BUS 312 Chapter 11 Practice Test
When Apple introduced its iPhone, it priced the new product at $599, considerably higher than either its iPod or competing cellular phones. Apple Computer was pursuing a(n) ________ new product pricing strategy.
market-skimming
The pricing method in which sellers combine several products and offer a reduced price is known as __________.
product bundle pricing
The Ford Mustang is offered in several different models. Ford will use ________ pricing to determine the price steps between the different models.
product line
Some sellers use 00-cent endings on regularly priced items and 99-cent endings on discount merchandise. This is an example of pricing referred to as __________.
psychological pricing
Which of the following statements is true concerning new product pricing strategies?
For a market-skimming strategy to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.
A company has set a low price on a new product it introduced. It wants to maximize its market share and attract a large number of buyers quickly. Which new product pricing strategy should the company use?
Market-penetration pricing
Which of the following is a potentially effective action a company could take in response to a competitor's price cut?
Reduce the price.
What is predatory pricing?
Selling below cost with the intention of punishing a competitor
What is the purpose of the Robinson-Putnam Act?
To prevent unfair price discrimination
Which of the following statements is true regarding initiating price increases?
Wherever possible, the company should consider ways to meet higher costs or demand without raising prices.
Market skimming prices are preferred in all of the following conditions except __________.
an initial low price is set by the companies
Bath & Body Works offers "three-fer" deals on its soaps and lotions (such as three antibacterial soaps for $10). This is an example of _______ pricing.
product bundle
Techniques that can be used by sellers for avoiding customers' perception of price gouging includes all of the following except __________.
rationing products to customers
Assume a competitor has cut prices and a company determines it should respond. Potential actions that the company could initiate include ________.
reducing price, raising perceived value, improving quality and increasing price, and launching a low-price "fighter brand"
Many state colleges and universities charge one price for in-state students and a higher price for out-of-state students. Which form of segmented pricing are these schools using?
Location-based pricing
Gillette charges a fairly low price for its razors (relative to costs) and a high price for razor blades. It is using a strategy of ________ pricing.
captive-product
Companies that make products that must be used along with a main product are using __________.
captive-product pricing
Techniques that can be used by sellers for avoiding customers' perception of price gouging includes all of the following except __________.
low-price fighter items
A car buyer can choose a base model at one price, or one with a premium sound and navigation system at a higher price. This is an example of _______ pricing.
optional-product
Which of the following statements is true regarding initiating price cuts?
Cutting prices in an industry loaded with excess capacity might lead to price wars.
________ occurs when retailers set an artificially high "regular price" and then advertise a "sale price," which is actually close to their everyday price.
Deceptive pricing
________ is the practice of pricing products below cost to harm competitors.
Predatory pricing
UPS charges different prices for shipping depending on which region of the United States the item is being shipped to. The more distant the city the package is being shipped to, the higher the price UPS charges. Which geographic pricing method is UPS using?
Zone pricing
Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Because she does not know much about wine, she will likely use the price of the wines as ________.
an indicator of quality
Companies that use ________ continually adjust prices to meet the characteristics and needs of individual customers and situations.
dynamic pricing
Market penetration prices are preferred in all of the following conditions except __________.
enough buyers must want the product at a higher price
In __________pricing, the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs.
segmented
One major objective associated with a market-penetration pricing strategy is to ________.
win a large market share
Archer Daniels Midland Co is the world's largest processor of soybeans, corn, and wheat. In the 1990s, the Justice Department found it guilty of regularly meeting with competitors when setting prices. ADM was guilty of ________.
price-fixing
Federal legislation on __________ states that sellers must set prices without talking to competitors.
price-fixing