Quiz 1 Lecture 1 Question 1 The XYZ company's average cost last year was $240 per unit.

. It priced its product

at $300 for a target margin of 20%. A recent drop in demand has resulted in an increase in the average cost to $256. The manager is considering a price increase to $320 to maintain the margin at 20%. In the face of the drop in demand, which of the following is the most appropriate: a. The earlier price of $240 would be too low now b. The new contemplated price is probably too high c. Both prices are probably too high d. The manager should settle for a margin lower than 20%

Question 2 Advertising
a. Increases consumer's perceived value by targeting the right consumers b. Decreases consumer's perceived value by cheapening the product c. Decreases consumer's perceived value by increasing the cost and price of the product d. Increases consumer's perceived value by educating the consumers

Question 3 The fourth profit lever, in addition to price, fixed cost and variable cost, is
a. price of NBA b. volume c. willingness to pay d. margin

Question 4 WTP depends on

a. product attributes b. value of NBA c. product attributes and NBA d. product attributes and price

Question 5 Managers that pursue market share goals

a. Are old fashioned in their thinking b. Are responding to incentives

c. Are using Game theory to guide their actions d. Are short-term oriented

Question 6 Customer oriented pricing requires that we should measure the customer's
perceived value for the product, and a. Choose a price equal to the value b. Choose a price below the value c. A or B d. Neither A nor B

Question 7 The most important profit lever is

a. price b. variable cost c. willingness to pay d. fixed cost

Question 8 A tactical approach to pricing involves:

A- Asking reactive questions B- Making judgments about the right price C- Ensuring that costs are covered and profit objectives are met Answer a. Only A b. A and B c. A and C d. B and C

Question 9 A good approach to competitor oriented pricing is

a. To take into account differences among competitors b. To hold price just below competitors c. To ignore competitors d. To match competitor prices

Question 10 We can get the net profits by

a. adding fixed costs to gross profits b. subtracting fixed and variable costs from gross profits c. subtracting variable costs from gross profits d. subtracting fixed costs from gross profits

Question 11 Cost plus pricing

a. Is a good strategy for new products b. Is not a good strategy if fixed costs are too high c. Guarantees that all costs can be recovered d. Can lead to overpricing if demand is weak

Question 12 The two objectives of pricing strategy are to

a. Capture consumer value and ensure proper positioning b. Recover costs and target the best customers c. Ensure profitability and capture consumer value d. Stay customer focused and price as high as possible

Question 13 Attributes X of a product

a. are under the manager's control b. are under the manager's control and affect variable costs c. are under the manager's control and affect willingness to pay d. are under the manager's control and affect willingness to pay and variable costs

Question 14 According to Marn, Roegner and Zawada a 1% improvement in fixed cost

increases profits by a. 1% b. 10.2% c. 2.7% d. 7.3%

Question 15 Strategic pricing involves asking

Answer

a. What price is the customer willing to pay? b. What sales increase would be necessary to profit from a price cut? c. What price would allow us to meet our profit objectives? d. A and B