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Exam 14: Developing and Pricing Goods and Services

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Question 101

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The key to demand-oriented pricing is the recognition that not all producers face the same costs of production.

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Question 102

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The _________ pricing strategy maintains low prices and avoids the use of special sales.

A) everyday low pricing (EDLP)
B) cost-based
C) target-based
D) skimming

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Question 103

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New-product commercialization includes promoting the product to distributors and retailers as well as developing strong advertising and sales campaigns.

Mini-Case Gourmet Pets is an innovative competitor in the billion-dollar pet food industry.In fact,two of its products,Kitty Sirloin and McDog T-bone,each claim over a 30% share in their market segments.The company has done detailed research and discovered that,for a growing number of pet owners,the family pet serves as a "baby substitute." These owners tend to pamper their pets,and are very discriminating in what they purchase.With this in mind,the company has put a great deal of effort into developing a new dog food: Prime Cuts.The new product is packaged in a resealable,microwaveable container and can be purchased in a variety of flavors (including Western BBQ,Teriyaki,Australian Outback,and Hickory Smoked. ) Gourmet Pets promotes the product as far superior to "average" dog foods,even though the quality of meat and nutrient content of the food is virtually identical to many other brands.The company faces no competition in this market segment so it plans to charge a high price for the product. -Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts.The fixed costs of adding this product to the product line amounts to $20,000.Variable costs to produce one package of Prime Cuts are $2.Prime Cuts will sell for $6 per package.The break-even point would be:

In evaluating a total product offer,value enhancers such as service,guarantees,reputation of the seller,etc.are as important to customers as the basic product.

Unsought goods and services are products consumers do not actively seek out for purchase on a regular basis.

Having completed the first stages of product development of its new low-calorie frozen yogurt breakfast bars,the YaYa Yogurt Company took its product directly to consumers.Marketers partnered with a large theme park in Orlando,FL,to perform _______________.The YaYa marketing department wanted to know if consumers found this product to be a quick way to eat breakfast on the road.Subsequently,they also wanted to determine what customers would be willing to pay for the breakfast bar.

The stages of the product life cycle are:

Shopping goods and services are purchased only after consumers compare value,quality,style,and price of competing goods and services.

__________ goods appeal to consumers who are willing to make an extra shopping effort to acquire them.

Which of the following is a benefit of a brand name for a seller?

A brand includes practically all means of identifying a product.

Profits peak during the maturity stage of the product life cycle.

The New Era Cap Company of Buffalo,New York,understands the importance of ______________.In the mid-1990s,the company's products became very popular when film director Spike Lee requested a red Yankees cap,instead of the traditional blue cap.It did not take long for Yankees' fans who were also fans of Spike Lee to want to wear a similar cap.

Brand loyalty refers to the degree to which customers are satisfied with a brand and are committed to further purchases.

In order for product differentiation to be effective,real product differences must be identified so that one product is clearly better than others.

Phar-out Pharmacy will advertise a price of an over-the-counter drug at or below their cost.The intended goal of this loss leader strategy is to:

At the concept testing stage,factors such as packaging,branding,ingredients,etc.should be tested to ensure that a product is acceptable to potential consumers.

From the buyer's perspective,which of the following is a benefit of a product with a well known brand name?

Soprano Manufacturing acquired several pieces of expensive heavy machinery it intends to use in its operations.As an industrial good,this heavy machinery represents: