MKTG 380: Chap 19 - Pricing Strategies

A negative cash discount is used by a seller to: A- improve its liquidity position and cut collection expenses. B- return the costs incurred by channel members in performing marketing functions. C- reduce prices on a one-time-only basis. D- reduce prices in an attempt to integrate promotional strategies within distribution channels.

A

A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions. A- pricing policy B- MAP C- leader pricing strategy D- EDLP

A

An office supply wholesaler offers a 15 percent discount for retailers who purchase goods worth $ 20,000 over a period of nine months and a 20 percent discount for purchases worth $ 25,000 during the same time period. This is an example of a _____ discount. A- cumulative quantity B- recurring C- noncumulative quantity D- trade

A

Consumers today perceive that, within price limits, there is: A- a direct relationship between the quality and price of a product. B- obvious opportunity for psychological pricing. C- no perceivable difference in major product brands. D- a need for discounts and incentives.

A

Everyday low pricing is a strategy devoted to continuous low prices as opposed to: A- relying on short-term price-cutting tactics such as cents-off coupons, rebates, and special sales. B- prices that are set on a weekly or monthly basis in reaction to competitors' actions. C- seasonal changes in prices based on current demand. D- purely cost-based prices that vary as the manufacturer's costs vary.

A

In order to recover research and development costs rapidly and earn high initial profits, SenseTV is setting a high price for its plasma TVs. The pricing strategy SenseTV is using is called _____ pricing strategy. A- skimming B- penetration C- market-minus D- competitive

A

Many government and organizational procurement departments do not pay set prices for their purchases. Instead, they: A- determine the lowest prices available for items that meet specifications through competitive bidding. B- approach the supplying industry and get an average estimate of price from all producers. C- always negotiate with favored suppliers to get exactly what they want. D- call the federal supply agency and place an order with this government-run factory.

A

The process by which buyers ask a number of potential suppliers to submit price quotes on a proposed purchase or contract, of which the lowest will be accepted, is called: A- competitive bidding. B- specification. C- competitive pricing. D- noncompetitive bidding.

A

When the price of Cheerios cereal is displayed as 14.7 cents per ounce, this is an example of _____ pricing. A- unit B- commodity C- penetration D- odd

A

You just opened a retail pet supply store, and have decided to use a penetration pricing strategy. A potential investor, however, is dismayed by your decision. To win her over, which of the following points should you make? ​A- The new store's introductory prices can be changed later in its life cycle. ​B- Demand for pet supplies is highly elastic. ​C- Demand for pet supplies is highly inelastic. ​D- A new store needs to focus on attracting shoppers. ​E- Market-minus pricing would be inappropriate in the pet supply market.

A & B & D

A car manufacturer has developed different models of a car to suit the pricing needs of different classes of customers. It offers a low-end version for price conscious customers and luxury cars for high-end customers. This is an example of _____ pricing. A- leader B- product-line C- promotional D- psychological

B

A one-time reduction in list price typically offered at the time of sale is referred to as a(n): A- allowance. B- noncumulative discount. C- cumulative discount. D- rebate.

B

For the purpose of transfer pricing, any part of the organization to which revenue and controllable costs can be assigned, such as a department, is referred to as a: A- sales department. B- profit center. C- revenue center. D- controllable costs center.

B

Komatsu is a global firm known for its earth moving equipment utilized in construction. Since its products are sold around the globe, Komatsu has developed a unique approach to pricing where prices are set according to the market conditions within each geographic region. For example, an excavator might be significantly less expensive in India than in the United States in order to reflect the local marketplace conditions. What type of pricing strategy is Komatsu utilizing?​ ​A- competitive pricing ​B- market-differentiated pricing ​C- standard worldwide pricing ​D- dual pricing

B

Psychological pricing is based on the premise that: A- setting a limited number of prices for a selection of merchandise has a certain appeal. B- certain prices or price ranges make products more appealing to buyers than others. C- one-price policies appeal to most people and suit mass-marketing programs. D- lower-than-normal prices as part of recurring marketing initiatives creates demand.

B

A penetration pricing strategy is called _____ pricing when it implements the premise that a lower-than-market price will attract buyers and move a brand from an unknown newcomer to brand-recognition or brand-preference stage. A- FOB B- market-plus C- market-minus D- EDLP

C

A price quotation system that allows the buyer to deduct shipping expenses from the cost of purchases is known as _____ pricing. A- FOB plant B- uniform-delivered C- freight absorption D- basing-point

C

A smartphone manufacturer introduced a new device into the marketplace with pricing set according to the skimming approach. The CEO of the company reviews financial reports from the device and notes that the pricing approach used is not cost-effective for the company. How should the CEO adjust the pricing strategy for this device?​ ​X- increase the price ​B- offer an everyday low price option ​C- drop the price ​D- remarket the device under a private label ​E- match the price to the competitions' price

C

An example of odd pricing would be: A- rebates that lower total price. B- a buy-two-get-one-free promotion. C- selling a radar detector for $129.99 instead of $130. D- subtracting trade-ins from the list price.

C

Burlan Paints, manufacturer of paints for both interiors and exteriors, prices its products differently in various international markets to suit the requirements of local customers. Burlan Paints is implementing the _____ pricing strategy for pricing products. A- zone B- dual C- market-differentiated D- standard

C

Makson's, a manufacturer of agricultural fertilizers and pesticides, modifies the prices of its products exported to foreign markets to include the marketing costs in foreign markets but maintains the same price in all its domestic markets. Its products are more expensive in international markets compared to its domestic market where it is sold at a lower price. This pricing strategy used by Makson's to differently price its products is known as: A- competitive pricing. B- market-differentiated pricing. C- dual pricing. D- standard worldwide pricing.

C

Penetration pricing works best for goods or services: A- that involve high production and operational costs. B- that face little or no competition in the market place. C- that are characterized by highly elastic demand. D- that offer a unique advantage over competitors' brands.

C

Retailers such as Home Depot and Lowe's, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing. A- cost-plus B- skimming C- competitive D- penetration

C

The customer service department of a vitamin and nutritional supplement company has been receiving an increase in customer complaints since the company changed the shipping and handling charges to be the same amount for every order. Which delivery pricing method is this company using?​ ​A- free on board ​B- basing point ​C- uniform delivered ​D- cumulative quantity ​E- zone

C

Transfer pricing becomes especially complex when the global market is involved because: A- the temperature and humidity differences between origins and destinations often damage the products. B- issues of quality control can be serious, even when divisions of the same firm are involved. C- a firm with activities in several countries can use transfer pricing as a tax-avoidance device and governments frown upon such activities. D- shipping materials across national lines involves payment of duties and taxes, and these become part of the total price of the goods.

C

The travel agency business is more competitive than ever because of industry consolidation and the growth of online services. Still, Sam believes his cruise booking agency can be profitable if he targets organizations that book tickets for member events -- and if he makes careful use of price discounts. Which of the following steps is Sam likely to take? ​A- Offer cash discounts to organizations that pay for tickets at any time in cash. ​B- Offer one-time only cumulative quantity discounts to organizations buying the largest number of tickets for a given cruise. C- ​Offer cumulative quantity discounts for organizations making annual bookings over $10,000. ​D- Offer cash discounts to organizations that pay their bills within 30 days. ​E- Eliminate list prices.

C & D

"Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, is an example of _____ pricing. A- unit B- variable C- product-line D- promotional

D

A _____ is the amount by which the average transportation charge exceeds the actual cost of shipping. A- transfer price B- rebate C- list price D- phantom freight

D

A cosmetics company offers incentives to its retailers for advertising its new shampoo by placing it in a special display unit near the billing counters. This incentive offered by the manufacturer is an example of a _____. A- trade-in B- cash discount C- rebate D- promotional allowance

D

A credit allowance given for a used item when a customer purchases a new item is known as a _____. A- cash discount B- functional discount C- rebate D- trade-in

D

A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success? A- Prestige pricing B- Unit pricing C- Price flexibility D- Promotional pricing

D

Consumers have a certain range within which their product-quality perceptions vary directly with price. This range reflects the concept of price: A- variations. B- controls. C- resistance. D- limits.

D

The chief financial officer (CFO) of an automotive manufacturer is reviewing the revenue earned from the sale of all-terrain vehicles in South America. Because the selling price of the vehicles has been changed frequently, the CFO wanted to analyze the impact of these changes particularly during the rainy season. Which global pricing strategy is being used to price these vehicles? ​A- standard ​B- cannibalization ​C- transfer ​D- market-differentiated ​E- dual

D

The practice of marketing merchandise at a limited number of prices is called _____ pricing. A- unit B- one-price C- odd D- product-line

D

Which of the following is a disadvantage associated with product-line pricing? A- It is ineffective in differentiating between products. B- It does not allow shoppers to choose desired price ranges. C- It results in consumers having difficulty in making purchase decisions. D- It does not provide flexibility for making price changes on individual items.

D

Which of the following is an example of a rebate offered to buyers? A- Getting $3 off a $100 purchase for paying the bill within 10 days. B- Getting $100 off a $1,000 purchase for buying in bulk quantities. C- Getting $25 off a $100 purchase on exchange of a used product. D- Getting $5 returned by mail after a $100 purchase for making the purchase.

D

T/F: A grocery store places tags on shelves just below the products that list the product name, UPC number, a store code, and the regular price of the product. This regular price is called the market price.

F

T/F: A leader merchandise is a product offered by retailers to customers at less than cost to attract them to stores.

F

T/F: A low price is a sure sell because the demand for many goods is highly elastic.

F

T/F: A price of $ 9.97 is less likely to appeal to customers than $ 9.95 or $ 9.99.

F

T/F: Cannibalization occurs when companies offer their products in multiple retail channels such as drug stores, convenience stores, grocery stores and discount stores.​

F

T/F: Marketers implement leader pricing policies to avoid violating maximum-markup regulations and to earn a maximum return on promotional sales.

F

T/F: Penetration pricing is likely to be utilized when demand for a good or service is highly inelastic.

F

T/F: Setting prices is a one-time decision for most products in most companies.

F

T/F: Step outs occur when a company refuses to participate in price escalation between competitors.

F

T/F: While price offers a dramatic means of achieving competitive advantage, it is the most difficult marketing variable for competitors to match.

F

T/F: A manufacturer's list price must incorporate the costs incurred by channel members in performing required marketing functions and expected profit margins for each member.

T

T/F: Auctions such as eBay are considered the purest form of negotiating prices.​

T

T/F: Buyers of a particular new car model are being offered zero-percent financing. This is an example of a promotional allowance.

T

T/F: Every online marketer is inherently a global marketer who must understand the internal and external conditions that affect global pricing strategies.

T

T/F: Few businesses want the distinction of being the first to charge higher prices.

T

T/F: Firms that price their products differently for online purchases face the risk of cannibalization.

T

T/F: Most price structures are built around list prices.

T

T/F: Penetration pricing is often used in a market in which a new product is likely to face strong competition when introduced.

T

T/F: Price is an important indicator of quality for many consumers.​

T

T/F: Skimming pricing strategies are also known as "market-plus pricing."

T

T/F: The global status of an industry will influence a firm's pricing strategies in international markets.

T

T/F: Zone pricing helps sellers compete in distant markets.

T