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Chapter 12

12.1 Knowledge Check

1
a. Artificial time constraints tell the consumer they will miss out if they don’t purchase right now.
2
c. To determine profit, total costs (fixed and variable) are subtracted from total revenue.
3
a. Perceived value is perceived benefits less perceived costs.
4
d. Price anchoring is a strategy that utilizes a psychological theory that buyers frame their price reference around the first piece of information they see.
5
b. The value that a buyer receives from an exchange takes into account the perceived benefits and costs of making the purchase.

12.2 Knowledge Check

1
c. Channels of distribution include the importance of understanding the value of a product through the lens of suppliers and retailers.
2
d. Compatibility refers to the consistency of pricing decisions with the other marketing mix elements.
3
a. Analyzing the critical Cs of pricing will help ensure the pricing strategies are set appropriately.
4
b. Cost does not only include the materials needed to produce a produce, but all other costs associated with doing business.
5
d. The five critical Cs of pricing include cost, customers, channels of distribution, competition, and compatibility.

12.3 Knowledge Check

1
c. The demand curve describes the relationship of demand and price for most goods and services.
2
b. Fixed costs do not change based on the number of units produced.
3
d. As demand declines for a product, it is generally expected that prices will also decrease.
4
a. Total costs are equal to fixed costs + variable costs.
5
d. Cross-elasticity of demand refers to the increase in demand for a substitute product when the price of a product increases.

12.4 Knowledge Check

1
c. Penetration pricing is setting an initially low price to capture as much market share as possible.
2
d. The break-even unit formula is Fixed Costs / (Unit Price + Variable Unit Cost)
3
a. BreakEveninUnits=FixedCosts/(UnitPriceVariableUnitCost)=100/(2.000.25)����������������=����������/(���������−����������������)=100/(2.00−0.25)
4
b. Price skimming sets an initially high price to capture the portion of the market willing to pay the price.
5
d. Penetration pricing attempts to capture the greatest market share possible when introducing a new product.

12.5 Knowledge Check

1
c. Bundle pricing is a tactic that has a lower price for a bundle of items than when those items are purchased separately.
2
a. Captive pricing is a tactic used when there is both a core and a captive product.
3
a. Odd-even pricing is a tactic used to illustrate value or quality to a customer through pricing.
4
b. Price skimming sets an initially high price for new products to capture the portion of the market willing to pay the price.
5
d. Economy pricing is a tactic in which products are priced much lower than their name-brand competitors.
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