chapter 14: pricing strategies

A.

A banana supplier sells to both supermarket chains and independent food stores in the same region. The supermarket chains always generate more revenue than the independent food stores, because the supermarket chains order bananas more frequently and in bigger volume. To increase his or her profits from the independent food stores, the supplier wants to charge them more per bushel than he or she charges the chains. However, the supplier's director of marketing advises against it. A. This pricing policy might violate the Robinson-Patman Act. B. This pricing policy could cause a price war C. This pricing policy must be approved by the FTC D. This pricing policy is defamatory

D.

A pricing strategy is: A. the use of seasonal discounts to reduce inventory. B. a short-term approach to setting prices. C. associated with competitive threats in the marketplace. D. a long-term approach to setting prices in an integrated effort

A.

A retailer is facing difficult times: Sales are down and there has been a decrease in the number of customers visiting the store. The retailer decides to lower the prices on a few items, hoping this strategy will draw more customers who will not only purchase the discounted items but will also linger in the store and buy additional items. Which type of pricing policy is the retailer using? A. Promotional pricing B. psychological pricing C. price flexibility D. Product line pricing

C.

For most of the basic men's product lines they carry, tuxedo rental stores offers good, better and best alternatives. For example, they might offer tuxedos of different quality levels at $139, $219 and $495, which involves the use of _____. A. Non-competitive pricing B. Leader pricing C. Price lining D. Reference pricing

D.

If Zara features both original prices and temporary promotional sale prices of certain items both in their advertisements and in signs throughout the store they are using this type of pricing: A. Reference pricing B. Improvement pricing C. Cost of ownership method D. High/Low pricing

D.

The three primary competitive pricing strategies are all of the following EXCEPT A. price skimming B. competitive pricing C. penetration pricing D. product-line pricing

A.

To execute an overall pricing strategy, marketers choose among three basic pricing tactics: psychological pricing, product-line pricing, and promotional pricing. Which of the following BEST describes the relationship between price and quality? A. Many consumers associate high prices with high quality B. Lowering the quality of a product will lower prices because costs will be reduced. C. There is no close relationship between price and quality. D. Raising the quality of a product will raise the price because costs will be increased

A.

When Apple Computer Company introduced the iPhone--a combination phone, MP3 player, and Internet access device--in 2007, it was priced at $499, considerably higher than either the iPod or competing cell phones. Apple was probably pursuing a ___________________ pricing strategy. A. Skimming B. Slotting allowance C. Price fixing D. Reference

B.

When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is using the illegal practice of _____. A. Price skimming B. Predatory pricing C. Loss leader pricing D. Bait and switch

A.

When the price of Product A is raised by 1 percent, its sales drop by 0.06 percent. When the price of Product B is raised by 1 percent, its sales drop by 1.5 percent. This means that demand for Product A is _______, while demand for Product B is ________. A. inelastic, elastic B. partially elastic, inelastic C. elastic, partially elastic D. unelastic, inelastic

B.

Which of the following is a reason companies such as H&M and Zara use penetration pricing? A. Their customers are willing to pay more for their products B. To build profits quickly C. Their competitors are unable to enter the market easily D. They cannot satisfy a rapid rise in demand

Robinson-Patman Act

a Depression-era law that prohibits price discrimination when selling the same product in the same amount to two different customers

skimming pricing strategies

intentionally setting a relatively high price compared with the prices of competing products

unfair-trade laws

laws which require sellers to maintain minimum prices for comparable merchandise

competitive pricing

pricing strategy designed to reduce emphasis on price as a competitive variable by matching competitors' prices and focusing on other ways to differentiate products

psychological pricing

pricing tactic based on the belief that certain prices or price ranges make products more appealing to buyers

promotional pricing

pricing tactic in which a lower-than-normal price is used as a temporary ingredient in a firm's marketing strategy

loss leaders

pricing tactic where goods are priced below cost to attract customers to stores in hopes they will buy other merchandise at regular prices

product-line pricing

pricing tactic where the firms sets a limited number of prices for a selection of merchandise

sales force composite

qualitative forecasting method based on the combined sales estimates of the firm's salespeople

Jury of executive opinion

qualitative forecasting method that assesses the sales expectations of various executives

trend analysis

qualitative forecasting method that estimates future sales through statistical analysis of historical sales patterns

Delphi technique

qualitative forecasting method that gathers several rounds of feedback from experts inside and outside the firm

survey of buyer intentions

qualitative forecasting method that samples opinions among groups of current and potential customers concerning purchasing plans

penetration pricing strategies

setting a lower price than competitive offerings in order to stimulate demand and market acceptance

quantitative forecasting

techniques that rely on statistical data, such as past sales or results from small tests

qualitative forecasting

techniques that rely on subjective data that reports opinions rather than using statistical data

demand

the amounts of a product that consumers will purchase at different prices during a specific time period

supply

the amounts of a product that will be offered for sale at different prices during a specified period

elasticity

the measure of the responsiveness of purchasers and suppliers to price changes

elasticity of demand

the percentage change in the quantity of a product demanded divided by the percentage change in its price

price discrimination

when a supplier offers the same product to two buyers at two different prices