Question 1

Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii.When a tourist shop began selling Pure Hawaiian Air,it charged $5 per bottle and could not keep up with the demand.It has since raised the price to $7.Now the shop is still selling all the bottles of Pure Hawaiian Air it carries,but the owner is not forced to reorder on a daily basis.The $7 price is probably a(n):

Accepted Answer

A)  supply schedule 
B)  symmetrical price 
C)  price equilibrium 
D)  inventory equalizer 
E)  inelastic price

Question 2

How does price interact with the other three Ps of the marketing mix?

Accepted Answer

The answer of How does price interact with the other...

Question 3

List the three categories of pricing objectives and then two specific strategies in each category that a marketer could implement to achieve those objectives.

Accepted Answer

The answer of List the three categories of pricing objectives...

Question 4

Behavioral targeting technology is being used by Internet retailers to offer different prices and promotional offers to different customers based upon their Internet and browsing habits.One potential downside to this practice is:

Accepted Answer

A)  lack of profits 
B)  consumer privacy 
C)  cost 
D)  reliability of the system 
E)  competitive pressure

Question 5

All of the following statements about price are true EXCEPT:

Accepted Answer

A)  Price can relate to anything with perceived value,not just money. 
B)  Price is that which is given up in an exchange to acquire a product. 
C)  Price means the same thing to the consumer and the seller. 
D)  The price paid is based on the satisfaction consumers expect to receive from a product. 
E)  Customers are interested in obtaining a perceived reasonable price.

Question 6

Proctor & Gamble entered the electric toothbrush market with the Crest SpinBrush at a price considerably lower than lesser-known competitors.It used penetration to gain market share.

Accepted Answer

A) True 
 B)False

Question 7

High purchase prices may create feelings of pleasure and excitement in consumers.

Accepted Answer

A) True 
 B)False

Question 8

Tesla Motors
"Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally-friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons.
-Refer to Tesla Motors.Tesla set the price of the Roadster high because the company wanted to promote a high-quality image.What type of pricing does this represent?

Accepted Answer

A)  prestige pricing 
B)  elite pricing 
C)  penetration pricing 
D)  quality pricing 
E)  complete pricing

Question 9

_____ pay for every activity of the company.

Accepted Answer

A)  Revenues 
B)  Investments 
C)  Retained earnings 
D)  Profits 
E)  Prices

Question 10

Specialty Cakes
Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping center to a group of investors,and you want to serve a cake shaped like an architectural rendition of the center.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a gala in Macon,Georgia.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike.
-Refer to Specialty Cakes.There are many occasions for which people may need to buy a cake,but most people do not have the time or interest to learn about cakes and their bakers.These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them because they:

Accepted Answer

A)  equate price and quality 
B)  know cakes are in the mature stage of their product life cycle 
C)  realize that this is a monopolistic industry 
D)  believe there is not a relationship between price and quality 
E)  desire value-added services

Question 11

Name and describe the three basic strategies for setting a price on a new good or service.Under what conditions is each of the three basic pricing methods successful?

Accepted Answer

The answer of Name and describe the three basic strategies...

Question 12

South Africa's Competition Commission accused South African Airways of conspiring with its partner,Germany's Lufthansa,to set prices on flights between Cape Town,Johannesburg,and Frankfurt.As a result,the two airlines were charged with:

Accepted Answer

A)  price discrimination 
B)  price fixing 
C)  bait pricing 
D)  unfair trade practices 
E)  channel control pricing tactics

Question 13

Apple iPhone
Apple Inc.iPhone went on sale on June 29,2007.Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products and the iPhone enjoyed a tremendous amount of "buzz" before its introduction.As expected,the iPhone entered the market at what many believed to be a high price ($599).However,within weeks the price was reduced to $399.By the end of 2007 over 8 million iPhones had sold in the U.S.marketplace.By most,if not all measures,the original iPhone was a huge success for Apple and it exclusive U.S.carrier AT&T.
On July 11ᵗʰ,2008,Apple Inc.released the iPhone 3G,which it advertised as twice as fast as the original iPhone for half the cost.However,in order to obtain an iPhone at the new price of $199,buyers had to agree to a two-year service contract with AT&T.This allows iPhone users to receive phone calls and email,and search the web on the same device.A single charge of $59.99 from AT&T included 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voicemail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.This approach succeeded and over a million iPhone 3Gs were sold during the introductory weekend.
-Refer to Apple iPhone.When Apple Inc.introduced the iPhone at a high price it was probably using a _____ strategy to maximize profits.

Accepted Answer

A)  price-bracketing 
B)  penetration pricing 
C)  price-lining 
D)  price-fixing 
E)  price skimming

Question 14

List five factors that affect elasticity of demand and briefly describe how each affects demand.

Accepted Answer

The answer of List five factors that affect elasticity of...

Question 15

Tesla Motors
"Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally-friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons.
-Refer to Tesla Motors.If Tesla had assets of $5 million and net profits after taxes of $550,000,what is Tesla's return on investment (ROI)?

Accepted Answer

A)  1 percent 
B)  9 percent 
C)  11 percent 
D)  $14,135 
E)  $4,450,000

Question 16

Monthly output at Leisure-Time,Inc.changed from 12 to 13 prefabricated gazebos,and the total costs changed from $9,000 to $10,500.What is the marginal cost for this company?

Accepted Answer

A)  $1,500 
B)  $2,000 
C)  $1,200 
D)  $10,000 
E)  $12,000

Question 17

Prices may actually rise for a product in the decline stage of the product life cycle.

Accepted Answer

A) True 
 B)False

Question 18

Smelly Fruit
At first glance there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell,but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price.
-Refer to Smelly Fruit.Suppose a Thai farmer sells 10 Kan Yao durians in the marketplace at the going rate of $200 each.If it cost a Thai farmer $125 to produce and market the Kan Yao durian that she has sold,the difference between these two numbers ($75),times the number sold (10),represents the farmers _____.

Accepted Answer

A)  ROI 
B)  revenue 
C)  profit 
D)  returns 
E)  COGS

Question 19

Profit is equal to the price charged to customers multiplied by the number of units sold.

Accepted Answer

A) True 
 B)False

Question 20

The manufacturer of Trek Natural sports drink would like to introduce a Trek Natural brand energy drink in the already crowded energy drink category.This company would have a great amount of freedom in choosing a price for its new energy drink.

Accepted Answer

A) True 
 B)False

Exam 16: Pricing Concepts

How does price interact with the other three Ps of the marketing mix?

List the three categories of pricing objectives and then two specific strategies in each category that a marketer could implement to achieve those objectives.

Behavioral targeting technology is being used by Internet retailers to offer different prices and promotional offers to different customers based upon their Internet and browsing habits.One potential downside to this practice is:

All of the following statements about price are true EXCEPT:

Proctor & Gamble entered the electric toothbrush market with the Crest SpinBrush at a price considerably lower than lesser-known competitors.It used penetration to gain market share.

High purchase prices may create feelings of pleasure and excitement in consumers.

_____ pay for every activity of the company.

Name and describe the three basic strategies for setting a price on a new good or service.Under what conditions is each of the three basic pricing methods successful?

South Africa's Competition Commission accused South African Airways of conspiring with its partner,Germany's Lufthansa,to set prices on flights between Cape Town,Johannesburg,and Frankfurt.As a result,the two airlines were charged with:

List five factors that affect elasticity of demand and briefly describe how each affects demand.

Monthly output at Leisure-Time,Inc.changed from 12 to 13 prefabricated gazebos,and the total costs changed from $9,000 to $10,500.What is the marginal cost for this company?

Prices may actually rise for a product in the decline stage of the product life cycle.

Profit is equal to the price charged to customers multiplied by the number of units sold.

The manufacturer of Trek Natural sports drink would like to introduce a Trek Natural brand energy drink in the already crowded energy drink category.This company would have a great amount of freedom in choosing a price for its new energy drink.