Chapter 11: Pricing Considerations, Approaches, Strategy

1. Reducing prices unnecessarily can lead to lost profits and damaging price
wars and signal that the price is more important than customer __________.
2. __________ is the only marketing mix element that produces revenue.
3. __________ is the least understood marketing variable, yet is controllable in an
unregulated market.
4. The most common pricing mistakes include:
a. pricing that is too __________ oriented
b. prices that are not revised to reflect __________ changes
c. pricing that does not take the rest of the marketing __________into
account
d. prices that are not varied enough for different product items and
market __________
5. Many companies want to set a price that will __________ current profits.
6. Some companies want a __________ market-share position, believing the
largest market share will eventually enjoy low costs and high long-run profit.
7. Price must be coordinated with __________, __________, and __________
decisions to form a consistent and effective marketing program.
8. A company wants to charge a price that covers costs for __________, __________
& __________ the product.
9. __________ costs (aka overhead) are costs that do not vary with production or
sales level.
10.__________ costs vary with the total of units produced.
11.__________ costs are the sum of the fixed and variable costs for any given
level of production.
12.While costs set the lower limits of prices, the __________ and __________ set the
upper limit.
13.Before setting prices, a marketer must understand the relationship between
__________ & __________ for a product.
14.__________, part of effective revenue management, involves training sales &
reservations employees to continuously offer a higher-priced product.

15.__________-oriented pricing means the marketer cannot design a marketing

program and then set the price.
16.Good pricing begins with analyzing consumer __________ and price __________.
17.Buyers are __________ price-sensitive when the product is unique or high in
quality, prestige, or exclusiveness.
18.Consumers are less price-sensitive when __________ products are hard to find.
19.If demand is __________ rather than __________, sellers generally consider
lowering their prices.
20.Creating the perception that your offering is __________ from those
competitors avoids price competition.
21.Existence of __________ of which buyers are unaware cannot affect their
purchase behavior.
22.Customers are more price-sensitive when the price of the product accounts
for a large share of the total cost of the end __________.
23.Many purchases have __________ costs.
24.The more someone spends on a product, the more __________ he or she is to
the products price.
25.Consumers tend to equate price with __________, especially when they lack
prior product experience.
26.When reacting to environmental pressures created by the __________environment, a company must consider the impact its pricing policies will
have on its __________-environment.
27.Companies set prices by selecting a general pricing approach including one
or more of these sets of factors:
a. the __________-based approach (cost-plus pricing, break-even analysis,
and target profit pricing)
b. the __________-based approach (perceived value pricing)
c. the __________-based approach (going rate)
28.The simplest pricing method is __________-plus pricing, adding a standard
markup to the cost of the product.
29.__________-based pricing uses the buyers perceptions of value, not the
sellers cost, as the key to pricing.

30.A strategy of ______ -______ pricing is the establishment of price based largely
on those of competitors, with less attention paid to costs or demand.
31.When __________ is hard to measure, firms feel that the going price represents
the collective wisdom of the industry concerning the price that will yield a fair
return.
32.__________ Pricing - hotels or restaurants seeking to position themselves as
luxurious and elegant enter the market with a high price to support this
position.
33.Market-__________ Pricing - setting a high price when the market is priceinsensitive.
34.Market-__________ Pricing - other companies set a low initial price to penetrate
the market quickly & deeply, attracting many buyers and winning a large
market share.
35.Product-__________ Pricing - sellers combine several products and offer them
at a reduced price.
36.__________ pricing refers to segmentation of the market & pricing differences
based on price elasticity characteristics of these segments.
37.Companies often adjust basic prices to allow for differences in __________,
__________, and __________.
38.The concept behind revenue management is to manage __________ &
__________ effectively by pricing differences based on the elasticity of demand
for selected customer segments.
39.An effective revenue management system establishes __________ to prohibit
customers from one segment receiving prices intended for another.
40.When companies use __________ pricing, they temporarily price their products
below list price.
41.__________ demand leads to price increases.