marketing chapter 11 final

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Which of the following would most likely lead to a company initiating a price increase?

overdemand

By definition, ________ is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost.

segmented pricing

Price discrimination is legal when a ________.

seller can prove its costs are different when selling to different retailers

Companies set not a single price, but a pricing ________ which covers different items in its line and changes over time as products move through their life cycles.

structure

Segmented pricing is only effective when ________.

the cost of segmenting does not exceed the revenue obtained from the price difference

Competitors are most likely to react to a price change when ________.

the product is uniform

The "bottom of the pyramid" refers to ________.

the world's poorest consumers

When a firm varies its price by the season, it is using ________.

time-based pricing

Shoe Trends, a company that manufactures formal shoes for men and women, offers to give its customers $10 for an old pair of shoes when they buy a new pair. In essence, they're reducing the price of the new shoes by $10. What is this type of price adjustment called?

trade-in allowance

In the case of services, captive product pricing is called ________ pricing.

two-part

When amusement parks charge customers for admission and later for food and beverages, they are following a ________ pricing strategy.

two-part

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?

uniform-delivered pricing

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?

uniform-delivered pricing

Which of the following factors would most likely lead to a company initiating a price cut?

weakened economy

Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly?

cash discount

Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.

defensive

________ allowances are price reductions given for turning in an old item when buying a new one.

depreciation

A(n) ________ is a straight reduction in price on purchases during a stated period of time or of larger quantities.

discount

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

dynamic pricing

hich of the following product mix pricing strategies involves pricing additional/accessory products sold along with the main product?

optional product pricing

________ is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price.

Zone pricing

With which pricing strategy does the seller take responsibility for part or all of the actual freight charges in order to get the desired business?

freight-absorption pricing

A seller offers a ________ to trade-channel members who perform certain functions, such as selling, storing, and record keeping.

functional discount

Which of the following involves adjusting prices to account for the physical location of customers?

geographic pricing

The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________.

monopolies

Which of the following is true of price skimming?

It can be profitably used when the product's quality and image support its price.

Which of the following would be considered predatory pricing?

a company which prices below cost to drive out competitors

Which of the following is true of optional product pricing?

it involves pricing accessory products sold with the main product

Federal legislation on price fixing requires that sellers set their prices ________.

without communication from competitors

If Detroit DLX charges the same price for the delivery of its product to customers located within the Great Lakes states, but a different price to customers elsewhere, the company is using ________.

zone pricing

Which of the following is true of public policies and pricing?

The Robinson-Patman Act governs interstate commerce.

Which of the following is true of product line pricing?

The price steps take cost differences between products in the line into account.

Consumers are less likely to use price to judge the quality of a product when they ________.

have experience with the product

Trade-in allowances are most commonly used in the ________ industry.

automobile

Which of the following is true of price changes?

A drop in price can adversely affect how consumers view the brand

Which of the following is an adverse effect of using promotional pricing?

It makes shopping stressful if used by multiple stores simultaneously.

Which of the following is true of product bundle pricing?

It promotes the sale of products that consumers might not otherwise buy.

Which of the following is true of market-penetration pricing?

It results in drawing in large numbers of buyers quickly, winning a large market share.

Which of the following companies uses product line pricing?

Mobile Point, which launched a range of cell phone models, each priced according to its features

ich of the following companies uses product bundle pricing?

Panizza, whose combo meals are priced lower than its individual components sold together

Which of the following companies uses captive product pricing?

Photo Genie, which sells inexpensive cameras that run only on their own expensive batteries

The ________ seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given price level.

Robinson-Patman Act

Solar Tanning Salon prices tanning sessions at $25 per visit. It also offers seasonal passes for $175 which permit the customer to visit the salon multiple times in a year. This is an example of a(n) ________.

discount

Which of the following is a price adjustment strategy?

discount and allowance pricing

Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product promptly?

discount and allowance pricing

Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.

dynamic pricing

Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

product bundle pricing

Freight-absorption pricing is used for ________.

holding on to increasingly competitive markets

Low-interest financing and longer warranties are both examples of ________.

promotional pricing

Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?

psychological pricing

Which term refers to prices that buyers carry in their minds and check with when they look at a given product?

reference prices

La Belle released a a cut glass bottle of perfume at $299 per item, even though its major competitor prices its signature scent at $99 per item. La Belle reasons that customers in search of luxury goods will prefer its product because they are likelier to believe that high price indicates superior quality. What price adjustment strategy is evident in its reasoning?

psychological pricing

________ are formed by noting current prices, remembering past prices, or assessing the buying situation.

reference prices

Mark's Markers, a manufacturer of white board markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________.

retail price maintenance

Failure to enter the current price into a retailer's system may result in charges of ________.

scanner fraud

The discount offered by Glamor Gifts to customers who bought Valentine-themed merchandise the week following Valentines Day is an example of a ________.

seasonal discount

A market-penetration pricing policy should LEAST likely be used for a new product when ________.

the products quality and image support a high price

Cellpoint uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed fee plus a(n) ________ rate.

variable usage

Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices?

product line pricing

Under ________, different versions of the product are priced differently but not according to differences in their costs.

product-form pricing

________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.

promotional

In return for participating in Honda advertising and sales support programs, Honda dealerships are rewarded with payments or price reductions, which are known as ________.

promotional allowances

Hearth & Home, a store which sells household products, has announced a one-week sale on its new carpet line. This is an example of ________.

promotional pricing

What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency?

promotional pricing

A supermarket places its store brand of blackberry jam priced at $5 per jar in the fruit preserves aisle, alongside the jam jars of a better known brand—whose products are priced at $8 apiece. Store managers reason that customers are more likely to choose the store brand instead of the better known brand when they realize the price difference. What price adjustment strategy is evident in the supermarket's reasoning?

psychological pricing

Tone Zone plans to introduce four mp3 player models over the next year. These models range from basic players at $99 per unit, to more sophisticated players at $399 per unit. The more features a model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of mp3 players?

product line pricing

________ occurs when a seller states price savings that are not actually available to consumers.

Deceptive pricing

Electrowhip, a company that manufacturers blenders and electric whisks, has decided to use a market-penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?

Electrowhip operates in a market with many competitors.

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

FOB-origin pricing

Which of the following is true of FOB-origin pricing?

It is an expensive alternative for customers in distant locations.

Which of the following is true of the bottom of the pyramid?

It is considered a source of fresh growth opportunities.

Which of the following is true of promotional pricing?

It leads to 'deal-prone' customers who buy products only during sales.

A(n) ________ refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

allowance

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

basing-point

Which of the following is a geographical pricing strategy?

basing-point pricing

A quantity discount is a price reduction for buyers who ________.

buy merchandise in bulk

When faced with a competitor who has cut its product's price, which of the following is the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer?

by altering the company's marketing communications

Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

by-product

Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two of the firm's models share the same specifications. What type of pricing does Multiprint use?

captive product pricing

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

captive product pricing

Which of the following product mix pricing strategies involves pricing products that must or can only be used with the main product?

captive product pricing

Leicestershire Renovations has a history of problems with customers who do not pay their bills on time. Leicestershire Renovations wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. Which of the following forms of pricing would most likely help the firm achieve its goal?

cash discounts

A market-skimming pricing strategy should NOT be used for a new product when ________.

competitors can undercut prices easily

The New Age Gallery has three admission prices for students, adults, and seniors, even though all three groups are entitled to the same services. This form of pricing is called ________.

customer-segmented pricing

In response to price cuts from competitors, a cereal company with several more expensive and higher quality cereals introduced a lower-priced option to its product line. This is an example of which of the following responses to a competitor's price cut?

launching a "fighter brand"

Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and services offered are identical in every other aspect. This form of pricing is called ________.

location-based pricing

When theaters vary their seat prices because of audience preferences for seats in coveted rows, they use ________.

location-based pricing

When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.

maintain its current prices and profit margin

Companies which set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

market-penetration pricing

In a bid to attract more customers in a market which has several competitors, Barrymore's Bakery slashed the prices of all its products by 50%. Managers at the firm reasoned that lower prices would draw in even more customers, making up for the reduction in price several times over. Which of the following pricing strategies are they using?

market-penetration pricing

Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

market-penetration pricing

When a company sets a high price for a new product with the intention of reducing the price in the future, it is using the ________ pricing strategy.

market-skimming

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.

market-skimming pricing

Midnight Magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using?

market-skimming pricing

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

predatory pricing

Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________.

predatory pricing

A number of top fashion-modeling agencies would most likely be charged with ________ for jointly determining what commissions they charge for models.

price fixing

When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.

price fixing


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