MKT101 - CHAPTER 11
10) A challenge for management in product line pricing is to decide on the price steps between the ________. A) various products in a line B) product mixes C) product groupings D) product lines E) channel partners
A
19) What is a major advantage of product bundle pricing? A) It can promote the sales of products consumers might not otherwise buy. B) It allows a company to offset the costs of disposing of by-products. C) It combines the benefits of the other pricing strategies. D) It creates a brand experience for consumers. E) It offers consumers less value for the money.
A
24) Which of the following is an example of a cash discount? A) 2/10, net 30 B) $5.00 with a two-pack C) a free case when you buy 12 D) when you pay cash and take the product with you E) none of the above
A
26) Trade-in allowances are most commonly used in the ________ industry. A) real estate B) automobile C) packaged goods D) financial services E) health care
B
81) When product managers at Schwinn make decisions about which types of bicycle seats, handle bars, and saddlebags to offer customers on their bikes, they are engaged in ________. A) product line pricing B) optional product pricing C) captive product pricing D) by-product pricing E) cost-based pricing
B
82) A car maker's strategy of advertising a basic vehicle model with few conveniences and comforts at a low price to entice buyers and then convincing customers to buy higher-priced models with more amenities is an example of which of the following? A) product line pricing B) optional product pricing C) captive product pricing D) allowance pricing E) segmented pricing
B
83) When Whallans Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas, Whallans is giving a(n) ________ discount. A) functional B) seasonal C) annual D) allowance E) credit
B
11) Typically, producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product. A) low; low markups B) high; low markups C) low; high markups D) high; high markups E) moderately; moderate markups
C
12) Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is being used? A) product line pricing B) optional product pricing C) captive product pricing D) by-product pricing E) product bundle pricing
C
13) In the case of services, captive product pricing is called ________ pricing. A) by-product B) optional product C) two-part D) bundle E) segmented
C
14) When amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n) ________ pricing strategy. A) by-product B) optional-product C) two-part D) skimming E) penetration
C
20) Which of the following is NOT a price adjustment strategy? A) segmented pricing B) promotional pricing C) free samples D) geographical pricing E) seasonal pricing
C
98) Lancaster Recycling has a history of problems with customers who do not pay their bills on time. Lancaster Recycling wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. The company might consider which of the following forms of pricing? A) by-product B) inflation-adjusted C) cash discounts D) captive-product E) penetration
C
17) Using ________, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive. A) product bundle pricing B) optional product pricing C) captive product pricing D) by-product pricing E) skimming
D
25) When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs, it is granting a ________. A) trade discount B) functional discount C) cash discount D) promotional allowance E) trade credit
D
85) Secret Sneaker will give anyone $10 for an old pair of sneakers, regardless of condition, when that person purchases a new pair of sneakers. The end result is essentially reducing the price of the new sneakers by $10. What is this type of price adjustment called? A) functional discount B) captive product C) seasonal discount D) trade-in allowance E) by-product
D
89) The JC Whitney Company of Chicago offers replacement parts for older Volkswagen Beetles. Parts are often shipped from other locations throughout the United States. However, the company charges for shipping as if every part was shipped from its Chicago headquarters. The company practices ________. A) FOB-origin pricing B) uniform-delivered pricing C) zone pricing D) basing-point pricing E) none of the above
D
9) A marketer must be familiar with the five major product mix pricing situations. Which of the following is NOT one of them? A) product line pricing B) optional product pricing C) captive product pricing D) unbundled product pricing E) by-product pricing
D
90) If Northwest Awnings charges the same price for delivery of its product to any customer that is located within the Great Lakes states, but a different price to customers outside of the Great Lakes states, the company is using ________. A) psychological pricing B) promotional pricing C) reference pricing D) zone pricing E) uniform-delivered pricing
D
92) 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? A) raising the perceived value of a product B) improving product quality C) accepting a reduced market share D) launching a "fighter brand" E) using high-low pricing
D
97) A manufacturer offers 3/10, net 30 terms to a wholesaler for a recent purchase. The wholesaler may deduct ________ percent if the bill is paid within ________ days. A) 10; 30 B) 10; 3 C) 3; 30 D) 3; 10 E) 7; 10
D
52) Price escalation in international markets may result from four of these five marketing conditions. Which one will have the LEAST effect? A) the additional cost of physical distribution B) exchange-rate fluctuations C) market instability D) higher costs of selling E) language barriers
E
7) Which of the following is a reason that a marketer would choose a penetration pricing strategy? A) to ensure the company has the ability to increase prices once demand decreases B) to focus on the rapid achievement of profit objectives C) to appeal to different consumer segments with different levels of price sensitivity D) to create markets for highly technical products E) to discourage competition from entering the market
E
75) Comparison pricing claims are legal if they are truthful. However, sellers should not advertise a price reduction unless ________. A) it is a saving from the usual retail price B) a "factory" price, if listed, is what it is claimed to be C) a "wholesale" price, if listed, is what it is claimed to be D) "comparable value items" are not actually imperfect goods E) all of the above
E
93) A number of top fashion-modeling agencies would most likely be charged with ________ for jointly determining what commissions they would charge for models. A) prestige pricing B) predatory pricing C) price bundling D) dynamic pricing E) price fixing
E
23) Trade or functional discounts are offered by manufacturers to ________. A) channel members who perform tasks that the manufacturer would otherwise have to perform B) consumers who earn a price reduction for buying in bulk C) intermediaries such as financing institutions as a cost of doing business with them D) other channel members that agree to exclusive distribution contracts E) the government market and other organizations that require bid proposals
A
27) 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. A) segmented pricing B) variable pricing C) flexible pricing D) cost-plus pricing E) reference pricing
A
29) Under product-form pricing, different versions of a product are priced differently, but not according to differences in its ________. A) costs B) distribution channels C) marketing budgets D) reference prices E) retail outlets
A
38) In a form of promotion pricing, customers buy products from manufacturers' dealers within a specified time period, and then the manufacturer sends the customer a check called a ________. A) cash rebate B) discount C) dealer reduction D) promotional pricing reward E) discount allowance
A
4) A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future. A) price skimming B) trial pricing C) value pricing D) market-penetration pricing E) prestige pricing
A
49) Most companies that conduct international business ________ to ________. A) adjust their prices; take local market conditions into consideration B) use promotional pricing; create excitement in new markets C) use geographical pricing; reduce delivery costs D) set a uniform price; maintain a consistent product image E) initiate price cuts; compensate for import tariffs and taxes
A
54) Which of the following is a reason for a company to raise its prices? A) to address the issue of overdemand for a product B) to win a larger share of the market C) to use excess capacity D) to boost sales volume E) to balance out decreasing costs
A
55) Which of the following is a major factor that influences price increases? A) cost inflation B) surplus of raw materials C) government intervention D) foreign competition E) excess capacity
A
62) A company would most likely consider launching a low-price "fighter brand" in response to a competitor reducing prices if ________. A) the market segment being lost is price sensitive B) the market segment being lost is not price sensitive C) the market segment being lost responds to arguments of higher quality D) the market segment being lost no longer demands the product E) the market segment being lost has shifted culturally
A
64) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________. A) monopolies B) oligopolies C) competitive markets D) international markets E) limited partnerships
A
71) Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________. A) defensive B) offensive C) published D) private E) used in all channels
A
79) When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is using ________. A) product line pricing B) market-skimming pricing C) market-penetration pricing D) break-even pricing E) target return pricing
A
87) The Chicago Bears organization charges different prices for seats in different areas of Soldier Field, even though the costs are the same. This form of pricing is called ________. A) location-based pricing B) customer-segment C) product-form pricing D) flexible pricing E) penetration pricing
A
88) Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m. when accompanied by a paying customer. This is an example of ________. A) promotional pricing B) discounts and allowances C) by-product pricing D) product bundle pricing E) location-based pricing
A
1) A company sets not a single price, but rather a ________ that covers different items in its line that change over time as products move through their life cycles. A) pricing by-product B) pricing structure C) pricing loop D) pricing cycle E) pricing bundle
B
15) HiPoint Telephone Company 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) ________. A) fixed usage rate B) variable usage rate C) standard usage rate D) market usage rate E) optional usage rate
B
16) Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing. A) product bundle B) optional product C) captive product D) by-product E) skimming
B
18) Using product bundle pricing, sellers combine several products and offer the bundle ________. A) as a functional unit B) at a reduced price C) as a complete self-service package D) as a reward to loyal customers E) at a premium price
B
22) A quantity discount is a price reduction to buyers who purchase ________. A) frequently B) large volumes C) close outs D) inferior merchandise E) superior merchandise
B
31) Consumers usually perceive higher-priced products as ________. A) being in the maturity stage of the product life cycle B) having a higher quality C) having low profit margins D) popular brands E) being in the introductory stage of the product life cycle
B
33) Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product? A) target prices B) reference prices C) promotional prices D) geographical prices E) dynamic prices
B
39) Low-interest financing and longer warranties are both examples of ________. A) segmented pricing B) promotional pricing C) allowances D) discounts E) product-form pricing
B
41) Durango China Company charges all customers within different identified geographical areas a single total price. The more distant the area, the higher the price. This is ________. A) freight-absorption pricing B) zone pricing C) uniform-delivered pricing D) FOB-origin pricing E) bulk rate pricing
B
43) Using this pricing strategy, the seller takes responsibility for part or all of the actual freight charges in order to get the desired business. A) FOB origin B) freight-absorption C) basing-point D) loss leader E) zone
B
47) The Internet offers ________, where the price can easily be adjusted to meet changes in demand. A) captive pricing B) dynamic pricing C) basing-point pricing D) price bundling E) cost-plus pricing
B
5) ________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share. A) Market-skimming B) Market-penetration C) Below-market D) Value-based E) Leader
B
50) Price escalation in international markets may result from differences in market conditions or ________. A) cultural preferences B) selling strategies C) regional tastes D) customer perceptions E) language barriers
B
56) A company that raises its prices is most at risk of being accused of which of the following? A) high-low pricing B) price gouging C) predatory pricing D) price discrimination E) retail price maintenance
B
57) Competitors are most likely to react to a price change when ________. A) a large number of competitors are involved B) the product is uniform C) the buyers are not well informed about product features D) buyers are not well informed about price differences E) the market has a pure monopoly
B
63) Price fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of ________. A) common pricing policies B) major public policy issues in pricing C) ethical pricing strategies D) pricing policies used mostly in the wholesale sector E) pricing used mostly in the retail sector
B
66) Federal legislation on price fixing requires that sellers set their prices ________. A) based on their fixed and variable costs B) without communication from competitors C) to achieve a specific profit margin D) without the intention of cutting into competitors' profits E) consistently throughout a region
B
68) Which of the following would most likely be considered predatory pricing? A) pricing below cost to get rid of a surplus B) pricing below cost to drive out competitors C) offering a volume discount D) offering a suggested retail price on the manufacturer's package E) offering real-time pricing online
B
69) The Robinson-Patman Act seeks to prevent unfair ________ by ensuring that sellers offer the same price terms to customers at a given price level. A) marketing B) price discrimination C) dynamic pricing D) price collusion E) treatment of small retailers
B
72) Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________. A) price fixing B) retail price maintenance C) price discrimination D) price collusion E) unfair price skimming
B
74) Failure to enter the current price into a retailer's system may result in charges of ________. A) predatory pricing B) scanner fraud C) retail maintenance pricing D) discriminatory pricing E) price fixing
B
76) Valeo Fashions has just introduced a new line of fashion dresses for teens. It will initially enter the market at high prices in a ________ pricing strategy. A) market-penetration B) market-skimming C) competitive market D) psychological E) demographic
B
77) When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers, Pepsi was using ________. A) market-skimming pricing B) market-penetration pricing C) new-product pricing D) discount pricing E) value-added pricing
B
78) Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a ________ pricing strategy. A) market-skimming B) market-penetration C) zone D) loss-leader E) captive-product
B
8) Companies usually develop ________ rather than ________. A) single products; product families B) product lines; single products C) product families; product lines D) product brands; product images E) product images; product brands
B
86) Bose prices its most expensive noise reduction earphones at $399.95, which is a full $100.00 more than its next most expensive earphones. It costs Bose only a few dollars more to make the most expensive earphones. Bose is using ________ pricing. A) customer-segment B) product-form C) promotional D) penetration E) captive product
B
95) Market-skimming pricing would likely be most effective in selling ________. A) any convenience item B) an electronic device for which research and development must be recouped C) shampoo and bath soap D) anything easily copied by competitors E) most items at EDLP retailers such as Walmart
B
2) Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________. A) market-level pricing B) market-competitive pricing C) market-skimming pricing D) market-price lining E) market-price filling
C
21) Service Industries, Inc. plans to offer a price-adjustment strategy in the near future. It could consider each of the following EXCEPT ________. A) discount and allowance pricing B) segmented pricing C) physiological pricing D) promotional pricing E) location pricing
C
28) The New Age Gallery has three admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________. A) time pricing B) location pricing C) customer-segmented pricing D) revenue management pricing E) generational pricing
C
32) Consumers are less likely to use price to judge the quality of a product when they ________. A) lack information B) lack skills to use the product C) have experience with the product D) are shopping for a specialty item E) cannot physically examine the product
C
34) When consumers cannot judge quality because they lack the information or skill, price becomes ________. A) less important B) insignificant C) an important quality signal D) the only driver of the purchase E) negotiable
C
37) Promotional pricing can have all of the following adverse effects EXCEPT ________. A) creating deal-prone customers B) eroding the brand's value in the eyes of customers C) giving pricing secrets away to competitors D) becoming addictive to both the customer and business E) delaying the company's focus on long-term strategies
C
40) Which of the following is NOT a geographical pricing strategy? A) FOB-origin pricing B) zone pricing C) dynamic pricing D) uniform-delivered pricing E) basing-point pricing
C
44) Which of the following is the opposite of FOB-origin pricing? A) basing-point pricing B) freight-absorption pricing C) uniform-delivered pricing D) freight-absorption pricing E) zone pricing
C
45) Freight-absorption pricing is used for ________ and ________. A) market penetration; higher profit margins B) holding on to increasingly competitive markets; higher profit margins C) market penetration; holding on to increasingly competitive markets D) generating temporary higher profits; discouraging competitors E) services; installations
C
58) When a competitor cuts its price, a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price. A) stabilize its production costs B) reduce its marketing costs C) maintain its current prices and profit margin D) increase its marketing budget to raise the perceived value of the product E) increase its production costs to improve the quality of the product
C
59) When faced with a competitor who has cut its product's price, which of the following is typically the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer? A) improving the quality of the product B) introducing a higher-priced premium brand C) altering the company's marketing communications D) bundling the offer with add-ons E) distributing the product through less costly channels
C
6) Which of the following conditions would NOT support the use of a market-penetration pricing strategy? A) The market is highly price sensitive. B) Production and distribution costs will fall as sales volume increases. C) The product's quality and image support a high price. D) A low price would help keep out the competition. E) A and C
C
61) When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction, the firm is ________. A) moving its brand into a less competitive position B) negatively positioning its product C) moving its brand into a higher price-value position D) creating a "fighter brand" E) narrowing its target market
C
65) When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________. A) predatory pricing B) discriminatory pricing C) price fixing D) skimming pricing E) penetration pricing
C
67) 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 ________. A) price collusion B) price fixing C) predatory pricing D) discriminatory pricing E) penetration pricing
C
70) Price discrimination is legal under which of the following conditions? A) when a manufacturer and reseller have agreed upon a specified retail price for a product B) when a manufacturer sells to retailers in different markets C) when a seller can prove its costs are different when selling to different retailers D) when a seller advertises prices that are not actually available to consumers E) when a seller has not communicated with competitors before announcing prices
C
73) ________ results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying. A) Comparison pricing B) Skimming pricing C) Price confusion D) Predatory pricing E) Price collusion
C
91) Big Mike's Health Food Store sells nutritional energy-producing 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 ________. A) price elasticity B) cost-plus pricing C) dynamic pricing D) everyday low pricing E) penetration pricing
C
96) Among the following, a market-penetration strategy will likely be most effective with ________. A) pharmaceuticals B) an electronic device for which R&D must be recouped C) convenience items for which there is much competition D) any specialty item E) a product manufactured in small quantities and distributed in limited areas
C
3) Of the following, which statement(s) would NOT support a market-skimming policy for a new product? A) The product's quality and image support its higher price. B) Enough buyers want the products at that price. C) Competitors are not able to undercut the high price. D) Competitors can enter the market easily. E) C and D
D
30) When a firm varies its price by the season, month, day, or even hour, it is using ________ pricing. A) revenue management B) penetration C) variable D) time-based E) value-added
D
35) All of the following are typical ways a buyer might form a reference price EXCEPT ________. A) noting current prices B) remembering past prices C) assessing the buying situation D) identifying perceived value E) being influenced by sellers
D
36) 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? A) segmented pricing B) psychological pricing C) referent pricing D) promotional pricing E) basing-point pricing
D
42) Under which type of geographic pricing strategy does each customer pay the exact freight for the product from the factory to its destination? A) zone pricing B) basing-point pricing C) uniform-delivered pricing D) FOB-origin pricing E) dynamic pricing
D
46) When a company charges the same rate to ship a product anywhere in the United States, it is using which form of geographic pricing? A) FOB delivered B) FOB factory C) FOB origin D) uniform-delivered E) basing-point
D
48) Some companies are reversing the fixed pricing trend and using ________. A) captive pricing B) segmented pricing C) promotional pricing D) dynamic pricing E) geographical pricing
D
51) Which of the following is LEAST likely to cause price escalation in foreign markets? A) the additional costs of product modifications B) the additional costs of shipping and insurance C) the additional costs of import tariffs and taxes D) the additional costs of improving a country's infrastructure E) exchange rate fluctuations
D
53) There are many reasons why a firm might consider cutting its price. All of the following are among them EXCEPT ________. A) excess capacity B) falling demand in the face of strong price competition C) a drive to dominate the market through lower costs D) a drive to reduce market share E) a drive to gain market share and cut costs through volume
D
60) Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product? A) reduce price B) raise perceived value C) improve quality and increase price D) improve quality and decrease price E) launch a low-price "fighter brand"
D
80) When Polaroid set the general price range of its cameras low and the markup on its film high, it was practicing ________. A) market-penetration pricing B) market-skimming pricing C) product line pricing D) captive product pricing E) price bundling
D
84) Brown Baby Tanning Salon offers weekly tanning sessions for $15 and season passes with unlimited tanning for $150. Brown Baby Tanning Salon is offering ________ pricing. A) by-product B) captive product C) product bundling D) discount E) psychographic
D
94) 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 at risk of being accused of ________. A) market skimming B) price fixing C) deceptive pricing D) price confusion E) predatory pricing
E