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Total questions: 50
Worksheet time: 26mins
The price skimming consists of setting high prices and reducing them over time to maximize the long-term profit.
True
False
Which statement best describes "Price"?
The cost of producing items
The amount customers are charged for items
The profit earned from selling items
What is price skimming?
An initially high price charged to customer which will reduce over time
An initially low price charged to customer which will increase over time
A steady price charged to customer regardless of product age
What is an advantage of price skimming?
Gains market share
Covers costs and breaks even
Allows an organisation to make the largest profit possible
What is Promotional pricing?
When a business offers different prices to different customers
When a business reduces price to below production cost to clear stock
When a business offers a short term special offer such as buy one get one free to gain interest and increase sales
What is meant by Psychological pricing strategy?
Items are offered at an uneven number to appear cheaper encouraging sales (eg £9.99)
Items are sold using a special promotional offer which is brightly coloured and attracts attention
Items are sold at production cost price to attract customers into the store and increase purchases
What sets the floor for product prices?
consumer perceptions of the product's value
product costs
competitors' strategies
advertising budgets
Which of the following processes does value-based pricing reverse?
high-low pricing
everyday low pricing
cost-based pricing
good-value pricing
Under oligopolistic competition the market consists of ________.
a single dominant seller
numerous small sellers
many buyers and sellers who trade over a range of prices rather than a single market price
only a few large sellers
________ refers to a measure of the sensitivity of demand to changes in price.
Price elasticity
A demand curve
Price-value equation
Marginal utility
________ pricing uses buyers' perceptions of value as the key to pricing.
Customer value-based
Cost-based
Time-based
Markup
Quantity of payment or compensation given by one party to another in return for goods and services.
Revenue
Price
Sales
Profit Margin
Different markets have different level of price sensitivity. Hence, a one-price-fits all market would not be recommended.
Pricing in different markets
Nature of the market and demand
Price elasticity Demand
Break-even point
Is the level of income that is desired by the company.
Fixed Costs
Variable Costs
Profit Margin
Revenue
What is Loss Leader pricing?
A product is sold at production cost price
A product is sold at less than cost price
A product is sold to make a small profit
What is meant by Psychological pricing strategy?
Items are offered at an uneven number to appear cheaper encouraging sales (eg £9.99)
Items are sold using a special promotional offer which is brightly coloured and attracts attention
Items are sold at production cost price to attract customers into the store and increase purchases
_____________________ are the one you wouldn't necessarily expect to be interested in your business and could be attracted because of other reasons.
Target Customers
Primary Customers
Secondary Customers
Virtual Customers
By knowing the buyers' behaviours, I can...
Better project my sales target and manage inventory
Know what is important for my customers and better increase customer loyalty
Make improvements to the product design and function
Better market my products or services to the customer
Which of the following is not a factor affecting pricing?
Competitors' pricing
Weather
Production cost & distribution cost
Brand positioning (Luxury brand/ down-to-earth brand)
Examples of time based pricing are...
Goods with shorter shelf life will be priced cheaper to reduce wastage
Cheaper food and drinks during happy hours
Airline ticket pricings during peak and non peak period
Hotel pricing on weekends vs weekdays
Printers are usually charged at a lower price, however accompanying ink top-ups are charged a premium price. This is know as _________________
Premium Pricing
Bundle Pricing
Passive Pricing
Captive Product Pricing
Mc Donald charges a premium pricing for it's outlet at Garden by the Bay. This pricing strategy is know as
Premium Pricing
Product Options Pricing
Geographical Pricing
Economy
What is the definition of PRICE ?
The amount of money a consumer must spend in order to get a product.
A value of services determined by money
Benefits of product payed
The amount of product a customer gained
The different terms used to reference pricing is :
The charge
The fare
The price point
The value
Which of the following is NOT an internal factor that affects price ?
Consumer
Product differentiation
Marketing-mix strategies
Organization
Which are EXTERNAL FACTORS ?
Buyer
Nature market and demand
Environment factors
Background market
What is the general pricing approach
cost-based pricing
value-based pricing
break-event pricing
competition-based pricing
What is cost-based pricing ?
cost+markup + final price
cost production + cost manufacturing + final price
cost manufacturing + cost distribution + final price
What type of agreement that competitors agree to fix a price at their advantage?
Price Encouragement
Price Fixing
________ 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
________ 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
What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency?
segmented pricing
psychological pricing
referent pricing
promotional pricing
dynamic pricing
The Internet offers ________, where the price can easily be adjusted to meet changes in demand.
captive pricing
dynamic pricing
basing-point pricing
price bundling
cost-plus pricing
Consumers perceptions of the product's value set the ceiling; demand set a floor to a product's price.
TRUE
FALSE
Overhead cost is another term for variable cost.
TRUE
FALSE
