Ch 17 Review
86) ________ means setting a fair price level for a marketing mix that really gives the target market superior customer value. 86) ______ A) Value pricing B) Status quo pricing C) Target pricing D) Consumer surplus E) Uniform pricing
A
87) ________ are reductions from list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himself. 87) ______ A) Discounts B) Spiffs C) PMs D) Markups E) Phony prices
A
1) Which of the following is not an example of price? 1) _______ college tuition interest on a loan apartment rent doctor's fee All of these are examples of price.
All of these
14) Which of the following is a status quo pricing objective? 14) ______ A) Maximize profits B) Meeting competition C) Growth in sales D) Growth in market share E) Satisfactory profits
B
78) Trying to sell a firm's new product to a large market at one low price is known as ________. 78) ______ A) a flexible-pricing policy B) a skimming pricing policy C) introductory price dealing D) nonprice competition E) a penetration pricing policy
E
2) A _____ price policy tries to sell the top of the demand curve at a high price before aiming at more price-sensitive customers. 2) _______ panning status quo skimming meet competition penetration
Skimming
3) A one-price policy means offering the same price 3) _______ for store brands and national brands. for individual consumers and organizational buyers. to all customers. all four seasons of the year. for all types of merchandise.
to all customers
25) The Robinson-Patman Act says that to be legal, price differences must be based on: 25) ______ A) a need to meet competition and cost differences B) freight costs C) transportation differences D) a reasonable profit margin as determined by the FTC E) None of these alternatives is correct.
A
27) The president of a major airline makes telephone calls to the top executives of several other airlines asking them to "hold the line" and refrain from offering discounts on fares for several key routes in order to improve profit margins. This practice could easily be considered ________. 27) ______ A) price fixing B) dumping C) price discrimination D) price grabbing E) zone pricing
A
31) A _____ policy means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities. 31) ______ A) one-price B) penetration price C) differentiated D) flexible price E) skimming price
A
35) On the price sticker placed on the window of a new vehicle by the manufacturer, the manufacturer's suggested retail price is listed, followed by a "destination charge" for shipping the vehicle to the dealership. The destination charge is the same everywhere in the country, no matter whether the dealership is close to or far away from the manufacturing plant. This pricing practice is called 35) ______ A) uniform delivered pricing. B) zone pricing. C) freight absorption pricing. D) F.O.B. pricing. E) None of these is a good answer.
A
38) A retailer might expect a stocking allowance 38) ______ A) to offset the handling costs for a new product. B) for paying the supplier's invoice before the product is delivered. C) to pass along to retail salesclerks who aggressively sell the product. D) if the manufacturer can't fill an order by the promised delivery date. E) None of these-stocking allowances only apply to wholesalers.
A
43) A marketing manager may choose a pricing objective that is 43) ______ A) any of these-depending on the situation. B) status quo oriented. C) sales oriented. D) profit oriented.
A
44) A firm that is very concerned about increases in market share should adopt a ______________ pricing objective. 44) ______ A) sales-oriented B) target return C) status quo D) profit-oriented E) nonprice competition
A
60) A penetration pricing policy 60) ______ A) tries to sell the whole market at one low price. B) tries to sell the top of the demand curve initially. C) tries to target the elite market first. D) involves price movement down the demand curve over time. E) tries to sell the top of a market.
A
66) A discount that is offered to encourage buyers to stock earlier than present demand requires is ________. 66) ______ A) a seasonal discount B) "push money" C) a cash discount D) a quantity discount E) a credit discount
A
68) A flexible-price policy means offering ________. 68) ______ A) the same product and quantities to different customers at different prices B) different products and quantities to different customers at different prices C) different products and quantities to different customers at same prices D) the same product and different quantities to different customers at same prices E) the same product and quantities to different customers at same prices
A
70) What is the objective of a target return strategy? 70) ______ A) A specific level of profit. B) A specific share of the market. C) A specific mindshare of consumers. D) A specific share of competitors' sales. E) A specific sales volume.
A
77) World Imports/Exports, Inc., is pricing a product sold in a foreign market below the cost of producing it. It sells the same product at a higher price in its domestic market. The company is engaging in ________. 77) ______ A) dumping B) conscious parallel action C) skimming D) price dealing E) fair trade
A
8) Jiffy Cake Mix Company developed a new brownie mix that is much improved over its current brownie mix. When a sales representative for Jiffy contacted a buyer for a major supermarket chain, the buyer demanded that Jiffy give the supermarket chain a combination of cash and free cases of goods whose total value exceeded the entire marketing budget Jiffy planned to spend on the new brownie mix during its first year on the market. When the sales representative from Jiffy protested, the buyer said, "It is company policy to get ______________ in order to secure shelf space for new brands." 8) _______ A) stocking allowances B) an advertising allowance C) sale prices D) push money E) everyday low pricing
A
21) Which of the following statements about a flexible-price policy is True? 21) ______ A) Flexible pricing does not cause channel conflict. B) Flexible pricing often involves price negotiation between the buyer and seller. C) The availability of computer pricing databases has had no effect on the popularity of flexible-price policies. D) Flexible pricing means offering the same price to all customers who purchase under essentially the same conditions and in the same quantities. E) None of these statements about a flexible-price policy is true.
B
29) Managers satisfied with their current market share and profits sometimes adopt what can be termed as "don't-rock-the-pricing-boat objectives." These are also referred to as ________. 29) ______ A) target return objectives B) status quo objectives C) sales-oriented objectives D) market share maximization objectives E) profit maximization objectives
B
36) Sears reduces prices on gas grills between November and February, prior to spring and summer. This price reduction is a ________. 36) ______ A) stocking allowance B) seasonal discount C) cash discount D) noncumulative quantity discount E) cumulative quantity discount
B
40) Uniform delivered pricing is most often used when ________. 40) ______ A) the seller does not wish to have a nationally advertised price B) the seller wishes to sell in all geographic areas at one price C) an average freight charge becomes illogical D) transportation costs are relatively high E) F.O.B. shipping point pricing is preferred
B
56) A trade discount is also called a ________. 56) ______ A) cumulative quantity discount B) functional discount C) noncumulative quantity discount D) stock discount E) seasonal discount
B
59) A producer of plastic water bottles that can be attached to bikes gives retailers a 3 percent price reduction to advertise its products locally. This is an example of ________. 59) ______ A) value pricing B) an advertising allowance C) a cash discount D) everyday low pricing E) push money
B
61) Quantity discounts are discounts offered to encourage ________. 61) ______ A) buyers to buy later than present demand requires B) customers to buy in larger amounts C) customers to buy sooner D) buyers to pay their bills quickly E) excellent customer service
B
67) Charlie Ferragamo is a sales representative for the Season-All Spice Company, and sells spices to large food service operations and restaurants. Charlie used to be able to justify selling his products for a higher price than the competition because he believed his spices were of higher quality. However, now the demand for individual brands of spices has become very elastic because buyers perceive few differences among the brands. One of Charlie's regular customers told Charlie that another spice company offered him a significantly lower price on spices, and he asked if Charlie could match the price. Charlie said, "I have to see a written price quote from the competitor. If I lower my price without seeing the price quote, I could be accused by my other customers of engaging in ________." 67) ______ A) dumping B) price discrimination C) price grabbing D) zone pricing E) price fixing
B
80) The use of temporary price cuts to speed new products into a market and encourage trial by customers is 80) ______ A) a skimming price policy. B) introductory price dealing. C) pricing for dollar or unit sales growth. D) a penetration pricing policy. E) a flexible-price policy.
B
85) "Unfair trade practice acts" ________. 85) ______ A) eliminate price competition on manufacturers' brands B) put a lower limit on prices, especially at the wholesale and retail levels C) make price fixing illegal D) prohibit intermediaries from taking excessive markups E) require different types of retailers to charge different retail prices
B
11) Calumet Pottery Supply allows a 10 percent reduction off its list price of Jepson clay whenever an intermediary orders more than 100 cases in one shipment. This is a 11) ______ A) cash discount. B) PM. C) noncumulative quantity discount. D) seasonal discount. E) cumulative quantity discount.
C
18) Heritage Brick's marketing manager is setting her pricing policies to "increase market share to 8%." Her pricing objective seems to be ________. 18) ______ A) status quo oriented B) nonprice competition C) sales oriented D) target return oriented E) profit oriented
C
19) Introductory price dealing 19) ______ A) is often viewed by competitors as a "stay out" price. B) would not be used if other competitors already had competing products on the market at a price consumers found acceptable. C) is different from penetration pricing. D) usually sets off price wars. E) can apply only to final consumers, not channel members.
C
23) Which of the following do firms using value pricing tend to avoid? 23) ______ A) Building a relationship with a customer which raises their expectations B) Focusing on customer requirements and adopting a relevant marketing mix C) Setting a high price only because consumers already know the brand name D) Establishing a price level that gives the target market superior customer value E) Delivering unexpected services which haven't been stated to the customer
C
37) A manufacturer might try to defend itself against charges of illegal price discrimination by claiming that 37) ______ A) its products were not of "like grade and quality." B) the price differentials were justified on the basis of cost differences in production and/or distribution. C) Any of these could make price discrimination legal. D) the price differentials did not actually injure competition. E) the price discrimination occurred as a defensive measure to "meet competition in good faith."
C
39) A main purpose of "unfair trade practice acts" is to 39) ______ A) permit different types of retail outlets to charge different retail prices. B) prevent manufacturers from taking high markups. C) require some minimum percentage markup on cost. D) eliminate price competition on manufacturers' brands. E) guarantee retailers some profit.
C
50) Some customers encourage the use of ________ by paying more attention to supposed price discounts than to the actual prices (and values). 50) ______ A) unchanging list prices B) fix prices C) phony list prices D) fair trade prices E) basic list prices
C
51) Offering a CUMULATIVE quantity discount seeks to 51) ______ A) eliminate some marketing function. B) reduce the seller's shipping costs. C) encourage the buyer to make additional purchases. D) shift some of the storing function to the buyer. E) All of these alternatives are correct.
C
52) Sales-oriented pricing objectives include 52) ______ A) target return. B) profit maximization. C) growth in unit sales, dollar sales, or share of market. D) meeting competition. E) None of these alternatives is correct.
C
55) KeyLine, Inc., engages primarily in the manufacture of touch-sensitive LCD monitors. The company prices its products so that it earns a 20 percent return on investment. Which pricing objective is the company following? 55) ______ A) Unit sales growth B) Share of market C) Target return D) Meet competition E) Nonprice competition
C
63) A manufacturer spends a large amount of money on research and development leading to the introduction of a product that is likely to present the firm with a breakthrough opportunity. The manufacturer prices the product with the goal of achieving a 20 percent return on its investment. Which of the following types of pricing objectives is the company using? 63) ______ A) Profit maximization B) Dollar or unit sales growth C) Target return D) Meeting competition E) Nonprice competition
C
64) A flexible-price policy is MOST LIKELY to be set by a retailer selling 64) ______ A) golf balls. B) t-shirts. C) cars. D) milk. E) women's shoes.
C
65) Why should pricing objectives be explicitly stated? 65) ______ A) Explicitly stating objectives provides legal protection for the firm. B) Firms should always choose profit-oriented pricing objectives. C) They have a direct effect on pricing policies and the methods used to set the price. D) Most state laws require explicitly stating legal objectives. E) It provides direction for company-level objectives.
C
73) When individual firms set their own prices-sometimes holding them steady for long periods of time-rather than letting daily market forces determine prices, such prices are called ________ 73) ______ A) fixed prices B) flexible prices C) administered prices D) equilibrium prices E) parallel prices
C
75) A "skimming pricing policy" 75) ______ A) should be used if a firm expects strong competition very soon. B) is typically used during the sales decline stage of the product life cycle. C) usually involves a slow reduction in price over time. D) means temporary price cuts to speed new products into a market. E) is most useful when demand is very elastic
C
83) A producer offers a retailer free merchandise to stock a new item. The retailer is receiving a 83) ______ A) spiff. B) cash discount. C) an advertising allowance D) cumulative quantity discount. E) seasonal discount.
C
9) Which of the following pricing objectives is a producer seeking when the producer tries to obtain some percent return on his investment? 9) _______ A) Meeting competition B) Growth in market share C) Target return D) Status quo E) Profit maximization
C
26) Which of the following is "something of value" that might be offered to FINAL CONSUMERS as part of the "price equation"? 26) ______ A) push money B) sufficient margin to allow for profit C) competitive advantage D) branded merchandise E) None of these is a good answer.
D
34) The ________ bans "unfair or deceptive acts in commerce." 34) ______ A) Excessive Bail Act B) Excessive Punishment Act C) Emblems Act D) Wheeler-Lea Amendment E) Trade Name Amendment
D
42) A penetration pricing policy 42) ______ A) usually involves a slow reduction in price over time. B) is used when the firm does not expect strong competition soon after its product is introduced. C) tries to sell the top of the market at a high price. D) tries to sell the whole market at one low price. E) is used when demand for the product involved is inelastic.
D
45) Final customers or users are normally asked to pay ________ prices for products they buy. 45) ______ A) discounted B) phony list C) unchanging list D) basic list E) wholesale list
D
54) _____ are the prices final customers or users are normally asked to pay for products. 54) ______ A) Net prices B) Discounts C) Cost prices D) Basic list prices E) Payoffs
D
58) Using temporary price cuts to speed a producer's new product into a market is known as ________. 58) ______ A) a penetration pricing policy B) a meeting competition pricing policy C) a skimming pricing policy D) introductory price dealing E) a flexible-price policy
D
71) Almost any business transaction in a modern economy involves ________. 71) ______ A) an exchange at a list price B) an exchange in which price serves as a measure of quality C) a loss of consumer surplus D) an exchange of money-the money being the Price-for something of value E) "dumping"
D
84) Prices are called "administered" when ________. 84) ______ A) they are determined through negotiations between buyers and sellers B) they fall below the "suggested list price" C) government intervenes to ensure that prices fluctuate freely in response to market forces D) firms set their own prices for some period of time-rather than letting daily market forces determine their prices E) a marketing manager has to change the strategy every time a customer asks about the price
D
90) A reduction from list price given to retailers to get shelf space for a product is a ________. 90) ______ A) brokerage allowance B) shelf allocation C) trade allowance D) slotting allowance E) push money allowance
D
10) If a producer wants title to pass to a buyer immediately-but still wants to pay the freight bill-the invoice should read: 10) ______ A) F.O.B. shipping point. B) F.O.B. delivered. C) F.O.B. mill. D) F.O.B. buyer's factory. E) F.O.B. seller's factory-freight prepaid.
E
13) Which of the following statements about rebates is True? 13) ______ A) Many consumers purchase a product because a rebate is offered but then never request the refund. B) Rebates ensure that the final consumer gets a producer's price reduction. C) Rebates are refunds paid to consumers after a purchase. D) Many consumers think that some sellers make it an unnecessary hassle to claim a rebate. E) All of these statements about rebates are True.
E
16) Which of the following is NOT "something of value" that might be offered to FINAL CONSUMERS in the "price equation"? 16) ______ A) credit B) repair facilities C) packaging D) service E) stocking allowance
E
22) Which of the following pricing policies involves entering a market with a single low price and not significantly increasing the price even upon gaining a major market share? 22) ______ A) Introductory price dealing B) Temporary price cut policy C) Zone pricing policy D) Skimming price policy E) Penetration price policy
E
28) An "all the traffic will bear" pricing objective is called ________ objective. 28) ______ A) growth in market share B) nonprice competition C) target return D) meeting competition E) profit maximization
E
30) A one price policy means ________. 30) ______ A) offering the same price on all its products irrespective of the manufacturing, designing, and marketing costs B) equating price with the per-unit cost of production C) offering the same price to customers, but the price depends on the store which is selling the product D) offering the same price to distributors, retailers, and customers E) offering the same price to all customers who purchase products under the same conditions and in the same quantities
E
32) ProEdge Tech, a leading technology firm, has bluntly stated its pricing objective as: "Charge all the traffic will bear." This is an example of a ________. 32) ______ A) nonprice competition objective B) growth in market share objective C) unit sales growth objective D) target return objective E) profit maximization objective
E
33) Sales-oriented objectives stated in market share terms 33) ______ A) may lead to greater economies of scale for the firm than for its competitors. B) make some sense when a market is growing rapidly. C) use market share targets instead of dollar or unit sales targets. D) might be achieved and still result in losses for the firm. E) All of these alternatives are correct.
E
41) Sharper Blade Knife Company produces different knives in a range of prices. The company tries to set a fair price level for each product and a marketing mix that gives each target market superior value. Sharper Blade Knife is using ________. 41) ______ A) F.O.B. delivered. B) a bad strategy C) flexible pricing D) everyday low pricing E) value pricing
E
46) Strategy planning for Price is concerned with 46) ______ A) how flexible prices will be. B) how transportation costs will be handled. C) at what level prices will be set over the product life cycle. D) to whom and when discounts and allowances will be given. E) All of these alternatives are correct.
E
47) A(n) ________ involves making small payments for a product over time—usually with interest payments built in. 47) ______ A) quantity discount B) rebate C) investment D) stocking allowance E) installment
E
48) A manufacturer could try to defend itself against charges of price discrimination under the Robinson-Patman Act by claiming that 48) ______ A) the price differences were justified on the basis of cost differences. B) the price differences did not injure competition. C) the products were not of "like grade and quality." D) any price differences were to "meet competition in good faith." E) All of these are possible defenses against price discrimination charges.
E
49) Insta-Mark Inc. makes custom-imprinted three-ring binders for business customers. Its prices are: $4.00 per binder for a single order of up to 50 binders; $3.50 per binder for a single order of 51 to 100 binders; and $3.00 per binder for a single order over 100 binders. Insta-Mark is using a 49) ______ A) basic list price. B) cash discount. C) cumulative quantity discount. D) seasonal discount. E) noncumulative quantity discount.
E
53) Which act prohibits price discrimination unless it is based on cost differences or the need to meet competition? 53) ______ A) Sherman Act B) Magnuson-Moss Act C) Federal Trade Commission Act D) Wheeler-Lea Act E) Robinson-Patman Act
E
57) A catalog merchant divides the country into regions. Every buyer in a particular region pays the same average shipping charge. The shipping charges differ from region to region, depending on how far the region is from the catalog merchant's main warehouse facility. The catalog merchant is using ________. 57) ______ A) uniform delivered pricing B) value pricing C) F.O.B. pricing D) freight absorption pricing E) zone pricing
E
62) A jewelry store advertises a one-carat diamond engagement ring as being discounted 50 percent off the original price of $10,000, for a sale price of $5,000. However, the ring was never put on sale at the original price, and its actual cost to the retailer was only $1,500. This jewelry store could be accused of using ________. 62) ______ A) dumping B) price fixing C) price discrimination D) unfair trade practices E) phony list prices
E
69) Teenagers and young adults with no income and few assets are sometimes prime targets for credit card companies. In response, Congress in 2009 passed the Credit CARD Act, which requires that anyone under age ____ must have a cosigner or prove they can repay any debt. 69) ______ A) 23 B) 25 C) 18 D) 17 E) 21
E
72) "Zone pricing" 72) ______ A) simplifies the calculation of transportation charges. B) allows a uniform delivered price to be charged to all buyers in each zone. C) may make it possible to compete with sellers located closer to the buyer. D) means making an average freight charge to all buyers within some geographic area. E) All of these alternatives are correct.
E
74) Quantity discounts are offered by sellers to 74) ______ A) encourage customers to purchase larger quantities. B) encourage buyers to make additional purchases. C) reduce shipping or selling costs. D) shift some of the storing function to buyers. E) All of these alternatives are correct.
E
76) A reduction from list price given to intermediaries to get shelf space for a product is a 76) ______ A) trade allowance. B) brokerage allowance. C) push money allowance. D) shelf allocation. E) stocking allowance.
E
79) Which of the following is a sales-oriented pricing objective? 79) ______ A) Target return B) Nonprice competition C) Meet competition D) Profit maximization E) Market share growth
E
81) Which of the following is a profit-oriented pricing objective? 81) ______ A) Growth in market share B) Meeting competition C) Sales growth D) Nonprice competition E) Target return
E
88) Offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities is a ______________ policy. 88) ______ A) skimming pricing B) value pricing C) flexible-price D) penetration pricing E) one-price
E
89) Some manufacturers give ________ to retailers to pass on to the retailers' salesclerks to encourage aggressive selling of specific items or lines. 89) ______ A) cash discounts B) advertising allowances C) quantity discounts D) slotting allowances E) "push money"
E
4) Which of the following is a SALES-ORIENTED pricing objective? 4) _______ Satisfactory profits Meeting competition Growth in market share Target return Nonprice competition
Growth in market share
5) "Price fixing" means ________. 5) _______ changing a price that was set at the wrong level by the financial manager competitors getting together to raise, lower, or stabilize prices a firm consciously setting its prices selling products of like grade and quality to different buyers at different prices pricing a product that will be sold in a foreign market at a level below the cost of production
competitors getting together to raise, lower or stabilize prices
6) Godiva, a maker of expensive European chocolates, does not mention price in its magazine advertising. Instead, the ad copy mentions the quality of the ingredients, the fine packaging, and the luxurious boutiques where Godiva chocolates are sold. Godiva seems to be pursuing a pricing objective of 6) _______ target return. growth in market share. nonprice competition. meeting competition. None of these is a good answer.
nonprice competition
12) Trying to get the "cream" of a market (i.e., the top of a demand curve) at a high price before aiming at the more price-sensitive customers is consistent with a(an) ________. 12) ______ A) skimming pricing policy B) introductory price dealing policy C) flexible-price policy D) penetration pricing policy E) sales-oriented pricing policy
A
20) A cash discount of 3/15, net 30 means that 20) ______ A) The buyer gets a 3 percent discount off the face value of the invoice if the invoice is paid within 15 days. B) The buyer gets a 3/15 (20 percent) discount if the invoice is paid within 30 days. C) The buyer gets a 15 percent discount off the face value of the invoice if the invoice is paid within 3 days. D) The buyer makes a 3 percent down payment on the face value of the invoice within 15 days; the remainder is due in 30 days. E) None of these alternatives is correct.
A
24) ________ is what a customer must give up to get the benefits offered by the rest of a firm's marketing mix. 24) ______ A) Price B) Product C) Past D) Promotion E) Profit
A
7) The Robinson-Patman Act 7) _______ A) requires that promotional allowances be made available to all of a firm's customers on "proportionately equal" terms. B) states that selling the same product to different consumers at different prices is always illegal. C) makes it illegal for a firm to offer quantity discounts. D) requires that advertising allowances be made available to all buyers in equal dollar amounts. E) None of these alternatives is correct.
A
82) A business products producer which has given its salespeople the right to adjust prices when necessary to get new business is using a ______________ policy. 82) ______ A) penetration pricing B) flexible-price C) one-price D) skimming pricing E) target-return pricing
B
17) Which of the following is a disadvantage of flexible pricing? 17) ______ A) It allows a salesperson to adjust the price depending on his customer. B) It allows a salesperson to adjust the price in response to competition. C) It results in broadcasting a price that the competition can undercut. D) It can cause discontent among customers who realize they have paid a higher price than others. E) It leaves opportunities for sales by not adjusting to customers.
D
15) A rebate is 15) ______ A) a temporary price cut to attract customers. B) a temporary discount from the price list. C) a document detailing pricing changes. D) a reduction in price to encourage buyers to pay their bills quickly. E) a refund paid to consumers after a purchase.
E