Price And Promotions Quiz

Supply and demand is a factor that affects prices. The price of a product is determined by the availability of the product (supply) and the desire or demand for the product. When the supply of a product is low and the demand is high, the price tends to increase. On the other hand, when the supply is high and the demand is low, the price tends to decrease. Therefore, supply and demand play a crucial role in determining the prices of products.

Elastic demand refers to situations where a change in price leads to a significant change in demand. This means that consumers are highly responsive to price changes, and a small increase or decrease in price can result in a large increase or decrease in the quantity demanded. In other words, when demand is elastic, consumers are more likely to adjust their purchasing decisions based on price fluctuations. Therefore, the statement "Elastic demand refers to situations in which a change in price creates a change in demand" is true.

Promotion is a form of communication that aims to persuade or influence individuals to take a desired action, such as purchasing a product or service. Through various promotional tools and techniques, companies use persuasive messages to create awareness, generate interest, and ultimately convince consumers to make a purchase. Therefore, it can be concluded that promotion is indeed a form of persuasive communication.

Odd-Even Pricing is a technique that involves setting prices that all end in either odd or even numbers. This strategy is used to create a perception of lower prices by avoiding round numbers. It is believed that odd prices, such as $9.99, appear smaller and more affordable to consumers compared to round prices. On the other hand, even prices, like $10.00, are often associated with quality and prestige. This pricing technique aims to influence consumer behavior and increase sales by manipulating their perception of price.

Location based customer tracking is not part of the promotional mix because it is not a direct promotional tool used to communicate with customers or persuade them to make a purchase. The promotional mix typically includes personal selling, advertising, and sales promotion, which are all active methods of promotion that involve direct communication and persuasion. Location based customer tracking, on the other hand, is a passive method that involves tracking and analyzing customer behavior and data for marketing purposes, but it does not directly communicate with or persuade customers.

The break-even point is the point at which total revenue equals total costs, resulting in neither profit nor loss. In this case, the cost to make and market the music CD is $12, and it will be sold for $15. The break-even point can be calculated by dividing the total costs by the selling price per unit. Therefore, the break-even point is $12 divided by $15, which equals 0.8. To find the quantity at the break-even point, we divide the total quantity sold at that price (200,000) by 0.8, which equals 160,000 units.

The correct answer is law of diminishing marginal utility. This concept states that as a consumer consumes more units of a product, the satisfaction or utility derived from each additional unit decreases. Therefore, even if the price of the product is low, consumers will eventually reach a point where they have obtained enough utility and will not buy any more of the product.

Bundle pricing refers to offering a group of products or services together at a discounted price. It is not related to price adjustments based on the location of the customer. Therefore, the given statement is false.

Direct marketing is the correct answer because it refers to a form of advertising that is specifically aimed at a targeted group of prospects and customers, rather than a mass audience. Unlike institutional promotion, which focuses on promoting the overall image and reputation of a company, or product promotion, which highlights the features and benefits of a specific product, direct marketing aims to directly reach and engage with potential customers on an individual level. This can be done through various channels such as direct mail, email marketing, telemarketing, or targeted online advertising.

The statement that there are 7 steps in determining prices is false. The question is asking whether the statement is true or false, and the correct answer is false. This means that there are not 7 steps in determining prices.