Pricing Decisions

________ is the amount of money charged for a product or service.

• Experience curve

• Demand curve

• Price

• Wage

• Salary

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

• Value-based pricing

• Target return pricing

• Variable costs

• Price elasticity

• Product image

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

• pricing power

• value-added pricing strategies

• fixed costs

• price elasticity

• image pricing

Which of the following presents the strongest reason that markup pricing generally does NOT make sense?

• Sellers earn a fair return on their investment.

• By tying the price to cost, sellers simplify pricing.

• When all firms in the industry use this pricing method, prices tend to be similar.

• This method ignores demand.

• With a standard markup, consumers know when they are being overcharged.

With target costing, marketers will first ________ and then ________.

• build the marketing mix; identify the target market

• identify the target market; build the marketing mix

• design the product; determine its cost

• use skimming pricing; use penetrating pricing

• determine a selling price; target costs to ensure that the price is met

Each of the following economic factors can have a strong impact on a firm's pricing strategy EXCEPT ________.

• an economic boom

• the reseller's reaction to price changes

• an economic recession

• inflation

• interest rates

Which of the following would NOT support a market-skimming policy for a new product?

• The product's quality and image must support its higher price.

• Enough buyers must want the products at that price.

• Competitors are not able to undercut the high price.

• Competitors can enter the market easily.

• The cost of producing a smaller volume is not so high that it negates the advantage of charging more per unit.

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.

• product bundle

• optional-product

• captive-product

• by-product

• skimming

It is most typical for producers who use captive-product pricing to set the price of the main product ________ and set ________ on the supplies necessary to use the product.

• low; low markups

• high; low markups

• low; high markups

• high; high markups

• moderately; moderate markups

The New Age Gallery has different admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________.

• time-based pricing

• location pricing

• customer-segment pricing

• revenue management pricing

• generational pricing