317. (p. 393) A competition-based pricing strategy called __________involves one or more dominant firms
establishing the pricing practices that all competitors in an industry follow.
A. skimming
318. (p. 393) __________ is the process used to determine the profitability of a product at various levels of sales.
D. Competition-based pricing
319. (p. 394) Costs incurred regardless of the number of units of a product that are produced or sold are called:
A. mixed costs.
320. (p. 394) _______ costs are those costs that increase as the level of production increases.
A. Fixed
321. (p. 393) The number of units of a product that must be sold for total revenue to equal total costs is called the:
A. equilibrium volume.
322. (p. 393) At the break-even point:
A. profits are maximized.
323. (p. 394) Which of the following represents a pricing strategy that establishes a low price in hopes of attracting
a great number of customers and attempts to discourage competitors?
D. price lining strategy
324. (p. 395) _________ uses price points to establish prices that help create the impression that the product is less
expensive than it is.
A. High-low pricing
325. (p. 394) A skimming pricing strategy:
A. allows low income households the ability to purchase a particular good or service.
326. (p. 394) The _________ pricing strategy maintains low prices and avoids the use of special sales.
D. skimming
327. (p. 394) Department stores often use _________ pricing in which they have regular prices which are
relatively high, but offer special sales where prices are set lower than competitors.
A. penetration
328. (p. 394) Charging high prices to earn large profits during a time when there is little competition represents a
________ strategy:
A. penetration
329. (p. 393) A competition-based pricing strategy in which all the competitors in an industry follow the pricing
practices of one or more dominant firms is known as:
A. market fixing.
330. (p. 393) Which of the following strategies establishes a price based on the actions of rival firms?
D. bundling
331. (p. 395) The strategy of charging prices based on consumer demand rather than cost or a predetermined profit
margin represents:
A. competition-based pricing.
332. (p. 395) The Internet has ________ the intensity of price competition.
D. stifled
333. (p. 393) Phil asks you to calculate the break-even point for his firm. You respond that you will need the
following information:
D. sales revenue and total liabilities.
334. (p. 395) As firms develop their marketing mix, it is important to remember that:
A. prices must be linked directly to the cost of production.
335. (p. 394) The cost of raw materials used to produce a good or service represent the firm’s ________ costs.
D. uncontrollable
336. (p. 392) Phar-out Pharmacy will advertise a price of an over-the-counter drug at or below their cost. The
intended goal of this loss leader strategy is to:
A. achieve a target profit.
337. (p. 393) The strategy of first determining what the market is willing to pay, then subtracting a desired profit
margin to determine a desired cost of production is called:
D. skimming pricing.
338. (p. 393) The formula for break-even analysis includes which of the following components?
A. depreciation
339. (p. 394) The rent a firm pays each month for office space is an example of a(n):
D. uncontrollable cost.
340. (p. 394) Which of the following is a potential problem with a high-low pricing strategy?
A. It confuses and frustrates customers.
341. (p. 393) American Building Products is the largest cement company in the Midwest. When the firm raised its
prices by 8 percent, all of its competitors soon announced they too were raising their prices by 8 percent. It
appears this industry is influenced by a ________ strategy:
D. price discrimination
342. (p. 395) The Internet allows customers to compare prices of many goods and services. This technology will
likely:
D. focus government attention on the collusive pricing practices of firms in specific industries.
343. (p. 394) Virtual Electronics is considering a strategy to charge a very high introductory price for their
automobile video theater. After identifying that their rival firms did not carry this new product, they chose this
pricing strategy to achieve maximum profits. Virtual Electronics has chosen a ________ strategy.
A. high-low pricing
344. (p. 394) Barker Brothers Pens utilizes a strategy of low prices to attract customers and discourage
competition. This represents a _______ strategy.
A. high-low
345. (p. 393) What does a break-even point of 100 units mean?
A. The firm must sell 100 units to maximize its profits.
346. (p. 393) Jian has entered into a contract with the federal government to design a computer simulation model
for training helicopter pilots. The contract calls for the final price to be set at a fixed percentage profit over and
above her cost of production. This seems to represent a:
D. price leadership pricing strategy.
347. (p. 393) Helen is considering adding a rack of greeting cards to her product offerings at Litton Books
Unlimited. Her fixed costs associated with adding the greeting cards would be $300. Variable costs per card are
$1 each. The greeting cards will sell for $2 each. Helen’s break-even point would occur at ________ cards sold.
A. 125
348. (p. 393) Felicia wants to know how many units she must sell to cover all of her costs. She indicates to you
that her selling price is $20 per unit, her fixed costs are $6,000, and the variable costs per unit are $15. What is
her break-even point?
A. 300 units
349. (p. 395) Which of the following product attributes is least emphasized on television ads?
A. style
350. (p. 395) Firms utilize ________ when they attempt to add value to their product by offering service after the
sale, product demonstrations, or interactive customer Web sites.
D. break-even segmentation
351. (p. 395) One way a small firm can succeed against larger competitors is to:
D. use break-even segmentation.
352. (p. 395) One of the reasons marketers emphasize nonprice differences in their competitive strategies is
because:
A. consumers aren’t concerned about prices.
353. (p. 395) Many products are promoted by emphasizing their benefits, rather than setting the price lower than
that of competitive goods. This emphasis on the product’s benefits illustrates a(n) _______ strategy.
D. bundled package
354. (p. 395) Which of the following statements about nonprice competition is most accurate?
D. As microeconomic theory suggests, firms have found that nonprice competition plays a secondary role that
supplements the more important competition based on price.
355. (p. 395) Angie owns a small company that markets high quality office supplies to businesses. Angie faces
stiff competition from some much larger firms. Which of the following competitive strategies would probably
work best for Angie?
A. Keep costs as low as possible by offering a no frills approach with little or no extra services.
356. (p. 395) Operating in the southwestern states, Lancer Airlines hopes to avoid entering the price war that
currently is taking place between several airlines on the east coast. The best strategy to avoid severe price
competition is to:
D. determine the breakeven price and charge slightly more than that.
357. From a marketing management perspective, what is the meaning of a total product offer? What are the
important elements in the total product offer of your college or university?
358. Consumer goods and services are generally classified into four specific categories. What are the four
categories, and how do they differ? Illustrate by giving examples of products that are often included in each
category.
359. Discuss the role of packaging in a firm’s total product offer.
360. What is a brand? What is a brand name? What is meant by brand equity?
361. (p. 379) The company currently markets McDog T-bone, Lapdog Lunchtreats, Rover’s Potroast, and Puppy
Porterhouse in the dog food market. Prime Cuts will be an addition to the company’s ___________ in the dog
food market.
D. product screen
362. (p. 380) Gourmet Pets hopes to use its special packaging and extensive advertising to create a perception in
the minds of consumers that Prime Cuts is a superior product, even though the actual quality of meat used in the
product is virtually no different from competing brands. The company is attempting to develop:
A. differential segmentation.
363. (p. 387) Prime Cuts was the brainchild of Karen Terrier who guided all the marketing efforts of the product.
She selected each element of the marketing mix such as the package, brand name, pricing, promotion, and
placement decisions. Karen is a(n):
D. marketing intermediary.
364. (p. 393) Gourmet Pets is interested in computing the break-even point for its new product Filet
Mignon-de-Canine. The fixed costs of adding this product to the product line amounts to $20,000. Variable
costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even
point would be:
A. 900 units.
365. (p. 394) Gourmet Pets feels its target market is more concerned with perceived quality than actual product
cost. They also feel that the newness of this concept offers an opportunity to make high profits since they are
the first firm to enter this market, so they face no direct competition. Their decision to charge a high price is
consistent with the ________ strategy.
A. market pricing
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