Chapter 10 - Understanding & Capturing Customer Value

What is price?

• The amount of money a company makes from a product

• The amount of money charged for a product or service

• The cost of producing a product

• The total revenue of a company

What does value-based pricing focus on?

• The seller’s costs

• Competitor prices

• Buyers’ perceptions of value

• Government regulations

Which pricing strategy is customer-driven?

• Cost-based pricing

• Value-based pricing

• Competition-based pricing

• Break-even pricing

What is a characteristic of cost-based pricing?

• It is customer-driven

• It is based on perceived value

• It is product-driven

• It always results in lower prices

What is good-value pricing?

• Offering the highest quality at the highest price

• Charging a constant low price with no discounts

• Offering the right combination of quality and good service at a fair price

• Setting price based on competitors’ strategies

Everyday low pricing (EDLP) involves:

• Charging high prices but offering frequent discounts

• Charging a constant low price with few or no temporary discounts

• Adjusting prices based on competitors’ actions

• Adding value-added features to justify higher prices

What is high-low pricing?

• Setting prices based on perceived value

• Charging lower prices on an everyday basis

• Charging higher prices but offering frequent promotions

• Setting prices based on production costs

Which pricing strategy differentiates a company’s offers by adding extra features and services?

• Cost-plus pricing

• Value-added pricing

• Competition-based pricing

• Break-even pricing

What are fixed costs?

• Costs that vary directly with the level of production

• Costs that remain constant regardless of production levels

• The sum of fixed and variable costs

• The costs set by the government

Which of the following is an example of a fixed cost?

• Raw materials

• Packaging

• Rent

• Factory wages