are their
answers most likely to be?
a. Q1 = 2 or 3, and Q2 = 1 or 2
b. Q1 = 6 or 7, and Q2 = 5 or 6
c. Q1 = 4 or 5, and Q2 = 3 or 4
d. Q1 = 1 or 2, and Q2 = 2 or 3
60. Renaud is the marketing manager at EatIt Foods. Although he knows that other tools are available, like
other marketing managers, Renaud’s favorite tool to study pricing is
a. conjoint.
b. a survey.
c. scanner data.
d. a meta-analysis.
61. Company XYZ manufactures quality widgets, but does not invest a significant effort in marketing the
company or its widgets. If Company XYZ were to develop a __________, one of the benefits it would realize is
the ability to charge premium prices.
a. company
b. product
c. marketing strategy
d. brand
62. Company ABA showed its customers products with various combinations of features and attributes, with
price being one of them. Its customers were asked: “Which combination do you prefer most, next most, etc.?”
What type of study did Company ABA conduct?
a. meta-analysis
b. scanner survey
c. price survey
d. conjoint analysis
63. What type of consumer is represented by the left side of this figure?
a. one who wants the brand and is willing to pay more to get it
b. one who appreciates a good deal and will give up the brand to retain the lower price
c. one who values low price and brand name both highly
d. one who does not care about brand name or price
64. Profit maximization occurs when marginal revenue equals
a. marginal profit.
b. marginal sale.
c. marginal cost.
d. cost-plus pricing.
65. Based on this figure, if American charges $209 for a flight, and Delta charges $279, how much does
Southwest charge?
a. $209
b. $279
c. $99
d. $309
66. A price’s role as a cue is so strong that prices are known to contribute to the formation of __________ prior
to a purchase.
a. beliefs
b. expectations
c. decisions
d. explanations
67. ABC Company has several product models within its product line. The company charges different prices,
which can reflect different __________ functionality.
a. product
b. place
c. promotion
d. aberrant
68. If the inner/middle pricing choice between two extremes looks particularly attractive, we call this the
a. reference.
b. median.
c. compromise.
d. average.
69. __________ is the idea that the price (on the sticker) is much higher than the referent.
a. Price fixing
b. Sticker shock
c. Predatory pricing
d. Price discrimination
70. Which of the following is represented by the Greek letter epsilon?
a. error
b. elasticity
c. profit
d. cost
71. Since we read from left to right, when we see a price, we process the number of dollars before the number
of cents. This is why so many prices end in what number?
a. 0
b. 11
c. 33
d. 99
72. Services are said to be __________, which means there is no such thing as storing inventory or excess
capacity.
a. perishable
b. price sensitive
c. legitimate
d. concrete
73. To what does FIFO refer?
a. four-in, four-out
b. first-in, first-out
c. front-in, front-out
d. financially fit, financial options
74. BigTime Products, Inc. sets high prices for its products, and the company seeks profit margin, not volume.
In which strategy is BigTime Products engaged?
a. market production
b. market skimming
c. market penetration
d. competitive pricing
75. Ashton wants to generate interest in the new branch of his hobby stores that is opening next week. He plans
to offer temporary price cuts and issue coupons. This practice is referred to as
a. price promotion.
b. price sensitivity.
c. price discrimination.
d. price instability.
76. Marketers frequently use __________ to try to estimate the likely results of various actions, most frequently
price cuts and competitive response.
a. strategies
b. promotions
c. competition
d. game theory
77. The point of __________ is to get companies to think about the broader market, rather than only optimizing
their own needs. This can avoid price wars.
a. conjoint analysis
b. game theory
c. elasticity
d. competition
78. The idea that price is actually negotiated between the buyer and seller refers to which of the following
terms?
a. fixed pricing
b. sensitivity pricing
c. dynamic pricing
d. none of these
79. The point of indifference at which you say, “If you raise the price, forget it, I won’t buy; if you drop the
price, okay, I will,” refers to which of the following terms?
a. reservation price
b. predatory pricing
c. deceptive pricing
d. vertical price fixing
80. __________ is an assessment of what the customer gets compared with what the customer gives up.
a. Market research
b. Value
c. Price
d. Auction
81. Why do marketers need to know how to set prices?
82. Describe three ways a company can set a price.
83. Identify and explain the two major issues that marketers must address regarding low prices.
84. Explain each part of this graph.
85. Describe how discounts create mood inductions.
86. Explain how price serves as a cue to quality.
87. Describe and discuss referent pricing.
88. Explain segmentation pricing.
89. Explain the difference between skimming and pricing for market penetration.
90. Describe game theory.
