Pricing Concepts 2
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Pricing Concepts 2
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1. A lack of pricing power means that when a company tries to raise its prices, it loses sales volume as customers shift to low cost competitors or find a substitute product.
2. When a retailer offers a price-matching guarantee, it is signaling to the target market that it is positioned as a low-price dealer.
3. Price is defined as the perceived value of a good or service that is exchanged for a certain dollar amount.
4. Firms that price their products solely on the basis of costs are adhering to the marketing concept.
5. When many substitute products are available, demand is inelastic.
6. The manufacturers that remain in the market toward the end of the maturity stage typically offer similar prices.
7. Research indicates that when a country’s inflation rate is high, demand becomes more elastic.
8. If the formula for elasticity results in a measure of elasticity (E) greater than 1, demand is said to be inelastic.
9. In most communities, the price of gas is more or less the same at all area service stations. This is an example of sales-oriented pricing.
10. Target return on investment is the most common profit objective used by firms.
11. Price should not be used as a promotional tool.
12. The B2B Internet auction world is shifting from using warranties, delivery dates, and financing options as bargaining chips to haggling over prices.
13. If demand for milk is inelastic, consumers will not change their purchasing habits greatly when the price of milk changes.
14. Adequate distribution for a new product is often obtained by reducing the size of the profit margin for its resellers.
15. Profit is the price charged to customers multiplied by the number of units sold.
16. Today's firms must develop specific, measurable, and attainable pricing objectives if they hope to survive in highly competitive markets.
17. Markup pricing, adding an amount to cost to cover expenses and profit, is one of the most common pricing methods used by intermediaries to establish a selling price.
18. High purchase prices may create feelings of pleasure and excitement in consumers.
19. A firm has maximized its profits when its marginal revenue exceeds its marginal cost.
20. Profit maximization is the price at which supply and demand are equal, and there is no inclination for prices to rise or fall.
21. Maximization of cash should be a long-term objective.
22. Research has shown that products that are perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.
23. When pricing goals are mainly sales oriented, cost considerations usually dominate.
24. Prices always steadily decline for a product in the decline stage of the product life cycle.
25. If a shopping bot steers you to an exceptionally low price, you should suspect Internet fraud.

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