Why Are Firms So Obsessed with the Pricing Element of the Marketing

question 3

Multiple Choice

Why are firms so obsessed with the pricing element of the marketing mix?

• A) because pricing is the most difficult element of the marketing mix to change
• B) because the firm's pricing has a direct bearing on its ability to increase revenue
• C) because pricing is the only marketing element that matters to customers
• D) because pricing is the best part of the marketing mix in which to make an educated guess about the most appropriate strategy
• E) because pricing is directly responsible for demand

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Definitions:

Indifference Curves

Graphical representations showing combinations of goods or services that provide the same level of satisfaction to a consumer.

Ordinary Goods

In a consumer’s utility function, those for which additional units of one good are required to compensate for fewer units of another, and vice versa; and for which the consumer experiences a diminishing marginal rate of substitution when substituting one good in place of another.

Marginal Rate

The rate at which one variable changes over the change in another variable, often used in the context of taxes or marginal rate of substitution in economics.

Substitution

The economic concept whereby consumers replace costlier items with less expensive alternatives, or firms switch between inputs to minimize costs.