Kotler 2020, 11 kap.
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Questions and Answers

What is the primary aim of Samsung's low pricing strategy for mobile phones?

  • To increase sales and decrease costs (correct)
  • To target only high-end consumers
  • To create a luxury brand image
  • To limit market share growth
  • How does Ryanair utilize economies of scale in its operations?

  • By operating multiple types of aircraft for flexibility
  • By using a single aircraft model on all routes (correct)
  • By maintaining a large fleet of diverse aircraft
  • By focusing on business class services
  • What is a significant risk associated with experience-curve pricing?

  • It always leads to increased market share
  • It ensures no competition can arise
  • It may result in a perception of low product quality (correct)
  • It guarantees high sales volume
  • What limitation arises from the experience curve's dependence on production volume?

    <p>Producing only one type of product can limit responsiveness (D)</p> Signup and view all the answers

    What does cost-plus pricing entail?

    <p>Adding a standard mark-up to the cost of a product (B)</p> Signup and view all the answers

    Why might pricing strategies based solely on cost reduction fail?

    <p>Competitors may find more effective ways to cut costs (A)</p> Signup and view all the answers

    Which factor has reduced the power of the experience curve?

    <p>A broader range of consumer preferences (C)</p> Signup and view all the answers

    What is a disadvantage of Ryanair's one-aircraft approach?

    <p>Reduced flexibility in service offerings (A)</p> Signup and view all the answers

    What is a key reason why many firms struggle with pricing effectively?

    <p>They often overlook the importance of pricing. (B)</p> Signup and view all the answers

    Which of these factors is not typically considered when setting prices?

    <p>Seasonal changes in weather (C)</p> Signup and view all the answers

    What is the relationship between pricing strategy and a company's brand?

    <p>Pricing reflects the company's brand and product attractiveness. (D)</p> Signup and view all the answers

    Which pricing strategy involves adjusting prices based on customer situations?

    <p>Price adjustment strategies (A)</p> Signup and view all the answers

    What is one characteristic of the medical technology industry that affects pricing decisions?

    <p>Intensive competition and high development costs. (D)</p> Signup and view all the answers

    What should companies do to capture customer value through pricing?

    <p>Balance effective marketing mix activities with pricing. (A)</p> Signup and view all the answers

    Which market structure allows sellers to freely use branding and advertising to differentiate their products?

    <p>Monopolistic competition (B)</p> Signup and view all the answers

    Which new-product pricing strategy focuses on maximizing short-term profits?

    <p>Skimming pricing (A)</p> Signup and view all the answers

    What is a defining characteristic of pure competition?

    <p>Many buyers and sellers sell a uniform commodity (C)</p> Signup and view all the answers

    Which market structure is characterized by a few sellers who are highly sensitive to each other's pricing strategies?

    <p>Oligopolistic competition (D)</p> Signup and view all the answers

    What does the pricing strategy of 'dynamic pricing' refer to?

    <p>Changing prices based on demand and customer profiles. (D)</p> Signup and view all the answers

    In a regulated monopoly, how is pricing typically determined?

    <p>The government allows rates that provide a fair return (A)</p> Signup and view all the answers

    What happens if one seller in an oligopolistic market changes their price significantly?

    <p>Competitors may also adjust their prices or offerings (C)</p> Signup and view all the answers

    Which of the following is NOT a characteristic of pure competition?

    <p>Significant product differentiation (A)</p> Signup and view all the answers

    In what type of market can new sellers easily enter if prices and profits rise?

    <p>Pure competition (C)</p> Signup and view all the answers

    In which type of market do sellers have the least opportunity for marketing strategies like product development and advertising?

    <p>Pure competition (A)</p> Signup and view all the answers

    What is typically the relationship between price and demand in most cases?

    <p>Higher prices lead to lower demand. (C)</p> Signup and view all the answers

    What does price elasticity measure?

    <p>Sensitivity of demand to changes in price. (B)</p> Signup and view all the answers

    Why might a company choose not to charge full price?

    <p>To accelerate market penetration with lower prices. (B)</p> Signup and view all the answers

    In which market structure does the demand curve reflect total market demand based on different prices?

    <p>Monopoly (D)</p> Signup and view all the answers

    How did Gibson Guitar Corporation's pricing strategy affect its sales?

    <p>Higher prices led to increased sales due to quality perception. (B)</p> Signup and view all the answers

    What happens to demand when a price increase occurs in a market represented by a steep demand curve?

    <p>Demand decreases significantly. (C)</p> Signup and view all the answers

    What does product line pricing primarily rely on when setting price steps between products?

    <p>Cost differences and customer evaluations (D)</p> Signup and view all the answers

    What must marketers consider about competitors when determining their demand?

    <p>Demand depends on whether competitors adjust their prices. (A)</p> Signup and view all the answers

    In which industry is product line pricing commonly used?

    <p>Consumer electronics (C)</p> Signup and view all the answers

    What is a unique characteristic of the demand curve for prestige goods?

    <p>It can slope upwards due to perceived quality. (C)</p> Signup and view all the answers

    What is a key factor motivating customers to accept optional-product pricing?

    <p>The convenience of accessing necessary products (A)</p> Signup and view all the answers

    What is an example of optional-product pricing in the content provided?

    <p>Booster seats offered for rent with cars (B)</p> Signup and view all the answers

    What can complicate optional-product pricing for companies?

    <p>The challenge in pricing optional features (D)</p> Signup and view all the answers

    Why might customers prefer renting a booster seat over buying one?

    <p>Convenience when traveling in a new place (B)</p> Signup and view all the answers

    What is crucial for companies to consider when implementing product line pricing?

    <p>Differences in customer perceptions of value (C)</p> Signup and view all the answers

    Which pricing strategy involves selling accessory products along with a main product?

    <p>Optional-product pricing (B)</p> Signup and view all the answers

    What is a potential negative consequence of poorly implemented dynamic pricing?

    <p>Margin-eroding price wars (D)</p> Signup and view all the answers

    How does dynamic pricing primarily benefit consumers?

    <p>It enables instant product and price comparisons. (B)</p> Signup and view all the answers

    What refers to consumers using physical stores to compare prices online?

    <p>Showrooming (D)</p> Signup and view all the answers

    Which of the following is a strategy store retailers are adopting in response to showrooming?

    <p>Implementing price matching policies. (A)</p> Signup and view all the answers

    What is one risk if companies misuse dynamic pricing?

    <p>Price gouging perceptions (B)</p> Signup and view all the answers

    Why might a physical store still be financially viable despite the presence of online retailing?

    <p>Consumers are inspired to buy more high-value items in-store. (B)</p> Signup and view all the answers

    Which example illustrates consumer backlash against dynamic pricing?

    <p>Negative reactions to Coca-Cola's smart vending machines. (B)</p> Signup and view all the answers

    What aspect of consumer behavior challenges traditional retail pricing?

    <p>Comparison shopping using smartphones. (A)</p> Signup and view all the answers

    Study Notes

    Pricing Strategies

    • Companies face complex price-setting decisions, especially in industries like medical technology.
    • Price is a critical tool reflecting the company's brand, and its product attractiveness.
    • Effective pricing is vital for capturing customer value created by other marketing mix activities.
    • Internal and external factors influence pricing decisions.
    • Crucial factors affecting pricing decisions include customer value perceptions, costs, and competitors' strategies.
    • New product pricing, product mix pricing, price adjustment, and price reaction strategies are important.

    Customer Value Perceptions

    • Customer value, not just low price, is crucial in pricing decisions.
    • Companies should sell value and justify a higher price based on the value proposition.
    • Customers are the ultimate arbiters of value.

    Value-Based Pricing

    • Setting prices based on consumer perceptions of value rather than cost is called value-based pricing.
    • It's crucial to understand the value a product delivers to customers.
    • The process of value-based pricing starts with understanding customer needs and value perceptions before determining the product's cost.

    Cost-Based Pricing

    • Cost-based pricing involves adding a markup to the cost of making and marketing a product.
    • Costs form the floor for prices, but the aim is not to minimize costs.
    • Managing the spread between costs and prices is vital for successful pricing.
    • Companies may choose higher costs to support higher prices and margins.

    Break-Even Analysis and Target Profit Pricing

    • Break-even pricing (or target profit pricing) determines the price at which the company will precisely break even or achieve a target profit.
    • Fixed and variable costs, as well as expected unit sales, are factors in break-even analysis.
    • The company must sell a certain number of products to cover all costs and achieve its targeted profit to break even.

    Other Internal and External Considerations Affecting Price Decisions

    • Overall company marketing objectives and mix will shape a pricing strategy.
    • Managing costs, and customer relationships are key success factors in pricing strategies.
    • Several internal factors, such as the company's overall marketing, strategy, objectives, and marketing mix.
    • Other external factors, including the nature of the market and demand, competitors' strategies and prices, and environmental factors.
    • The ability to respond to competitor prices and customer perceptions is vital for any strategic pricing approach.

    New-Product Pricing Strategies

    • Pricing new products demands careful consideration of several factors.
    • Companies must consider market skimming (high initial prices) or market penetration (low initial prices) strategies.

    Product Mix Pricing Strategies

    • Companies usually develop product lines, not single products.
    • Product line pricing determines a price range for products within a line, considering cost differences between the products, and cost of the features, and customer value perception.
    • Several strategies, including optional product pricing, captive product pricing, by-product pricing, and product bundle pricing, help manage the price of product lines.

    Price Adjustments

    • Companies often adjust prices based on customer responses and seasonal needs.
    • This involves discount pricing, allowances, segmented pricing, psychological pricing, promotional pricing, geographical pricing, and dynamic pricing strategies.
    • Price is only a tool among others, including product features, marketing mix, and demand, pricing must be tailored to specific needs.

    Geographical Pricing

    • Companies need to adapt prices for different locations and zones based on freight costs or uniform pricing.

    Dynamic Pricing

    • Dynamic pricing is a method of adjusting prices to meet individual customer needs.
    • It's increasingly used by online and other companies, considering factors like demand, seasonality, and competitor prices.

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    Description

    This quiz explores various pricing strategies and their implications for businesses, including cost-plus pricing, experience-curve pricing, and market structure influences. Participants will also learn about the challenges companies face in setting effective pricing strategies and how they can capture customer value. Test your knowledge on pricing tactics used by companies like Samsung and Ryanair.

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