Chapter 11: Pricing

According to recent research, approximately what percentage of consumers search for and purchase a low-priced product using an in-store shopping app or online search engine?

40%

Which statement accurately describes the concept of dumping?

A company decides to sell its exports to another country at a lower price than it sells the same product in its domestic market.

For marketers, what are three advantages of a price bundling strategy? (Check all that apply.)

Bundled packages can be sold for a higher price. Bundled packaging can lead to reduced advertising costs. Bundled packaging can lead to reduced selling costs.

Which statement regarding the "gray market" are true? (Check all that apply.)

Gray market buying and selling often occurs when the price of an item is significantly higher in one country than another. Gray market goods cut into a firm's revenue and profits. Gray market goods allow consumers to obtain legally produced items for less than they could normally.

What factors have made global pricing more transparent and, in many cases, more competitive in recent times? (Check all that apply.)

Growing Internet access Technological advancements

According to your text, what has been the outcome for marketers pricing products now that consumers have access to mobile applications while shopping?

Marketers must aggressively review the prices of online stores when setting the initial price of an item.

When it comes to setting prices, which of the following stakeholders would be most interested in setting prices high across all product lines in order to increase profits for the firm?

Marketing executives

What pricing tactic involves adding a certain amount to the cost of a product to set the final selling price?

Markup pricing

What is the final stage of the price-setting process?

Monitor and evaluate the effectiveness of the price

Websites like eBay and priceline.com are types of ______.

NYOP auctions

______ pricing is the practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels.

Predatory

Which of the following are ethical issues marketers may face as they seek to set prices for their products? (Check all that apply.)

Predatory pricing Price fixing Price discrimination

______ is common in B2B settings in which different customers might be charged different rates due to the quantities they buy or the differing terms of a negotiated contract.

Price discrimination

Which statement accurately describes the concept of prestige pricing?

Pricing a product higher than competitors to signal that it is higher in quality

How should pricing strategies be addressed during the product life cycle?

Pricing strategies evolve and should be reevaluated throughout the product life cycle.

What are three common pricing objectives a firm would seek to utilize? (Check all that apply.)

Profit maximization Survival pricing Volume maximization

Which of the following price discrimination scenarios are legal under the Robinson-Patman Act? (Check all that apply.)

Promising to match competitor's prices if the consumer produces proof of the lower price Charging different prices as a result of a going-out-of-business sale Charging different prices if it is part of a quantity discount program

What two factors influencing price are often overlooked? (Check all that apply.)

Reference prices Underpricing

What are taxes on imports and exports between countries called?

Tariffs

Which statement exemplifies the fact that technology has shifted the balance of power from companies to consumers?

The Internet has made it possible for customers to comparison shop for products from companies all over the world.

In addition to technological and economic factors, which of the following are unique challenges related to global pricing for firms seeking to increase their revenue and profits? (Check all that apply.)

The gray market Dumping Tariffs

What considerations should marketers take into account when determining which pricing tactic to use? (Check all that apply.)

The value customers perceive the product to have How customers' intend to use the product The customers' ability to pay

What is the most likely reason marketers utilize a price bundling strategy?

They can charge a higher price for the bundle than they could for the items individually.

In the past, how have companies set prices for products sold internationally compared to the same products sold domestically?

They have set the prices higher for products sold internationally.

What is the goal for marketers in determining the cost of a product?

To make sure they will not lose money by pricing the product too low

The most common examples of ______ pricing involve firms that falsely advertise wholesale pricing or promise a significant price reduction on an artificially high retail price.

deceptive

A retailer inflated the price of its dining room sets so that when it put them on sale, it appeared to customers that they were getting a better deal than they really were. In doing so, the retailer was engaged in ______.

deceptive pricing

The price-setting process begins with ______.

defining the pricing objectives

In the price-setting process, after demand has been evaluated, the next step is to ______.

determine the costs

The practice of charging different customers different prices for the same product is referred to as price ______.

discrimination

The removal of tariffs due to international agreements has caused countries to enact anti-______ laws to protect their local industries.

dumping

A Broadway theater production that tries to fill empty seats by lowering the price as the day of the production draws closer is using ______.

dynamic pricing

Firms that want to promote an image of ______ to customers would most likely pursue a strategy of prestige pricing.

exclusivity

In a market structure in which there are a large number of buyers and sellers, the pricing impact of any single firm will be ______.

fairly small

Price ______ is when two or more companies collude to set a product's price.

fixing

Every year Walter travels to China where he legally buys large quantities of baseball caps related to MLB sports teams. He imports the caps back into the United States where he sells them for less than the normal market price at his storefront in New York City. The baseball caps are considered to be ______.

gray market goods

A firm that takes branded products and sells them through legal, but unauthorized, distribution channels is participating in the ______ market.

gray or grey

If a company prices its products significantly lower in foreign countries than in the domestic market, they may be subject to ______ ______ buyers who will purchase the products internationally and then sell them in the United States for a much lower price than the normal market price.

grey or gray market

Prestige pricing involves pricing a product ______ than competitors.

higher, greater, or more

After determining the costs and analyzing the competitive price environment, the next step in the price-setting process is to choose a ______.

price

Because it directly impacts the financial viability of both organizations and individuals, activities related to which marketing mix element is watched and regulated most closely?

price

The two major electronic dealers in town conspired together to set the price of new high definition televisions. In doing so, they are engaging in ______.

price fixing

The Robinson-Patman Act was passed in 1936 and ______.

requires sellers to charge the same price for a product

If you were willing to pay $10 for a product, but the firm only charges you $8, the firm will most likely see a reduction in ______.

revenue

After Christmas, when the holidays are over, stores will often reduce the price of remaining Christmas trees and decorations because the demand for these products is at its lowest. This is an example of a(n) ______.

seasonal discounting

A hotel resort in Florida prices its rooms differently for different times of the year. In particular, it promotes the months of August and September as its "value" months where the room prices are at their lowest rates. It does this, in part, because the weather in Florida is not as favorable as it is at other times of the year. The pricing tactic the hotel is using to promote hotel stays during the "value" months is most likely ______.

seasonal discounts

What are the three most common and effective strategies for raising prices?

shrinkflation unbundling escalator clauses

Technology has had a ______ effect on pricing.

significant

There are ______ steps in the price-setting process.

six or 6

When determining a pricing strategy for a firm that sells its goods internationally, the firm must take into account the potential taxes on imports and exports that foreign countries will place on its goods. These potential taxes are known as ______.

tariffs

As it relates to evaluating demand, marginal revenue can be defined as ______.

the change in total revenue that results from selling one additional unit of product

For producers, the optimal price is ______.

the point at which marginal revenue equals marginal cost

What typically factors into a consumer's decision on what to purchase and is part of almost every consumer decision a person makes?

the price of the product

For countries involved in a trade agreement, such as the United States, Canada, and Mexico, transactions between these countries are easier if ______.

there is an absence of tariffs between the countries

As a pricing tactic, a marketer decides to add 10% to the price of the product to arrive at the final selling price. This is an example of ______ pricing.

cost-plus

In which strategy would companies most likely use data management systems to provide marketers with more data and enhanced ways of estimating price elasticity?

Dynamic pricing

Which pricing tactic has grown explosively due to improving and readily available technological tools that facilitate the ease with which prices can be updated to reflect changes in supply, demand, or market conditions?

Dynamic pricing

True or false: The World Trade Organization has classified the practice of dumping as illegal.

False

The central focus of determining what pricing tactic to use should be the ______.

customer

As a practice, price fixing is ______.

always illegal

The name-your-own-price strategy is best compared to a(n) ______.

auction

Price ______ is a strategy in which two or more products are packaged together and sold at a single price.

bundling

A pricing tactic that involves selling a product at a price that causes the firm a financial loss is called ______.

loss-leader

Firms using ______ hope that customers will buy other items in the store that are more profitable.

loss-leader pricing

Pricing objectives should be an extension of a firm's ______ objectives.

marketing

In an industry in which a small number of firms compete, firms will typically ______.

match the price of competitors

Similar to a firm's marketing objectives, its pricing objectives should be ______. (check all that apply.)

measurable specific

McDonald's prices its Extra Value Meals at $4.99. McDonald's is most likely using a(n) ______ pricing tactic in this instance.

odd

Callie notices that most items sold in the "As Seen on TV" store are priced a few cents below the next whole dollar amount, that is, $14.95 instead of $15.00, or $19.95 instead of $20.00. What type of pricing tactic does this represent?

odd pricing

Because it could be considered an attempt to create a monopoly, ______ is illegal under U.S. law.

predatory pricing