BA 370 Chapter 15
Which of the following are pricing tactics used in B2B pricing? (Select all that apply.)
Allowances Seasonal Discounts
How would a business benefit from offering a cash discount to customers who pay invoices quickly? (Select all that apply.)
By collecting its income sooner, the business could avoid borrowing to pay its own bills. The business would collect and deposit its money sooner, thus earning more interest.
How does penetration pricing discourage rival companies from entering the market? (Select all that apply.)
Competitors who enter the market will temporarily face higher unit costs. Usually none of the companies make much profit in this situation.
Which of the following is NOT a pricing tactic aimed at consumers?
Cumulative discounts
True or false: Cash discounts are reductions retailers take in the initial selling price of the product or service.
False
What are the characteristics of leader pricing? (Select all that apply.)
It sets a low price on something that customers often buy. It involves aggressive advertising.
Which of the following best describes the target market for leasing or renting products?
People who are less price sensitive
What is NOT a pricing tactic?
Price skimming
Which of the following are drawbacks of a market penetration pricing strategy? (Select all that apply.)
Setting the price lower than the item's value "leaves money on the table." It requires companies to have a large production capacity. Setting prices so low may indicate to consumers that the product is not high quality.
Which of the following are characteristics of price bundling? (Select all that apply.)
Several popular items are frequently sold together for a lower combined price. Price bundling helps customers stock up on a product. A less popular item is sometimes bundled with a more desirable item.
In reference to cash discounts offered between two businesses, what does "6/10, n/30" mean?
The buyer gets a discount of 6% if the invoice is paid within 10 days. If the buyer does not take the discount, the full amount must be paid within 30 days.
Every six months, the local hardware store receives a cumulative quantity discount on the tools it buys from Ace Tool Manufacturing. Which of the following is likely true? (Select all that apply.)
The store will offer special bargains to its customers two times a year. The store has a sales goal or quota for each six-month sales period. The more tools the hardware store buys, the more the discount will increase.
Which of the following are true of pricing tactics? (Select all that apply.)
They are a widely accepted method of setting short-term prices. They can be used to counter a competitor's temporary sale prices.
Which of the following are true of leader pricing, price lining, and price bundling? (Select all that apply.)
They are aimed at consumers. They are pricing tactics.
Which of the following statements are true of seasonal discounts? (Select all that apply.)
They help manufacturers plan their production schedule. They are offered to retailers so they will stock up on seasonal merchandise in advance. They can help retailers make a larger profit.
Which of the following are true of coupons? (Select all that apply.)
They offer an immediate discount on items purchased. They encourage first-time users to become regular users.
What types of customers are apt to lease a product instead of buying it? (Select all that apply.)
Those who cannot afford the purchase price Those who do not want to bother with selling the item after they tire of it
Which of the following are reasons that firms implement a market penetration pricing strategy? (Select all that apply.)
To build sales To earn profits To discourage competitors To establish market share
Why do retailers use markdowns as a pricing tactic? (Select all that apply.)
To dispose of products that have not been selling well To sell products out of season To match low prices offered by competitors
In March, before most consumers begin shopping for summer products, a shoe factory offers retailers a seasonal discount on sandals. What are the purposes of this pricing tactic? (Select all that apply.)
To make it easier to plan the factory's production schedule To move inventory out of the factory as soon as possible
Setting prices so low may indicate to consumers that the product is not high quality.
Value-based methods
When would an advertising allowance be illegal? (Select all that apply.)
When it blatantly favors one customer When it is offered to only a few customers
Which of the following are pricing tactics and discounts that businesses often use when selling to other businesses? (Select all that apply.)
Zone pricing Slotting allowances Advertising allowances
Business-to-business seasonal discounts are price reductions offered to stimulate purchases ______.
before the buying season for that product begins
______-based pricing encourages consumers to see how the company's prices compare to those of business rivals.
competition
Cost-based pricing does NOT consider the influence of ______ on the marketplace.
consumer
Quantity discounts, rebates, and coupons are examples of price reductions aimed at ______.
consumers
A company prices all of its products at twice what it cost to produce them. The company is using a ______-based pricing method.
cost
When retailers want to offer a discount on the price of specific items at the point of purchase, they will issue _________
coupons
What advantage is there for a company to offer products at prices below actual market value?
customers are more likely to try the product because they are not risking as much money.
Consumers typically compare a firm's products and prices with those offered by ______.
direct competitor's
With the ______ pricing strategy, a company adopts retail prices that are typically somewhere between the product's regular price and the sharply discounted sale prices that competitors occasionally offer.
everyday low
The strategy of ______ appeals to consumers because it reduces their need to spend time comparing prices at various stores.
everyday low pricing (EDLP)
Sometimes the cost per unit of a new product will decrease as the total sales increase. This is known as the ______ effect.
experience curve
When firms use a penetration pricing strategy, they expect the _________
experience curve effect
What is a slotting allowance?
fees firms pay to retailers simply to get new products into stores or to gain more or better shelf space for their products
In price bundling, two products or services are sold as a package ______.
for less than what they would cost individually
The ______ pricing strategy features frequent sales, during which prices are lowered for a short time.
high/low
When consumers relish the challenge of getting the lowest price and are willing to expend the time and effort to seek out the lowest price every time, retailers should use the ______ pricing strategy.
high/low
When evaluating a new product, customers decide that they are willing to pay a certain amount, more or less, than they would for similar products offered by competitors. This difference in perceived worth is called ______ value.
improved
When Apple introduced the iPhone to the mobile phone marketplace, the company used customer research to estimate how much better the iPhone was. That amount is called the product's ______ value.
improvement
A company launches a new product that is superior to similar products offered by competitors. The price is based on consumer research that reveals how much more a customer would be willing to pay for the new product. This type of pricing is called the ______.
improvement value method
The ______ pricing tactic lures customers into the store through aggressive advertising coupled with a very low price on something that customers often buy.
leader
Gary likes to drive expensive luxury cars, but he becomes bored with them quickly. Instead of purchasing a car and keeping it for a long time, he pays a monthly fee to drive the car of his choice and then returns it and gets a different one. This arrangement is called ______.
leasing
After the holidays, Toys "R" Us reduces prices of popular holiday gift items to attract consumers who were unwilling to brave long lines or pay higher prices. This pricing tactic is called a ______.
markdown
When a retailer reduces the initial selling price of a product or service, the pricing tactic is called a ______.
markdown
The goal of a(n) ______ strategy is to generate profit and establish a new product or service in the market as quickly as possible.
market penetration
When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first.
penetration pricing
Adelaide's gift shop sells small, white candles for 50 cents each and elaborate scented candles for $15 each. In between are several other types of candles with different features and quality. Adelaide is using ______.
price lining
By engaging in ______, a business sets the highest and lowest prices for a product line and then sets a few more prices between them.
price lining
In preparation for introducing a new doll to the market, a toy company advertises and creates so much demand that little girls are lined up at the stores, determined to be the first to own one. The toy company sells these first dolls at twice their actual retail value. This is an example of ______.
price skimming
When Apple first introduced the iPhone, some consumers were willing to pay the premium $599 price tag. Apple was using a(n) ______ strategy.
price skimming
According to the textbook, which of the following has the highest "hassle factor"?
rebates
In contrast to coupons, which are offered by retailers,_________ are discounts offered by manufacturers. The consumer purchases a product, and the manufacturer sends a cash refund for part of the price.
rebates
Patio furniture is often sold at a reduced price when the weather is cold. This is an example of a(n) ______ discount.
seasonal
Cash discounts are encouraged because the ______ gets the benefit from the time value of money.
seller
A(n) ______ discount is when large quantities or packages cost only a little more than smaller ones.
size
Warehouse club stores like Sam's Club or Costco offer customers low prices on a variety of merchandise, but often the merchandise is sold in large-quantity packaging. This is an example of a(n) ______ discount.
size
The five Cs of pricing are examples of pricing ______
strategies
Pricing ______ are short-term ways of concentrating on specific aspects of company objectives, costs, customers, competition, and channel members.
tactics
The improvement value method of pricing assigns a price based on how much more or less the product is perceived to be worth in comparison to comparable products. Who estimates what that price should be?
the firm
Setting the price for a new product is less difficult when other products like it are already being sold. This is true because ______.
the market will have established a general value for that sort of item
When leasing merchandise, the consumer pays a fee to ______.
use the product for a certain length of time and then return it.
To estimate a product's ______, consumers consider what they expect to get from the product, in addition to what they will need to sacrifice to acquire it.
value
_______-based pricing focuses on how much the customer thinks the product is worth.
value
Which of the following are common base for pricing strategies?
value cost competition
When a new product is launched in a market where similar items are already being sold, how is the price typically determined?
value-based methods
