1. Which of the following should be true for a skimming price to be successful?
a. Target consumers should be price sensitive.
b. Supply should exceed demand.
c. Demand must be stabilizing.
d. The producer should use intensive distribution.
e. There should be little chance that competitors can quickly enter the market.
2. Kodak is cutting the price of its digital camera 10%, from $250 to $225, because the product is at the latter end of its life cycle. At the original $250 price, digital cameras earned a 20% profit margin with 80% variable costs. What does this price cut do to the product's profit margin?
a. Reduces it from $50 to $40.
b. Cuts it in half from $50 to $25.
c. Reduces profit from $50 to $45.
d. Increases profit by selling more volume.
3. A brand promise is the marketer's or a company's vision of what the brand must be and do for the consumer, but it is the consumer's response to the marketing activities that actually defines the true value of the brand.
True
False
4. KinderCare has worked hard to be recognized for the best child development programs based on the 4 ways that children learn and grow. They also try to be competitive in their pricing. Therefore, KinderCare's "point of difference" is its child development program while its pricing would be described as a point of parity.
True
False
5. BONUS QUESTION: Jane Yellowhair makes small woolen handbags out of Pendleton blankets, and has fixed costs of $30,000. She expects to sell 6,000 bags for $17.50 each. This price will give her a 20 percent markup. Calculate the variable costs per handbag.
a. $6.00
b. $5.00
c. $9.00
d. $8.00