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Marketing Final Exam

Prices go up it does not significantly affect sales

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Unformatted text preview: d. highly elastic e. moderately elastic ANS: B Inelastic demand means that when prices go up it does not significantly affect sales. PTS: 1 REF: 307 Thinking KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB Reflective MSC: BLOOMS Application 129. Refer to Smelly Fruit. The durian fruit is a unique product. To many people in Thailand, no other fruit tastes or smells anything like the durian. Its uniqueness, in the eyes of the customer, would tend to have which of the following? a. It would have little effect. b. It would tend to make the durian more price elastic. c. It would tend to make the durian more price inelastic. d. It would tend to raise the price in comparison to purchasing power. e. It would tend to impact the durian’s stage in the PLC. ANS: C Lack of availability of substitutes leads to inelastic demand. PTS: 1 REF: 308 Communication KEY: CB&E Model Pricing OBJ: 19-3 TOP: AACSB MSC: BLOOMS Application ESSAY 1. Define price and discuss the two roles price plays in the evaluation of product alternatives. ANS: Price is that which is given up in an exchange to acquire a good or service. Price plays two roles in the evaluation of product alternatives: as a measure of sacrifice and as an information cue. Since price is “that which is given up,” it means what is sacrificed to get a good or service. In the United States, that usually means money, but it can mean other things as well. It may also be time lost while waiting to acquire the good or service. The information effect of price implies that many consumers use price as an indication of quality. That is, higher quality equals higher price. The information effect of price may also extend to favorable price perceptions by others because higher prices can convey the prominence and status of the purchaser to other people. PTS: 1 REF: 301-302 Communication KEY: CB&E Model Pricing OBJ: 19-1 TOP: AACSB MSC: BLOOMS Synthesis 2. One of the most stressful and pressure-filled tasks of the marketing manager is attempting to set the right price. Specify three aspects of the current pricing environment in consumer markets that have contributed to the difficulty in setting correct prices. ANS: Five factors in the consumer products market are listed in the text: (1) confronting a flood of new products, potential buyers carefully evaluate the price of each one against the value of existing products; (2) the increased availability of bargain-priced private and generic brands has put downward pressure on overall prices; (3) many firms are trying to maintain or regain their market share by cutting prices; (4) the Internet has made comparison shopping easier; and (5) the United States was in a recession from late 2007 until late 2009. PTS: 1 REF: 302 Communication KEY: CB&E Model Pricing OBJ: 19-1 TOP: AACSB MSC: BLOOMS Synthesis 3. List the three categories of pricing objectives and then two specific strategies in each category that a marketer could implement to achieve those objectives. ANS: PR...
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