Chapter 11
What is the purpose of the Robinson-Patman Act?
To prevent unfair price discrimination
Companies can, under some circumstances, price items below
cost
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 a(n) __________.
indicator of quality
Basic price adjustments known as __________ are used to reward customers for certain responses.
discounts and allowances
Assume a competitor has cut prices and a company determines they should respond. Effective actions that the company could initiate include __________.
launch a low-price fighter brand
A company has set a low price on a new product it introduced. They want to maximize their market share and attract a large number of buyers quickly. Which new product pricing strategy should the company use?
market penetration
When Apple Computer Company introduced their iPhone, they priced the new product at $599, considerably higher than either their iPod or competing cellular phones. Apple Computer was pursuing a(n) __________ pricing strategy.
market skimming
Promotional pricing tactics include __________.
discounts, special-event pricing, and limited time offers
__________ 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
Which of the following statements regarding dynamic pricing is correct?
Dynamic pricing could cause consumer resentment and damage customer relationships.
When would a competitor most likely react to a firm's price change?
When the number of firms involved is small
Which of the following is a concern when using optional-product pricing?
Which products to include in the base price and which to offer as options
Cheese makers in Wisconsin sell their leftover brine to local city and county highway departments, which use it in conjunction with salt to melt icy roads. Which product mix pricing strategy does this represent?
by-product pricing
Gillette charges a fairly low price for their razors (relative to costs) and a high price for razor blades. They are using a strategy of __________ pricing.
captive-product
Segmented pricing practices can cause
consumer resentment
One form of __________ is when movie theaters charge one price for adults and a different price for senior citizens.
customer-segment
Recently, Amazon.com has been accused of __________, which is the practice of selling products below cost to harm competitors.
predatory pricing
Cutting prices in an industry with excess capacity may lead to
price wars
Whirlpool washers and dryers are offered in many different models. Whirlpool will use __________ pricing to determine the price steps between the different models.
product line pricing
Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of __________ pricing.
product-bundle
A soda pop company offers a discount to a grocer. In exchange, the grocer agrees to provide in-store advertising for the soda pop and additional sales-support. This is an example of __________.
promotional allowances
The company should consider ways to meet higher costs or demand without
raising prices
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.
One major objective of a market-penetration pricing strategy is to __________.
win a large market share
