Marketing Chapter 9: Pricing
b
A retailer temporarily prices a few select items below cost to create excitement and pull consumers into the store. This is an example of _________ pricing. A. geographical B. promotional C. psychological D. optional product E. segmented
c
Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as ________. A. an indicator of geographic pricing B. an indicator of the cost of production C. an indicator of quality D. a limited time offer E. a type of segmented pricing
d
One major objective associated with a market-penetration pricing strategy is to ________. A. prevent customer dissatisfaction B. attract buyers willing to pay a higher price C. avoid everyday low pricing D. win a large market share E. skim off small but profitable market segments
d
Over the years, U.S. air carriers have been accused numerous times of collusion when setting prices. This illegal practice is called _______. A. predatory pricing B. deceptive pricing C. retail price maintenance D. price fixing E. price discrimination
d
Selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business is an illegal practice called _______. A. deceptive pricing B. price discrimination C. price maintenance D. predatory pricing E. price fixing
c
The Ford Mustang is offered in several different models. Ford will use __________ pricing to determine the price steps between the different models. A. optional-product B. two-part pricing C. product line D. captive-product E. product-bundle
d
UPS charges different prices for shipping depending on an item's destination. The more distant the city the package is being shipped to, the higher the price UPS charges. Which geographic pricing method is UPS using? A. Freight-absorption pricing B. FOB origin C. Base-point pricing D. Zone pricing E. Uniform-delivered pricing
reference prices
What are prices that buyers carry in their mind and think about when they look at a given product?
odd/even pricing, perceived price change vs. actual change, everyday low pricing vs. high/low pricing
What are some psychological issues in pricing?
price fixing and predatory pricing
What are the 2 pricing tactics prohibited by law within channel levels?
price discrimination, retail price maintenance and deceptive pricing
What are the 3 pricing tactics prohibited by law across channel levels?
product line, optional-product, captive-product, by-product and product bundle
What are the 5 product mix pricing strategies?
price elasticity
What is a measure of the sensitivity of demand to changes in price?
odd/even pricing
What is a psychological pricing tactic in which numeric value is utilized to affect the customer's perception of product value?
demand curve
What shows the number of units the market will buy in a given time period at different prices that might be charged?
cost-plus pricing
What type of pricing involves adding a standard markup to the cost of the product?
value-added pricing
What type of pricing involves attaching value-added features and services to differentiate a company's offers and charging higher prices?
value-based pricing
What type of pricing involves considering the price along with all other marketing mix variables before the marketing program is set?
psychological pricing
What type of pricing involves considers how the price is used to say something about the product, not just the economics involved?
good-value pricing
What type of pricing involves offering just the right combo of quality and good service at a fair price?
product bundle pricing
What type of pricing involves pricing combos of products sold together?
by-product pricing
What type of pricing involves pricing low-value by-products to get rid of or make money off them?
optional-product pricing
What type of pricing involves pricing optional or accessory products sold with the main product?
captive-product pricing
What type of pricing involves pricing products that must be used with the main product?
market-skimming pricing
What type of pricing involves setting a high price for a new product to get some maximum revenues layer by layer from the segments willing to pay the high price?
market-penetration pricing
What type of pricing involves setting a low price for a new product in order to attract a large number of buyers and a large market share?
break-even pricing
What type of pricing involves setting a price to break even on the costs of making and marketing a product or setting price to make a target return?
product line pricing
What type of pricing involves setting prices across an entire product line?
competition-based pricing
What type of pricing involves setting prices based on competitors' strategies, prices, costs and market offerings to create relative value against them?
cost-based pricing
What type of pricing involves setting prices based on the costs of producing, distributing and selling the product plus a fair trade of return for effort and risk?
customer value-based pricing
What type of pricing involves setting the price based on buyers' perceptions of value rather than the seller's cost?
a
When Apple Computer Company introduced its iPhone, its priced the new product at $599, considerably higher than either their iPod or competing cellular phones. Apple Computer was pursuing a ___________________ new product pricing strategy. A. market-skimming B. market-penetration C. by-product D. optional-product E. captive-product
b
Which of the following is a potentially effective action a company could take in response to a competitor's price cut? A. Launch a high-price "fighter brand" B. Reduce price C. Reduce both price and quality. D. Decrease perceived value E. Raise price
e
Which of the following is a cost-oriented pricing approach? A. High-low pricing B. EDLP pricing C. Competition-based pricing D. Value added pricing E. Breakeven pricing
c
Which of the following is true regarding the price-demand relationship? A. Demand and price are directly related dash the higher the price, the greater the demand. B. Price elasticity measures how responsive price will be to a change in demand. C. If demand is elastic, sellers will consider lowering their price. D. A demand curve shows the number of units a company will produce in a given time period at different prices that might be charged. E. If demand is inelastic, a small change in price will result in a large change in demand.
d
Which of the following statements is true regarding initiating price cuts? A. When faced with falling demand, firms should not cut prices. B. If faced with excess capacity, a firm should not cut its price. C. Cutting price has no effect on costs. D. Cutting prices in an industry loaded with excess capacity may lead to price wars. E. Firms never cut prices; they only raise them.
e
Which of the following statements is true regarding initiating price increases? A. Cost inflation is not a factor in price increases. B. Price increases do not impact profits. C. Companies do not need to communicate reasons for price increases to customers. D. Prices should be increased when there is a lack of demand. E. Wherever possible, the company should consider ways to meet higher costs or demand without raising prices.
b
New, premium movie theaters offer features such as online reserved seating, high-backed leather executive chairs with armrests and footrests, the latest in digital sound, super-wide screens, and other amenities for which they charge a higher price. This is an example of which type of pricing? A. EDLP pricing B. Value-added pricing C. High-low pricing D. Breakeven pricing E. Cost-plus pricing
a
________ refers to setting price based on buyers' perception of value rather than on the seller's cost. A. Customer value-based pricing B. Value-added pricing C. Cost D. Good-value pricing E. Cost-based pricing
