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28 Cards in this Set
- Front
- Back
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Price is
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the value that is exchanged for products in a marketing transaction.
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The oldest form of exchange—trading of products—is known as
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barter.
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Which of the following is the most flexible variable in the marketing mix?
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Price
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Price is a key element in the marketing mix because it relates directly
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to the generation of total revenue |
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Suppose Tommy Hilfiger is introducing a new line of men's ties. The designer believes that the target market for these ties comprises men who are very status-conscious. In keeping with this assessment, department stores selling the ties should
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use price symbolically.
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When marketers emphasize price as an issue and match or beat the prices of other companies, they are using
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price competition.
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Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of
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price.
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A danger associated with engaging in price competition is that competitors can also change prices quickly and aggressively, which can result in a(n) _____ that will be harmful to both companies.
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price war
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Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing
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nonprice competition.
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If Wilson Sporting Goods faces a standard demand curve that exists for most products, as it raises the price of its tennis rackets, the
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quantity demanded goes down.
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For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.
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inverse
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If Seagram's marketers found that the firm's Crown Royal bourbon was a prestige product and raised its price, which of the following would most likely happen?
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Above some price level, the quantity demanded would begin to decrease.
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Which of the following products is most likely to have an inverted C-shaped demand curve?
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Giorgio perfume
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A measure of sensitivity of demand in relation to changes in price is
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price elasticity of demand.
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If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival’s demand would be
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elastic.
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Which of the following is most likely to have an inelastic demand curve?
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Nonelective surgery
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If Pacific Power and Light increased its rates 10 percent and experienced only a 2 percent reduction in the demand for power, the demand would be
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inelastic.
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Costs that do not vary with changes in the number of units produced and sold are called ____ costs.
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fixed
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Which of the following is most likely to be a fixed cost?
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Rent
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Costs that vary directly with changes in the number of units produced or sold are called
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variable costs.
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Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's
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marginal revenue.
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When marginal cost is equal to marginal revenue, the firm should
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stop producing additional units to maximize profits.
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The point at which the costs of producing a product equal the revenue earned from selling the product is
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the breakeven point.
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If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?
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2,000 units
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Below the breakeven point, a firm is operating
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at a loss.
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A marketer sometimes uses temporary price reductions to
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gain market share.
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Marketers generally view _____ as the minimum price a product can be sold for.
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costs
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The type of prices most likely to appear in advertising is
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bargain.
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