mktg 301
Chapter Five
Which of the following identifies the best reason for why you should ignore advice to employ a competitive price approach in which you undercut all competitors?
By setting the price before you know the costs, you could lose money on every razor you sell.
You are considering a cost-plus pricing method for the razor.
Which of the following identifies the greatest danger in using this pricing method?
The price that is set will dramatically decrease demand.
Another pricing method you are considering is break-even pricing. With this method, you compute how many units you will need to sell at a given price to break even. Your VP of Finance, who is focused on profits, is against using this method to set the price.
Which of the following best explains why the VP of Finance is against break-even pricing?
Break-even pricing computes a price that simply offsets costs without actually generating a profit.
Using break-even pricing, suppose your revenue estimate falls short of the break-even point.
Which of the following modifications will not result in reaching the break-even point?
Lower the break-even point and keep the price, costs, and sales steady.
Rather than break-even pricing, you are considering setting your price using the target profit approach.
Which of the following best explains why target profit pricing is an improvement over break-even pricing?
Target profit pricing sets a price that will generate revenue above the break-even point so a profit can be achieved.
Another option you are considering is a value-based approach using good-value pricing.
Which of the following accurately describes a good-value pricing approach? a less expensive model that has features that are similar to the name brand product
Another value-based approach is value-added pricing.
Which of the following products is using a value-added pricing approach?
a 3G smart phone with all standard features and a few very
Which of the following identifies the best reason for why you should ignore advice to employ a competitive price approach in which you undercut all competitors?
By setting the price before you know the costs, you could lose money on every razor you sell.
You are considering a cost-plus pricing method for the razor.
Which of the following identifies the greatest danger in using this pricing method?
The price that is set will dramatically decrease demand.
Another pricing method you are considering is break-even pricing. With this method, you compute how many units you will need to sell at a given price to break even. Your VP of Finance, who is focused on profits, is against using this method to set the price.
Which of the following best explains why the VP of Finance is against break-even pricing?
Break-even pricing computes a price that simply offsets costs without actually generating a profit.
Using break-even pricing, suppose your revenue estimate falls short of the break-even point.
Which of the following modifications will not result in reaching the break-even point?
Lower the break-even point and keep the price, costs, and sales steady.
Rather than break-even pricing, you are considering setting your price using the target profit approach.
Which of the following best explains why target profit pricing is an improvement over break-even pricing?
Target profit pricing sets a price that will generate revenue above the break-even point so a profit can be achieved.
Another option you are considering is a value-based approach using good-value pricing.
Which of the following accurately describes a good-value pricing approach? a less expensive model that has features that are similar to the name brand product
Another value-based approach is value-added pricing.
Which of the following products is using a value-added pricing approach?
a 3G smart phone with all standard features and a few very