Penetration pricing involves

Charging a low price to stimulate interest

In pricing, a break even analysis can help a business by

how many units have to sell at a price to break even.

change with the volume of production

What is a pricing strategy?

Mananging prices and discounts to maximise profit.

Penetration Pricing is....................

a pricing policy that sets a low price for a new product

What is prestige pricing?

when you set pricing higher to promote status

Skimming pricing is.....

a pricing policy that sets a high price for a new product.

Skimming pricing involves:

Setting a high price then lowering the prices in stages.

What is the formula for Price Elasticity of Demand

%change in quantity demanded / %change in price

Psychological Pricing

Rounding down numbers such as $9.99 to make price seem lower

What is Price lining?

technique that sets a limited number of prices

Promotional pricing is used when:

The business wants rid of old stock

A penetration pricing strategy

Used by a business to attract a large share of the market

Which is the best explanation of value-based pricing?

Price based upon the value consumers perceive in the product or service

When sales equal total expenses

Revenue management can be defined as

Sell the right product, customer, timing, pricing

Which set of goods is most likely to have elastic demand?

Expensive jewelry and Diet Pepsi

Psychological Pricing...

Pricing things at £9.99 in order to getting a good deal.

What is price elasticity of demand?

changes in demand for a product due to changes in prices

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MT 1GIAT UNIT 4

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Questions 39

Answers

1
In the tourism and hospitality industry many products are elastic, as prices fall, demand increases.
True
False
2
The amount of money an organization sells its goods and services for is known as
Costs
Profit
Variable Costs
Price
3
Penetration pricing involves
Charging a high price for a temporary period
Charging a low price to stimulate interest
Charging a price similar to that of your competitors
adding on a % to cover costs
4
What is an internal factor in pricing decisions?
Competition
Economy
Marketing-mix strategy
Nature of the market and demand
5
In pricing, a break even analysis can help a business by
how many units have to sell at a price to break even.
providing estimates of fixed & variable costs.
telling them what they should charge.
calculating the elasticity of the prices for the product.
6
Variable Costs
remain the same irrespective of the number of units produced
change with the volume of production
are all the valuable cost items in production
are rent and insurance costs
7
What is a pricing strategy?
Strategy to set the right price without discounting.
Mananging prices and discounts to maximise profit.
A way of calculating price to cover costs.
A way of making price conscious customers happy.
8
Penetration Pricing is....................
a pricing policy that sets midlevel price for a new product
a pricing policy that sets a low price for a new product
a pricing policy that sets a high price for a new product
a pricing policy that uses old pricing for a new product
9
What is prestige pricing?
when you set pricing higher to promote status
when you use even numbers
when you set pricing lower to promote status
when you use odd numbers
10
Skimming pricing is.....
a pricing policy that sets a new price for a new product.
a pricing policy that sets a low price for a new product.
a pricing policy that sets a midlevel price for new product
a pricing policy that sets a high price for a new product.
11
Skimming pricing involves:
Setting a high price then lowering the prices in stages.
Skimming away the competitors by lowering the prices.
Setting a price at a psychological price point.
Charging higher prices than your competitors.
12
If demand remains relatively unaltered by price changes, the product or service is said to be...
All of the above
Elastic
Inelastic
Unit elastic
13
Examples of fixed cost
All of the above
Labour wages
Materials
Rent
14
What is an external factor in pricing decisions?
Organization for pricing
Marketing objectives
Government
Costs
15
It is income coming into the business from the sale of goods and services.
Profit margin
Costs
Sales revenue
Price
16
Why is demand for milk inelastic?
It is considered a luxury,not a necessity.
Buying milk takes a large portion of income.
There are many substitutes.
It is considered a necessity.
17
What is the formula for Price Elasticity of Demand
%change in quantity demanded / %change in price
%change in quantity demanded x %change in income
%change in quantity demanded / %change in profit
%change in quality demanded / %change in price
18
Psychological Pricing
Selling a product below its value.
Set a relatively low price.
Set the price higher than normal.
Rounding down numbers such as $9.99 to make price seem lower
19
What is Price lining?
Espionage
the price based on location
it gets rid of excess materials
technique that sets a limited number of prices
20
Promotional pricing is used when:
The product has high demand
The business wants rid of old stock
The product is well established in the market
The business has many competitors
21
It can be calculated by subtracting costs from sales revenues.
Fixed Costs
Varible Costs
Price
Profit
22
Costs that do not vary with the amount of the product or service provided.
Fised amount
Fixed costs
Variable costs
Total revenues
23
At break even costs = total revenue
False
True
24
A penetration pricing strategy
Frequently encourages other businesses to enter market
Used in maturity stage of the Product Life Cycle
Usually results in high profit levels for the company
Used by a business to attract a large share of the market
25
Which is the best explanation of value-based pricing?
Price based upon the value consumers perceive in the product or service
Price-matching
Cheap products permitting value prices
Discount pricing
26
What is the main goal of Revenue management ?
Lower profit
Increase revenue
Manage employees
Increase expenses
27
Break even point is?
Opposite to break odd
When sales equal total expenses
What you hope to do when you go to the casino
What Chuck Norris will do to you
28
The external factors of pricing decisions are : nature of demand/market, competition & consumer perceptions of $ & value
True
False
29
Revenue management can be defined as
Maximizing occupancy
Sell the right product, customer, timing, pricing
Pricing
Forecasting
30
Which set of goods is most likely to have elastic demand?
Expensive jewelry and Diet Pepsi
Colgate toothpaste and gasoline
Insulin and Honda Accords
Tooth picks and insulin
31
Break even is expressed as
pounds
Zimbabwe Dollar
units
Shiny match attax
32
Psychological Pricing...
Cost plus pricing.
Looking at the cost of the product.
Pricing things at £9.99 in order to getting a good deal.
Pricing high in order to cream off the top of the market.
33
What is price elasticity of demand?
quality demanded of a product
changes in demand for a product due to changes in prices
changes in supply for a product due to changes in prices
supply sensitivity of a product
34
What is the pricing strategy described?
Skimming
Predatory
Cost Plus
Penetration
35
What are the factors affecting pricing decisions?
Products
Clients
Marketing objectives
Production
36
If demand increases in line with the price cuts, then the product or service is said to be...
Unit elastic
All of the above
Inelastic
Elastic
37
What is penetration pricing?
Add a profit margin onto cost of production
Start high- reduce price later
Base price around that of competitors
Start low price- rise later
38
Fixed costs: the costs that increase as more of a product or service is provided
False
True
39
Yield management is revenue management?
True
False

MT 1GIAT UNIT 4 Flashcards | StudBud