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Exam 10: Pricing Strategies: Understanding and Capturing Customer Value

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Question 31

Multiple Choice

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A company building its pricing strategy around the experience curve would be most likely to .

A) price its products high
B) engage in value- added pricing
C) price its products low
D) avoid cost- based pricing
E) engage in break- even pricing

F) C) and D)
G) A) and E)

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Question 32

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The more elastic the demand,the more it pays for the seller to raise the price.

A) True
B) False

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Question 33

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uses buyers' perceptions of what a product is worth,not the seller's cost,as the key to pricing.

Once a company cuts prices,it's difficulty to raise prices again when the economy recovers.

In a pure monopoly,the market consists of one seller.

In industries in which pricing is a key factor,often set the best prices or help others in setting them.

Break- even pricing,or a variation called _ ,is when the firm tries to determine the price at which it will break even or make the profit it is seeking.

If demand hardly changes with a small change in price,we say the demand is .

Lawyers,accountants,and other professionals typically price by adding a standard markup for profit.This is known as .

Companies are fortunate to have demand that is more because they may be able to set higher prices.

Explain the concept of a price floor.

Which of the following involves setting prices based on competitors' strategies,costs,prices,and market offerings?

When there is price competition,many companies adopt rather than cutting prices to match competitors.

If demand falls by 1 percent when price is increased by 2 percent,then .

Price elasticity of demand is _ _ divided by .

Price is the only element in the marketing mix that produces .

Refer to the scenario below to answer the following questions. Alden Manufacturing produces small kitchen appliances-blenders,hand mixers,and electric skillets-under the brand name First Generation.Alden attempts to target newlyweds and first- time home buyers with this brand. In considering that most young households have limited financial resources,Alden has attempted to engage in target costing."In doing this," Milt Alden stated,"we have better control over keeping price right in line with customers." Alden manufactures a three- speed blender,its top seller,and a five- speed blender.The hand mixers are manufactured in two styles-a small handheld mixer with two rotating beaters and a similar style that comes with an optional stand and attached mixing bowl.Alden's temperature- controlled skillets are manufactured in one style with three color options. "Our product offerings are narrower," Milt Alden added,"but our line workers know each product like the back of their hands.This allows us to produce superior products while holding our prices low." -Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low.This indicates that Alden Manufacturing most likely uses which of the following strategies?

Pricing and price competition account for the number- one problem facing many marketing executives.What are some of the frequent problems that companies encounter?

When a downward- sloping experience curve exists,a company should usually the selling price of that product in order to bring in higher revenues.

Ryanair offers free flights to a quarter of its customers and rock- bottom prices to many of its other customers.Ryanair then charges for all extra services,such as baggage handling and in- flight refreshments.Which of the following best describes Ryanair's pricing method?