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marketing exam 3

question
cost-oriented pricing
answer
an approach to pricing in which the posted price is based on the cost of producing a product, plus some additional firm to realize a return
question
value-based pricing
answer
an approach to pricing in which the posted price is based on the value of a product as perceived by the customer
question
value-pricing thermometer
answer
a schematic often used to capture the key elements of value-based pricing
question
true economic value
answer
the value that a fully informed buyer would or should ascribe to the product
question
perceived value
answer
the value that the customer perceives today
question
cost of goods sold
answer
determined with the assistance and direction of our Accounting colleagues in the organization and generally represents a lower bound on the price an organization would be willing to set
question
profit
answer
total revenue - total costs
question
total revenue
answer
quantity sold * price per unit
question
total costs
answer
variable costs (unit variable costs * quantity produced (units)) + fixed costs
question
customer's incentive to purchase
answer
perceived value - price
question
firm's incentive to sell
answer
price - cost of goods sold (COGS)
question
A
answer
What would it mean to price "too high,' based on the concept of the value-pricing thermometer?

A. product price set above perceived value
B. product price set below perceived value
C. product price set below cost of goods sold
D. product price set at a point where firm's incentive to sell is larger than consumer's incentive to purchase
question
C
answer
Which of the following choices is NOT one of the reasons cost-plus pricing is so popular?

A. it is easy to justify to various stakeholders
B. it simplifies an otherwise complex pricing process
C. it captures the full price that customers might be willing to pay for a product
D. it is easy to measure or estimate
question
C
answer
All of the following are inputs to any value-pricing analysis EXCEPT:

A. true economic value
B. cost of goods sold
C. product price
D. perceived value
question
D
answer
A customer's incentive to purchase is equal to:

A. true economic value (TEV) - product price
B. true economic value (TEV) minus costs of goods sold
C. product price minus cost of goods sold
D. perceived value (PV) - price
question
unit margin
answer
price we sell at - cost to make/purchase
question
percentage margin
answer
unit margin / price we sell at (revenue per unit)
question
dynamic pricing
answer
an approach to pricing in which the posted price varies according to the current level of market demand
question
yield-management system
answer
an approach to pricing in which the posted price is based on the expected demand for a given product by various customers
question
elasticity
answer
percentage change in quantity demanded of good A / percentage change in price of good A
question
elastic demand
answer
any very small change in price results in a very large change in quantity demanded; gentle slope; perfectly is horizontal
question
inelastic demand
answer
quantity demanded does not change when price is changed; sharp slope; perfectly is vertical
question
price customization
answer
offer different prices to different customers at different times
question
E
answer
All of the factors below affect why a company might customize prices EXCEPT:

A. competition
B. intensity of use
C. consumer tastes
D. nature of use
E. fixed costs
question
A
answer
A cruise line could control the availability of prices by offering deals to specific groups of buyers based on all of the following EXCEPT:

A. competition
B. information gathered via e-commerce
C. coupon usage
D. location
E. purchasing history
question
C
answer
New Balance offers a variety of types of shoes to its customers at various price points, typically in 3 basic tiers, based on the quality of the material and components of the shoe. This is an example of:

A. observable buyer characteristics
B. pricing based on transaction characteristics
C. good/better/best strategy
D. controlling the availability of prices
question
value
answer
the difference between what a customer pays for an offering and the bundle of benefits they receive
question
C
answer
Product indicators of sensitivity to price include all of the following EXCEPT:

A. easy comparability
B. performance as expected
C. the ability to switch easily
D. low differentiation
question
D
answer
All of the following are price indicators of customer price sensitivity EXCEPT:

A. easy comparability
B. the existence of reference prices
C. high in a relative sense
D. performance as expected
question
B
answer
When calculating elasticity of demand (E), a relatively inelastic demand (0 < E < 1) indicates that:

A. small changes in price cause large changes in quantity demanded
B. large changes in price cause small changes in quantity demanded
C. any change in price is matched by an equal change in quantity
question
break-even point
answer
total revenue = total costs
question
B
answer
Marketers often use which of the following techniques to determine the impact of a price on volume required to reach profitability?

A. price elasticity
B. break-even analysis
C. competitive analysis
D. assessing perceived value
question
four dimensions of customer value
answer
social, functional, experiential, economic
question
economic value
answer
offering provides tangible monetary benefits (typically in the form of savings) either at the time of purchase or over its long-term use
question
functional value
answer
the features of an offering that create specific functional benefits for the customer
question
experiential value
answer
intangible psychological and emotional benefits that can be derived, generally, from brand perceptions, design, or great service
question
social value
answer
benefits derived based on our social interactions with family, friends, similar others (people we believe are like us), and/or aspirational others (people we would like to be more like)
question
market driven
answer
the process by which a firm understands the needs of its customers through market research
question
market driving
answer
the process by which a firm creates its own products based on its own vision of the future
question
okay
answer
Which of the following statements about economic value to the customers (EVC) is FALSE?

Any two customers will derive the same EVC for the same product.

Answer: okay
question
functional benefits
answer
The functional value of a product to a customer is BEST understood by understanding the product's
question
customer service
answer
Which method for building experiential value is most likely to have the most variability for consumer-based service organizations such as hotels and restaurants?
question
customer lifetime value
answer
the present value of all future streams of profits that an individual customer generates over the life of their business with the firm
question
customer equity
answer
the total value of current and future customers
question
customer acquisition
answer
getting the customer
question
customer retention
answer
keeping the customer
question
customer development
answer
customer spends more or buys higher margin offerings over time
question
profitability and experience
answer
customer value has two sides
question
star customers
answer
The group of customers who receive high value from customer experience and who provide high value to the company are referred to as
question
C
answer
Which of the following is NOT one of the variables included a basic calculation of customer lifetime value?

A. retention probability during a period of time
B. profit or contribution margin during a period of time
C. market capitalization of the company over a period of time
D. a discount rate across a period of time
E. the period of time
question
customer retention rate
answer
the percentage of customers who stay with a company in a given period
question
customer churn rate
answer
the percentage of customers who leave a company within a given period of time
question
provenance paradox
answer
A customer is comparing two similar products online. One is made in the United States, one in a foreign country to her. She opts for the choice made in the United States, judging it to be better quality despite favorable online reviews for each. This instinctual bias is known as:
1 of 53
question
cost-oriented pricing
answer
an approach to pricing in which the posted price is based on the cost of producing a product, plus some additional firm to realize a return
question
value-based pricing
answer
an approach to pricing in which the posted price is based on the value of a product as perceived by the customer
question
value-pricing thermometer
answer
a schematic often used to capture the key elements of value-based pricing
question
true economic value
answer
the value that a fully informed buyer would or should ascribe to the product
question
perceived value
answer
the value that the customer perceives today
question
cost of goods sold
answer
determined with the assistance and direction of our Accounting colleagues in the organization and generally represents a lower bound on the price an organization would be willing to set
question
profit
answer
total revenue - total costs
question
total revenue
answer
quantity sold * price per unit
question
total costs
answer
variable costs (unit variable costs * quantity produced (units)) + fixed costs
question
customer's incentive to purchase
answer
perceived value - price
question
firm's incentive to sell
answer
price - cost of goods sold (COGS)
question
A
answer
What would it mean to price "too high,' based on the concept of the value-pricing thermometer?

A. product price set above perceived value
B. product price set below perceived value
C. product price set below cost of goods sold
D. product price set at a point where firm's incentive to sell is larger than consumer's incentive to purchase
question
C
answer
Which of the following choices is NOT one of the reasons cost-plus pricing is so popular?

A. it is easy to justify to various stakeholders
B. it simplifies an otherwise complex pricing process
C. it captures the full price that customers might be willing to pay for a product
D. it is easy to measure or estimate
question
C
answer
All of the following are inputs to any value-pricing analysis EXCEPT:

A. true economic value
B. cost of goods sold
C. product price
D. perceived value
question
D
answer
A customer's incentive to purchase is equal to:

A. true economic value (TEV) - product price
B. true economic value (TEV) minus costs of goods sold
C. product price minus cost of goods sold
D. perceived value (PV) - price
question
unit margin
answer
price we sell at - cost to make/purchase
question
percentage margin
answer
unit margin / price we sell at (revenue per unit)
question
dynamic pricing
answer
an approach to pricing in which the posted price varies according to the current level of market demand
question
yield-management system
answer
an approach to pricing in which the posted price is based on the expected demand for a given product by various customers
question
elasticity
answer
percentage change in quantity demanded of good A / percentage change in price of good A
question
elastic demand
answer
any very small change in price results in a very large change in quantity demanded; gentle slope; perfectly is horizontal
question
inelastic demand
answer
quantity demanded does not change when price is changed; sharp slope; perfectly is vertical
question
price customization
answer
offer different prices to different customers at different times
question
E
answer
All of the factors below affect why a company might customize prices EXCEPT:

A. competition
B. intensity of use
C. consumer tastes
D. nature of use
E. fixed costs
question
A
answer
A cruise line could control the availability of prices by offering deals to specific groups of buyers based on all of the following EXCEPT:

A. competition
B. information gathered via e-commerce
C. coupon usage
D. location
E. purchasing history
question
C
answer
New Balance offers a variety of types of shoes to its customers at various price points, typically in 3 basic tiers, based on the quality of the material and components of the shoe. This is an example of:

A. observable buyer characteristics
B. pricing based on transaction characteristics
C. good/better/best strategy
D. controlling the availability of prices
question
value
answer
the difference between what a customer pays for an offering and the bundle of benefits they receive
question
C
answer
Product indicators of sensitivity to price include all of the following EXCEPT:

A. easy comparability
B. performance as expected
C. the ability to switch easily
D. low differentiation
question
D
answer
All of the following are price indicators of customer price sensitivity EXCEPT:

A. easy comparability
B. the existence of reference prices
C. high in a relative sense
D. performance as expected
question
B
answer
When calculating elasticity of demand (E), a relatively inelastic demand (0 < E < 1) indicates that:

A. small changes in price cause large changes in quantity demanded
B. large changes in price cause small changes in quantity demanded
C. any change in price is matched by an equal change in quantity
question
break-even point
answer
total revenue = total costs
question
B
answer
Marketers often use which of the following techniques to determine the impact of a price on volume required to reach profitability?

A. price elasticity
B. break-even analysis
C. competitive analysis
D. assessing perceived value
question
four dimensions of customer value
answer
social, functional, experiential, economic
question
economic value
answer
offering provides tangible monetary benefits (typically in the form of savings) either at the time of purchase or over its long-term use
question
functional value
answer
the features of an offering that create specific functional benefits for the customer
question
experiential value
answer
intangible psychological and emotional benefits that can be derived, generally, from brand perceptions, design, or great service
question
social value
answer
benefits derived based on our social interactions with family, friends, similar others (people we believe are like us), and/or aspirational others (people we would like to be more like)
question
market driven
answer
the process by which a firm understands the needs of its customers through market research
question
market driving
answer
the process by which a firm creates its own products based on its own vision of the future
question
okay
answer
Which of the following statements about economic value to the customers (EVC) is FALSE?

Any two customers will derive the same EVC for the same product.

Answer: okay
question
functional benefits
answer
The functional value of a product to a customer is BEST understood by understanding the product's
question
customer service
answer
Which method for building experiential value is most likely to have the most variability for consumer-based service organizations such as hotels and restaurants?
question
customer lifetime value
answer
the present value of all future streams of profits that an individual customer generates over the life of their business with the firm
question
customer equity
answer
the total value of current and future customers
question
customer acquisition
answer
getting the customer
question
customer retention
answer
keeping the customer
question
customer development
answer
customer spends more or buys higher margin offerings over time
question
profitability and experience
answer
customer value has two sides
question
star customers
answer
The group of customers who receive high value from customer experience and who provide high value to the company are referred to as
question
C
answer
Which of the following is NOT one of the variables included a basic calculation of customer lifetime value?

A. retention probability during a period of time
B. profit or contribution margin during a period of time
C. market capitalization of the company over a period of time
D. a discount rate across a period of time
E. the period of time
question
customer retention rate
answer
the percentage of customers who stay with a company in a given period
question
customer churn rate
answer
the percentage of customers who leave a company within a given period of time
question
provenance paradox
answer
A customer is comparing two similar products online. One is made in the United States, one in a foreign country to her. She opts for the choice made in the United States, judging it to be better quality despite favorable online reviews for each. This instinctual bias is known as:
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