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PPM712S - PRODUCT PRICING MANAGEMENT - 2ND OPP - JULY 2022 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE
Ano TECHnOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF MARKETING AND LOGISITICS
QUALIFICATION: BACHELOROF MARKETING
QUALIFICATION CODE: 07BMAR
LEVEL: 7
COURSE CODE: PPM712S
COURSE NAME: PRODUCT PRICING MANAGEMENT
SESSION:
JULY 2022
PAPER:
THEORY
DURATION:
3 HOURS
MARKS:
100
EXAMINER{S)
SECOND OPPORTUNITY EXAMINATION
DR. M. CHUFAMA
MODERATOR: DR. E. SIMATAA
INSTRUCTIONS
1. Answer ALLthe questions.
2. Write clearly, legibly and neatly.
3. Number the answers clearly.
4. Read each question carefully before answering.
5. Use a non-programmable calculator (STRICTLYNO USE OF
CELLPHONE/MOBILE CALCULATOR).
6. Answers should be rounded off to 1 decimal place.
THIS EXAMINATION PAPER CONSISTS OF 6 PAGES (Including this front page)
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SECTION A - MULTIPLE CHOICE QUESTIONS (each question carries 1.5 marks) (15 Marks)
1. Price is statement of _________
because it is the amount of money given in exchange
for a product.
a) fact
b) vision
c) value
d) mission
e) VAT
2. In the marketing mix three of the 4Ps add to company cost. Which is the only P directly concerned with
producing revenues?
a) Promotion.
b) Place.
c) Product.
d) Price.
e) None of the above.
3. Pricing objectives are deemed to be S.M.A.R.T an acronym which stands for:
a) Simple Modern Articulate Reasonable Timeous
b) Simple Mean Attainable Reachable Timeframe
c) Simple Measurable Attainable Realistic Time-bound
d) Same Measurable Achievable Reachable Timely
e) Simple Manageable Attainable Realistic Timing
4. Cost orientation approach to pricing entails all these factors except:
a) Price is an integral part of strategy
b) Price is an afterthought to strategy
c) Just price based costs
d) Price must not cover and earn profit
e) Determine price to achieve specific sales objectives
5. Why must a product's price be set in line with the marketing strategy?
a) It's easier to explain to sales staff
b) Profits can be assessed before product is launched
c) To avoid confusion in the customer's mind and the market place
d) Sales people can advise on a price that is likely to sell well
e) Price lists can be printed at the same time as brochures
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6. Which objective concerns with management's task when using this objective is to calculate which
price-quantity relationship generates the greatest cash revenue?
a) Target Return
b) Customer-oriented
c) Competitive
d) Sales-oriented
e) Sales maximisation
7. The following are status-quo objectives except:
a) Management's task when using the objective is to calculate which price-quantity relationship
generates the greatest cash revenue.
b) Seeks to maintain existing prices to meet the competitor's prices.
c) Often firms competing in an industry with an established price leader simply meet the
competitor's price
d) Typically have fewer price wars than an established price competition.
e) Managers regularly visit competitors' stores to ensure that their prices are comparable.
8. A value-based pricing strategy involves which of the following?
a) The pricing is product driven; the input comes from calculus and controlling
b) Setting price based on buyers' perceptions of value rather than on seller's cost
c) The company adds up the costs of making the product and sets a price that covers cost plus
target profit
d) Price goes up, revenue goes down
e) None of the above
9. The use of price points for reference to different levels of quality for a company's related products is
typical of which product-mix pricing strategy?
a) Optional-product pricing
b) Captive-product pricing
c) By-product pricing
d) Product line pricing
e) Market-oriented
10. Three key issues with regard to initiating price changes are the circumstances, the tactics and
the_____
_
a) bad publicity
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b) raw materials
c) competitor reactions
d) length of time since last price change
e) sales targets
SECTION B-TRUE/ FALSE QUESTIONS (each question carries 1.5 marks) (15 Marks)
1. Markup on cost and selling price are the same thing.
TRUE/FALSE
2. Conversion of markup percent can be calculated based on markup on cost or
markup on selling price.
TRUE/FALSE
3. Psychological pricing is the practice of setting a different price for the same product
in different segments to the market.
TRUE/FALSE
4. Variable pricing traditional includes auctions, stock markets, foreign exchange
markets, bargaining, electricity, discounts.
TRUE/FALSE
5. Yield management is not a variable pricing strategy, based on understanding,
anticipating and influencing consumer behavior in order to maximize revenue or
profits from a fixed perishable resource such as airline seats or hotel room
reservations or advertising inventory.
TRUE/FALSE
6. When markups are based on the selling price the cost is the rate.
TRUE/FALSE
7. The markdown percent is the amount of markup divided by the new sale price.
TRUE/FALSE
8. Congestion pricing is a system of surcharging users of public goods that are subject
to congestion through excess demand such as higher peak charges for use at busy
times.
TRUE/FALSE
9. Congestion pricing is the same as congestion charges
TRUE/FALSE
10.When the markup is based on cost the selling price is the rate. TRUE/FALSE
SECTION C- CALCULATIONS AND ESSAYS
QUESTION 1
[6 marks]
In 2012 Swartz Tyre Services had assets of N$ 6,5 million. In the year company had gross
profit N$ 1,2 million and taxes were at N$ 400 000. The directors at the beginning of the
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year set a target ROI of 10 percent. Calculate the Return On Investment and give a
comment on the result. (show all your workings and formula)
QUESTION 2
[28 Marks]
LonRho Incorporated, Cairns Holdings, Maxim Ltd., and Trade Masters Holdings are four
firms competing in an electronics industry. Consider the table below and complete it by
calculating the missing figures. (Answers must be rounded-off to 1 decimal place)
Company
LonRho
Incorporated
Cairns
Holdings
Maxim
Ltd.
Trade Masters
Holdings
TOTAL
Units Sold
1 500 000
250 000
350 000
750 000
?
Unit Price
(N$)
2.00
Total Revenue
(N$)
?
Unit
market
share(%)
?
Revenue
market
share(%)
?
3.00
?
?
?
4.00
?
?
?
1.00
?
?
?
?
(2 marks on correct answer)
QUESTION 3
[6 Marks]
Namibia Ice-Cream Company has introduced a premium brand of ice-cream for the hot
summer season and decides to price it on a cost-plus basis. The company determines its
variable costs per unit for producing the premium brand (primarily raw materials and
labour) at N$1,50. The company determines that fixed costs per unit (cost of plant and
machinery and administrative costs) are approximately 30% of variable costs per unit. Its
profit objective is to achieve a 20% return on variable costs per unit. You as a Marketing
Officer in the company you have been asked to perform the following: Calculate the price
per litre of ice-cream (show all your workings)
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QUESTION 4
(30 Marks)
Fill in the missing figures (where there is a question mark) on the table below (show all
your workings);
Product
Price (N$)
Marginal Cost
(N$)
Mark-up on cost(%) Mark-up on price (%)
A
40
?
900
?
B
90
?
?
80
C
160
100
?
37.5
D
1500
?
200.0
?
E
2800
?
?
40.0
F
?
2700
100.0
?
G
?
6720
?
40.0
H
?
185
8.5
?
(2 marks on correct answer)
END OF SECOND OPPORTUNITY EXAMINATION
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2022-05-06.·