Principles of marketing/PMKT101/Optimizing the Marketing Mix/Quiz 2

Price quiz

Indicate whether the following statements are true or false:

• Competitors often try to gain market share by reducing their prices.
  • True
    • Correct. When a company lowers its price, there is a likelihood that it will be more affordable to a wider group of people. However, a company must be careful to ensure that its brand promise (i.e., a luxury item) does not conflict with its pricing strategy.
  • False
    • Incorrect. Price is a key part of the marketing mix. Accordingly, companies try to increase their appeal to customers by reducing price by different means (i.e., lower unit price, coupons, special promotions) in an effort to increase market share.
• Pricing above the competition requires a clear advantage on non-price elements of the marketing mix.
  • True
    • Correct. The company must be able prove to the customer that it has premium value to justify the higher price.
  • False
    • Incorrect. The Internet affords many opportunities to compare prices among competing brands. A company must be careful to ensure that its product's value is clearly articulated and presented - so the buyer realizes the price / premium value proposition.
• "2-for-1" and "buy 1, get 1 free" pricing techniques have limited effectiveness.
  • True
    • Incorrect. Psychological pricing works - and consumers are moved to buy items, particularly when they perceive or believe they are getting a bargain.
  • False
    • Correct. These techniques are highly effective, as they make the most of consumer psychology, to create a sense of urgency and scarcity in the buyer's mind.