Sometimes managers price their products too low, resulting in a loss of company profits. One reason this happens is that:
a. managers attempt to buy market share through aggressive pricing, but the cuts are quickly met by competitors, which wipe out any gain in market share.
b. consumers tend to equate lower prices with low-quality goods, and they are never able to regain that lost market share.
c. price-skimming strategies only work in the short-term, and always eventually result in lower profits.
d. most managers simply lack good business sense, especially in regard to finances.
e. all of the above are reasons.
ANSWER: a
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Marketing Chapter 21
- The Great Brands campaign, developed by the American Advertising Federation, promoted the economic power of advertising by:
- Which of the following can be identified as the American advertising industry's primary trade organization?
- The _____ has been running a campaign for several years to convince consumers around the world of the economic value of advertising.
- Which of the following statements can be used to refute the argument that advertising reduces the number of choices available to consumers?
- Which of the following beliefs takes a positive view of advertising's economic effects?
- Which of the following statements show how advertising can increase the cost of a product?
- Which of the following is the major reason why the American Advertising Federation created and implemented an integrated marketing communications campaign?
- Marketers who believe that advertising equals _____ sees advertising as providing consumers with useful facts of the products, increasing their price sensitivity, and increasing competition in the market.
- If a marketer for an established company believes potential entrants to the marketplace must overcome established brand loyalty and spend relatively more on advertising, then he or she must believe that advertising equals:
- The belief that advertising equals _____ reflects traditional economic thinking that views advertising as a way to change consumers' tastes, lower their sensitivity to price, and build brand loyalty among buyers of the advertised brand.
- Identify the statement that supports the advertising equals information concept?
- Many argue that industry prices decrease as a result of advertising. Which of the following concepts supports this view?
- Which of the following statements support the advertising equals market power ideology?
- ____ is a good example of a relatively homogeneous product, which through advertising has achieved perceived brand differentiation.
- From an economic perspective, advertising might lower the cost of a product by:
- Consumer advocates argue that:
- Some critics say advertising hampers consumer choice. Which of the following justifications could potentially silence them?
- For many years Rolex watches and Colt firearms spent very little money on advertising yet were successful brands. The success of these products can be interpreted as evidence that:
- Some economists argue the reason Nike has such a high market share in the athletic shoe industry is because the company spends much more on media advertising and for endorsement contracts than other shoe manufacturers. This makes it difficult for new companies to enter the industry and compete against Nike because it has created:
- Barriers to entry mainly refer to:
- Large advertisers usually sell more of a product or service, which means they may have lower production costs and can allocate more monies to advertising, so they can afford the costly but more efficient media like network television. Which of the following phenomena describes this effect?
- Procter & Gamble spends over $2 billion annually on advertising for its various consumer products and can make large media purchases at rates lower than its smaller competitors. This is an example of how a large advertiser can achieve a competitive advantage based on:
- Advertising creates makes the products or services of large advertisers are perceived as unique or as better than competitors' products. This process can be referred to as:
- Larger companies often end up charging higher prices and achieve a more dominant position in the market than smaller firms that cannot compete against them and their large advertising budgets. When this occurs, advertising:
- Some critics say advertising hampers consumer choice. Identify the most reasonable justification for this argument.