5.01 Objective A

What is pricing in the context of marketing?

• The process of manufacturing goods.

• The determination of an exchange price at which the buyer and seller perceive optimum value for a good or service.

• The act of advertising products to customers.

• The method of distributing products to retailers.

Why might a business set prices too low?

• To increase the perceived quality of the product.

• To attract more customers by offering a bargain.

• To avoid paying taxes.

• To compete with luxury brands.

What is an example of a price attached to a service?

• The cost of raw materials.

• Legal fees for a lawyer's services.

• The price of a car.

• The price of a house.

In larger companies, which department is usually responsible for setting prices?

• Human Resources

• Finance

• Marketing

• Sales

Which of the following is an external factor that affects pricing decisions?

• Company objectives

• Production costs

• Supply and demand

• Marketing strategies

What is a potential consequence of setting prices too low?

• Increased customer trust.

• Customers may associate low prices with low quality.

• Higher production costs.

• Increased government regulation.

Which of the following is an internal factor that affects pricing decisions?

• Government regulations

• Economic conditions

• Company objectives and strategies

• Supply and demand

What is a competitive price?

• A price that is higher than all competitors.

• A price that is lower than the cost of production.

• A price that is in line with or better than competitors' prices.

• A price that is set randomly.

What is the relationship between price and quality as perceived by customers?

• Higher price always means lower quality.

• Lower price always means higher quality.

• Higher price is often associated with higher quality.

• Price and quality are unrelated.

What is meant by the term "exchange price"?

• The price at which a product is exchanged for another product.

• The monetary amount agreed upon by the buyer and seller for a product.

• The cost of producing a product.

• The price set by the government for all products.