Marketing Management 3rd Edition By Marshall – Test Bank

Chapter 11 Manage Pricing Decisions

1) Regardless of whether the setting is B2C or B2B, most costs are associated with the purchase price.

Answer: TRUE
Explanation: For most purchasers, regardless of whether the setting is B2C or B2B, the vast majority of costs are associated with the purchase price. As such, price—or more specifically the customer’s perception of the offering’s pricing—is a key determinant of perceived value.
Difficulty: 1 Easy
Topic: The Concept of Customer Value
Learning Objective: 11-01 Understand the integral role of price as a core component of value.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

2) For the marketing manager, pricing is merely an economic break-even point or a cost-plus accounting calculation.

Answer: FALSE
Explanation: For the marketing manager, pricing is much more than an economic break-even point or a cost-plus accounting calculation. It is a critical component that plays into a customer’s assessment of value.
Difficulty: 1 Easy
Topic: The Concept of Customer Value
Learning Objective: 11-01 Understand the integral role of price as a core component of value.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) Since a product’s price tends to be invisible, customers rarely have trouble moving past price to consider other critical benefits the product affords.

Answer: FALSE
Explanation: Pricing objectives are but one component leading to an overall value proposition. However, a product’s price tends to be so visible and definitive that customers often have trouble moving past price to consider other critical benefits the product affords.
Difficulty: 1 Easy
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

4) Price objectives are the desired or expected result associated with a pricing strategy and must be consistent with other marketing-related objectives, such as positioning or branding.

Answer: TRUE
Explanation: Pricing objectives are the desired or expected result associated with a pricing strategy. Pricing objectives must be consistent with other marketing-related objectives (positioning, branding, etc.) as well as with the firm’s overall objectives (including financial objectives) for doing business.
Difficulty: 1 Easy
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

5) A competitor’s price is one of the most visible elements of its marketing strategy; analyzing historical and current pricing patterns may allow firms to determine the competitor’s pricing objective.

Answer: TRUE
Explanation: A competitor’s price is one of the most visible elements of its marketing strategy, and firms can often infer the pricing objective by carefully analyzing historical and current pricing patterns. Based on such analysis, a firm may develop competitor-based pricing strategies.
Difficulty: 1 Easy
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
6) Effectively communicating a product’s differential advantages is at the heart of positioning strategy, and exposure to these elements spurs the customer to develop perceptions of value and a subsequent understanding of the value proposition.

Answer: TRUE
Explanation: Because value is in the eyes of the beholder, affected by his or her perceptions of the offering coupled with the operative needs and wants, pricing decisions are strongly driven by the sources of differential advantage a product can realistically deliver. Effectively communicating a product’s differential advantages is at the heart of positioning strategy, and exposure to these elements spurs the customer to develop perceptions of value and a subsequent understanding of the value proposition.
Difficulty: 2 Medium
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

7) Firms that have an objective of utilizing pricing to communicate positioning use a stability pricing strategy.

Answer: FALSE
Explanation: Firms that have an objective of utilizing pricing to communicate positioning use a value pricing strategy. Value pricing overtly attempts to consider the role of price as it reflects the bundle of benefits sought by the customer.
Difficulty: 1 Easy
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) Firms and brands that continually attempt to operate in the high-price/low-benefits environment do not survive over the long run as customer trust is damaged.

Answer: TRUE
Explanation: Firms and brands that continually attempt to operate in the high-price/low-benefits quadrant do not survive over the long run as customer trust is damaged. Unfortunately, some highly unscrupulous companies perpetuate their operations in this quadrant by constantly changing company name, location, and brand names.
Difficulty: 2 Medium
Topic: Pricing Tactics and Strategies
Learning Objective: 11-02 Explore different pricing objectives and related strategies.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

9) Firms frequently rely on combinations of pricing tactics in the marketplace rather than putting all their eggs in one basket.

Answer: TRUE
Explanation: As with establishing pricing strategies, for a variety of reasons firms frequently rely on combinations of pricing tactics in the marketplace rather than just going with one strategy.
Difficulty: 2 Medium
Topic: Pricing Tactics and Strategies
Learning Objective: 11-03 Identify pricing tactics.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

10) In product line pricing, the escalation of product prices up the product line does not depend on prices competitors are charging for similar products.

Answer: FALSE
Explanation: In product line pricing, the escalation of product prices up the product line has to consider factors such as real cost differences among the various features offered, customer assessments of the value added by the increasing level of benefits, and prices competitors are charging for similar products.
Difficulty: 2 Medium
Topic: Pricing Tactics and Strategies
Learning Objective: 11-03 Identify pricing tactics.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation