Chapter 11 Quiz

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? A. ​Captive-product pricing B. Optional product pricing C. ​Market-penetration pricing D. Psychological pricing E. ​Market-skimming pricing

Market-penetration pricing

Which of the following statements regarding segmented pricing is​ correct? A. For segmented pricing to be​ effective, the segments should have the same degree of demand. B. Segmented pricing is not used to price different versions of a product. C. Different locations are not used as a basis for segmented pricing. D. Perceived value does not have to be considered when using segmented pricing. E. Segmented pricing practices can cause consumer resentment.

Segmented pricing practices can cause consumer resentment.

Which of the following statements regarding initiating price increases is​ correct? A. The company should consider ways to meet higher costs or demand without raising prices. B. Price increases do not impact profits. C. Prices should be increased when there is a lack of demand. D. Companies do not need to communicate reasons for price increases. E. Cost inflation is not a factor in price increases.

The company should consider ways to meet higher costs or demand without raising prices.

What is the purpose of the​ Robinson-Patman Act? A. To prevent deceptive pricing B. To prevent predatory pricing C. To prevent scanner fraud D. To prevent unfair price discrimination E. To prevent price fixing

To prevent unfair price discrimination

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? A. ​By-product pricing B. Product line pricing C. ​Two-part pricing D. ​Product-bundle pricing E. ​Optional-product pricing

By-product pricing

When would a competitor most likely react to a​ firm's price​ change? A. When buyers are not well informed about prices B. When buyers are not well informed about the product C. When the number of firms involved is small D. When the number of firms involved is large E. When the product is differentiated

When the number of firms involved is small

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. A. ​by-product B. ​captive-product C. product line D. ​two-part pricing E. ​product-bundle

captive-product

Basic price adjustments known as​ __________ are used to reward customers for certain responses. A. psychological prices B. segmented prices C. ​location-based pricing D. discounts and allocations E. discounts and allowances

discounts and allowances

Promotional pricing tactics include​ __________. A. ​customer-segment pricing,​ location-based pricing, and​ time-based pricing B. ​discounts, geographical​ pricing, and​ special-event pricing C. ​discounts, special-event​ pricing, and limited time offers D. ​discounts, limited time​ offers, and reference prices E. functional​ discounts, limited time​ offers, and​ location-based pricing

discounts, special-event​ pricing, and limited time offers

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) __________. A. indicator of the cost of production B. indicator of quality C. limited time offer D. indicator of geographic pricing E. type of segmented pricing

indicator of quality

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. A. ​optional-product B. ​captive-product C. ​by-product D. ​market-penetration E. ​market-skimming

market-skimming

​Recently, Amazon.com has been accused of​ __________, which is the practice of selling products below cost to harm competitors. A. retail price maintenance B. predatory pricing C. price discrimination D. deceptive pricing E. price fixing

predatory pricing

Whirlpool washers and dryers are offered in many different models. Whirlpool will use​ __________ pricing to determine the price steps between the different models. A. ​product-bundle B. ​optional-product C. ​two-part pricing D. product line E. ​captive-product

product line

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​ __________. A. cash discounts B. promotional allowances C. ​trade-in allowances D. discounts E. segment discounts

promotional allowances

Many amusement parks charge a daily ticket or season pass charge plus additional fees for food and other​ in-park features. This is called​ __________. A. ​product-bundle pricing B. product line pricing C. ​two-part pricing D. ​by-product pricing E. ​optional-product pricing

two-part pricing

Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of​ __________ pricing. A. ​product-bundle B. ​captive-product C. ​by-product D. product line E. ​two-part

product-bundle

Which of the following is a concern when using​ optional-product pricing? A. How to price products that must be used with the main product B. Which products should be bundled at a lower price C. How to determine the price steps between different products in a product line D. Whether to set a fixed fee or a variable usage rate E. Which products to include in the base price and which to offer as options

Which products to include in the base price and which to offer as options

One major objective of a​ market-penetration pricing strategy is to​ __________. A. set a high price to gain profits B. skim off small but profitable segments C. prevent customer dissatisfaction D. attract buyers willing to pay a higher price E. win a large market share

win a large market share

Which of the following statements regarding public policy and pricing is​ correct? A. Federal statutes apply to both interstate and intrastate commerce. B. It is legal in some industries for sellers to collude with competitors when setting prices. C. Sellers are allowed to punish dealers who do not price a product at the​ manufacturer's suggested retail price​ (MSRP). D. Companies are usually free to charge whatever prices they wish. E. Companies​ can, under some​ circumstances, price items below cost.

Companies​ can, under some​ circumstances, price items below cost.

Which of the following statements is true regarding initiating price​ cuts? A. Cutting prices in an industry with excess capacity may lead to price wars. B. If faced with excess capacity a firm should not cut its price. C. Firms never cut​ prices, they only raise them. D. Cutting price has no effect on costs. E. When faced with falling​ demand, firms should not cut prices.

Cutting prices in an industry with excess capacity may 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. A. Retail price maintenance B. Price discrimination C. Deceptive pricing D. Predatory pricing E. Price fixing

Deceptive pricing

Which of the following statements regarding dynamic pricing is​ correct? A. Dynamic pricing could cause consumer resentment and damage customer relationships. B. The dynamic pricing tactic of surge pricing is legally questionable. C. Dynamic pricing is only effective when used online. D. Dynamic pricing benefits only consumers. E. Because of dynamic​ pricing, online consumers no longer compare prices.

Dynamic pricing could cause consumer resentment and damage customer relationships.

Which of the following statements is true concerning new product pricing​ strategies? A. When using a​ market-skimming strategy, marketers do not need to focus on the​ product's quality and image. B. For a​ market-penetration strategy to​ work, production and distribution costs must increase as sales volume increases. C. A​ market-penetration strategy should be used if the market is not highly price sensitive. D. 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. E. If competitors can easily enter the​ market, a​ market-skimming strategy should be used.

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 form of​ __________ is when movie theaters charge one price for adults and a different price for senior citizens. A. ​location-based pricing B. ​customer-segment pricing C. promotional allowances D. psychological pricing E. product form pricing

​customer-segment pricing

Assume a competitor has cut prices and a company determines they should respond. Effective actions that the company could initiate include​ __________. A. reducing perceived value B. decrease quality and increase prices C. launch a​ low-price fighter brand D. raising prices E. improve quality and decrease prices

​launch a​ low-price fighter brand