Pricing Strategy

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Chapter 11
Pricing Strategy

Multiple Choice Questions

1. _____ on pricing decisions concern primarily the nature of the target market and expected reactions of consumers to a given price or change in price. a. Government influences
b. Environmental influences
c. Supply influences
d. Demand influences

Answer: d
Learning Objective: 11-1
Level of Difficulty: Easy
Bloom's: Knowledge
AACSB: Analytic
Topic: Demand Influences On Pricing Decisions
Page: 163

Explanation: Demand influences on pricing decisions concern primarily the nature of the target market and expected reactions of consumers to a given price or change in price.

2. Which of the following is a factor pertaining to the expected consumption rate of potential buyers, location of potential buyers, and position of potential buyers and is particularly important for pricing decisions? a. Psychological

b. Political
c. Demographic
d. Price elasticity

Answer: c
Learning Objective: 11-1
Level of Difficulty: Easy
Bloom's: Knowledge
AACSB: Analytic
Topic: Demographic Factors
Page: 163

Explanation: Demographic factors that are particularly important for pricing decisions include the following: number of potential buyers, location of potential buyers, position of potential buyers, etc.

3. Which of the following factors related to pricing is concerned primarily with how consumers perceive various prices or price changes? a. Environmental
b. Psychological
c. Demographic
d. Sociological

Answer: b
Learning Objective: 11-1
Level of Difficulty: Easy
Bloom's: Knowledge
AACSB: Analytic
Topic: Psychological Factors
Page: 163

Explanation: Psychological factors related to pricing concern primarily how consumers will perceive various prices or price changes.

4. The three primary considerations pertaining to demand influences for a product are: a. segmentation variables used, breakeven point, and required discounts. b. internal rate-of-return, target pricing, and cost-plus pricing. c. required discounts, price elasticity, and breakeven point. d. demographic factors, psychological factors, and price elasticity.

Answer: d
Learning Objective: 11-1
Level of Difficulty: Easy
Bloom's: Knowledge
AACSB: Analytic
Topic: Demand Influences On Pricing Decisions
Page: 163

Explanation: There are three primary considerations here: demographic factors, psychological factors and price elasticity.

5. Which of the following is an example of a demographic factor that would be particularly relevant to the pricing decisions made by a company that sells insurance? a. The number of potential buyers

b. The types of insurance the company sells
c. The fact that potential buyers use price as an indicator of product quality d. The prestige orientation of potential buyers

Answer: a
Learning Objective: 11-1
Level of Difficulty: Medium
Bloom's: Application
AACSB: Reflective Thinking
Topic: Demographic Factors
Page: 163

Explanation: Demographic factors that are particularly important for pricing decisions include number of potential buyers.

6. Which of the following is an example of a demographic factor that is important to the pricing decisions made for a new type of low-fat cereal for children? a. How many boxes of the low-fat cereal will be consumed by a household in a month? b. What price will indicate the quality of the cereal?

c. How will price elasticity affect the pricing?
d. Will potential buyers be attracted to the cereal if its manufacturer uses odd pricing?

Answer: a
Learning Objective: 11-1
Level of Difficulty: Medium
Bloom's: Application
AACSB: Reflective Thinking
Topic: Demographic Factors
Page: 163

Explanation: Demographic factors that are particularly important for pricing decisions include expected consumption rates of potential buyers. They believe that quality is related to price and see themselves as good judges of product quality.

7. If consumers or...
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