1. Describe the eight stages of the process that marketers can use to establish prices.
Chapter 12 – Pricing Concepts and Management
2. What are some of the objectives a firm might hope to achieve when setting prices?
3. How are pricing objectives similar to a corporation’s overall goals? How are they different?
Chapter 12 – Pricing Concepts and Management
4. How can a marketer use product quality as a pricing objective to influence purchasing decisions?
5. Explain what is meant by price elasticity of demand.
Chapter 12 – Pricing Concepts and Management
6. What are the implications of a downward-sloping demand curve?
7. What are the components of total cost? Give specific examples.
Chapter 12 – Pricing Concepts and Management
8. Why is the marginal revenue of a product important to the marketer?
Chapter 12 – Pricing Concepts and Management
9. How might a marketer find information about a competitor’s prices? Why is this information important?
10. Identify and describe the major factors that affect pricing decisions.
Chapter 12 – Pricing Concepts and Management
11. Explain differential pricing and then describe the four major types.
12. Compare and contrast price skimming and penetration pricing.
Chapter 12 – Pricing Concepts and Management
13. Identify and describe the three types of product-line pricing.
Chapter 12 – Pricing Concepts and Management
14. Identify and describe six types of psychological pricing.
Chapter 12 – Pricing Concepts and Management
15. What is bundle pricing? Give three examples, each one from a different industry.
16. Under what conditions would a marketer most likely use a price leader strategy?
Chapter 12 – Pricing Concepts and Management
17. What are reference prices and how do customers use them?
18. What are some issues to consider when determining a specific price?
Chapter 12 – Pricing Concepts and Management
19. Identify and describe the major types of discounts used for business markets. Then explain the reasons for using
each type.
20. What are the terms of F.O.B. pricing?
Chapter 12 – Pricing Concepts and Management
21. How can transfer prices be calculated?
22. When establishing prices, a marketer’s first step is to:
a. determine demand.
b. develop pricing objectives.
c. select a pricing policy.
d. evaluate competitors’ prices.
e. determine a pricing method.
Chapter 12 – Pricing Concepts and Management
23. When marketers emphasize price as an issue and match or beat the prices of other companies, they are engaging
in:
a. price competition.
b. non-price competition.
c. comparative pricing strategies.
d. demand-based pricing.
e. supply-based pricing.
24. Safe Auto advertises its automobile insurance as “minimum coverage for minimum budgets.” Safe Auto is engaging
in:
a. non-price competition.
b. demand-based pricing.
c. competitive pricing.
d. price differentiation.
e. price competition.
Chapter 12 – Pricing Concepts and Management
25. Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing:
a. product competition.
b. non-price competition.
c. demand-based pricing.
d. price competition.
e. supply-based pricing.
26. One advantage of non-price competition is that:
a. a firm can react quickly to competitive efforts.
b. market share becomes less important.
c. a firm can build customer loyalty.
d. marketing efforts are completely eliminated.
e. pricing is no longer a factor.
Chapter 12 – Pricing Concepts and Management
27. Which of the following statements about non-price competition is false?
a. Companies that use non-price competition do not need to keep track of their competitor’s prices.
b. A company must be able to distinguish its brand through some unique feature in order to successfully engage
in non-price competition.
c. A firm using non-price competition can build loyalty to both its company and its products.
d. When using non-price competition, a company should promote the distinguishing characteristics of its brand.
e. Companies that use non-price competition can distinguish their products through promotion and packaging.
28. A product under non-price competition would most likely not succeed in the market if:
a. a new advertising campaign is established for it.
b. it is easy to duplicate.
c. it is packaged differently from similar products.
d. it is priced near the competitors’ price.
e. its quality has been upgraded.
Chapter 12 – Pricing Concepts and Management
29. Price is a key element in the marketing mix because it relates directly to:
a. the size of the sales force.
b. the speed of an exchange.
c. quality controls.
d. the generation of total revenue.
e. brand image.
30. If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would be needed
to make this a true pricing objective?
a. Statement of demand elasticity
b. Identification of cost structure
c. Breakeven analysis
d. Identification of a time period for accomplishment
e. Establishment of a subsequent pricing policy
Chapter 12 – Pricing Concepts and Management
31. The Office Place is an office supplies company which has adjusted its price levels so that it can increase its sales
volume to match its expenses. The Office Place is most likely employing a ____ objective.
a. market share
b. cash flow
c. return on investment
d. survival
e. profit
32. Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm’s
primary pricing objective is to:
a. maintain the status quo.
b. increase profit.
c. survive.
d. increase market share.
e. recover.
Chapter 12 – Pricing Concepts and Management
33. Westin Hotels, Inc. has an objective of achieving a 25 percent return from its overall sales. This is an example of a
____ pricing objective.
a. market share
b. cash flow
c. return on investment
d. profit
e. status quo
34. Most pricing objectives based on ____ are achieved by trial and error because not all cost and revenue data are
available when prices are set.
a. market share
b. cash flow
c. return on investment
d. survival
e. profit
Chapter 12 – Pricing Concepts and Management
35. Maintaining or increasing market share:
a. can be achieved even if industry sales are flat or decreasing.
b. is an infrequently used pricing objective in most industries.
c. depends upon the overall growth of the total industry.
d. is a profit-related objective based on price.
e. is directly tied to leading an industry in product quality.
36. Nabisco is considering two pricing objectives. The first is to sell one out of every three crackers consumed in the
world,anobjectivebasedon_____;thesecondistomeet,butnotbeat,competitor’spricesofcookieproducts,
which is a ____ objective.
a. cash flow; market share
b. market share; cash flow
c. survival; status quo
d. market share; survival
e. market share; status quo.
Chapter 12 – Pricing Concepts and Management