MKTG 361 LS CH 14

Gillette's five-blade Fusion shaving system has 70 patents protecting its product technology, making it more likely that __ pricing can be used successfully

skimming

In __, prices are lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices

skimming pricing

Which of the following represents an order of demand-oriented pricing approaches that may be used for a new product?

skimming, then penetration

Which of the following are reasons that firms engage in price wars?

-to respond to changes in competitors' prices -to preserve or grow their market share

Which two of the following are general methods for quoting prices related to transportation costs?

-uniform delivered pricing -FOB origin pricing

under which of the following circumstances is it legal to charge different prices to different customers?

-when the price differences are due to changing market conditions -when the price differences do not lessen competition

If a manufacturer quotes a price as $100 less 30/10/5, the retailer can expect to retain __ of the suggested retail price to cover its costs and provide a profit

$30

Which two of the following acts make predatory pricing illegal?

-Federal Trade Commission Act -Sherman Antitrust Act

Select all of the following that are common approaches to setting an approximate price level for a product

-cost-oriented -demand-oriented -competition-oriented

Select all of the following that are benefits of a penetration pricing strategy

-discourages competitors -production costs drop with increased volume -potential to gain market share

Which two of the following are the common forms of cost-plus pricing?

-fixed-fee -percentage-of-cost

Which of the following are special adjustments to the list or quoted price?

-geographical adjustments -allowances -discounts

Organizations choosing competitor-oriented approaches to set prices might use which of the following strategies?

-loss-leader pricing -customary pricing

Which two of the following are the options when choosing a price policy?

-one-price -dynamic-price

Which two of the following are types of allowances offered to buyers

-promotional allowances -trade-in allowances

Which of the following are pofit-oriented approaches to setting a price?

-target profit pricing -target return pricing

Organizations can be most effective using skimming pricing under which two of the following conditions?

-the customer understands and highly values the product -the product is protected by patent

What is essential to prove a complaint for predatory pricing in the market?

-the prices charged are below the defendant's average cost -a firm's intent to drive out competition must be proved

Seasonal discounts specifically do which two of the following?

-they contribute to more efficient production for the manufacturer -they reward channel members for accepting the risk of increased inventory

When a seller pays the cost of loading a product onto a vehicle and transfers title to the buyer at this time, so that the buyer responsible for the remainder of the transportation costs, it is known as

FOB origin pricing

Which of the following acts makes deceptive pricing illegal?

Federal Trade Commission

Yield management pricing is

a complex approach that continually matches demand and supply to customize the price for a service

Vertical price fixing might occur between

a manufacturer and a retailer in the same channel

When an organization deliberately prices a product above the prices set for competing products, to entice those customers for whom pricing doesn't matter, the firm is engaging in

above-market pricing

Standard markup pricing entails

adding a fixed percentage to the cost of all items in a specific product class

A one-price policy means there is one price for

all buyers of the product

If an organization sets prices similar to those of major competitors, it is using __ pricing

at-market

Manufacturers and retailers that offer private brands (store brands) of products deliberately price these products about 8 to 10 percent below the prices of national brands, using a __ pricing approach

below-market

McDonald's offers extra value meals, which include a hamburger, fries, and soft drink. The total price is lower than if each item were purchased individually, and the consumer just has to mention one item when ordering. This is an example of __ pricing

bundle

A(n) __ discount reduces the invoice total if the buyer pays the invoice prior to the end of the discount period

cash

__-oriented approaches to pricing set the price to reflect the way the marketer wants consumers to interpret prices relative to competitor's offerings

competition

Retailers have found that they should not price their store brands 20 to 25 percent below manufacturers' brands because

consumers then believe them to be of inferior quality and won't buy them

__-oriented approaches to pricing start with production and manufacturing costs and then add enough to cover direct, expected, overhead, and profit

cost

Adding a fixed percentage or fixed fee to the total costs for a product is known as __ pricing

cost-plus

Which of the following is a type of quantity discount that is likely to encourage repeat buying by a single customer?

cumulative

Price deals that mislead consumers fall into the category of __ pricing

deceptive

Penetration, price lining, and bundle pricing are all types of which of the following approaches?

demand

__-oriented approaches to pricing regard expected customer tastes and preferences as the most important factors in the decision

demand

If a firm sells the same product to different buyers at different prices, it may be considered price __

discrimination

Setting different prices for products depending on individual buyers and purchase situations is called a __ policy

dynamic-price

Walmart promotes that its average price for products will be lower than the competition. Walmart is able to offer low prices to its customers when its suppliers utilize __, minimizing expensive promotional allowances

everyday low pricing

__ promises to reduce the average price for consumers while minimizing promotional allowances that cost manufacturers billions of dollars each year

everyday low pricing

Prestige pricing means the organization deliberately prices a product __ so that __ consumer will be attracted to the product and buy it

high; quality-conscious

When two or more competitors explicitly or implicitly set prices, this practice is called __ price fixing

horizontal

Odd-even pricing is used to __, although overuse of this approach may mute its effect

increase demand for products

When a line of products are priced at different specific pricing points, it is known as price

lining

Though it may not call it by this name, a company that asks how many extra units it must sell in order to pay for a $1,000 advertisement is using

marginal analysis

A __ quantity discount is based on the amount purchased in a single order, and encourages a large individual purchase

noncumulative

In __ pricing, an organization sets a price a few dollars or cents under an even number, such as at $3.99

odd-even

Cash discounts are offered because they encourage customers to

pay their bills quickly

A firm may introduce a new product with __ pricing by using a low initial price designed to appeal to the many customers that are believed to be price sensitive

penetration

The ability to attract price sensitive customers and discourage competitors from entering a market make which pricing strategy appealing?

penetration

Proving the practice of __ is difficult because it must be shown that there was an explicit attempt to destroy a competitor with the use of a low price?

predatory pricing

The practice of colluding with other firms to set prices is called

price fixing

When Brooks Brothers prices its line of umbrellas at three price points, $60, $298, and $1,198 (or good, better, and best) it is using a __ approach

price lining

When Lexmark sells a printer for slightly below its cost, but prices its printer cartridges with a large profit margin that makes up for the loss on the printer, it is using

product-line pricing

When a marketing manager sets prices for all items in a product line, seeking to produce a profit for the entire line but not necessarily each product, is known as

product-line pricing

Instead of offering a __ allowance to retailers, some manufacturing companies like P&G have chosen to use an everyday low pricing (EDLP) strategy

promotional

Kmart has a new pricing special that state if the customer buys five boxes of cereal, then the cereal is discounted 10 percent. This type of discount is called a(n) __ discount

quantity

Reductions in unit costs for a larger order are known as __ discounts

quantity

Experience curve pricing entails

reducing prices in a systemic way over time based on the learning effect

The firm's goal in offering a trade discount is to

reward wholesalers and retailers for marketing functions

One can find hotel rooms, ski lift tickets, snowmobiles, lawn mowers, barbecue grills, vacation packages, flights to certain destinations, and Christmas cards at discounts during a time of year when they are not as desirable. These are called __ discounts

seasonal

__ discounts are price reductions offered on products to stimulate purchasing during times of low consumers demand, allowing a manufacturer to smooth out manufacturing highs and lows

seasonal

Which of the following would probably be an example of loss-leader pricing?

selling Clorox bleach for $0.99 which is way below cost

Loss-leader pricing entails

selling a product below its customary price to attract attention to it

Customary pricing entails

setting a price at a certain level based no factors like tradition or a standardized channel of distribution

A seasoned marketing manager will use the pricing approaches in which of the following ways?

she will consider several approaches together in setting an approximate price level

Price lining

stair step figure

Cost-plus pricing entails

summing total unit costs and adding a fixed percentage or fee to arrive at a price

In __ pricing, an organization estimates that consumers are willing to pay for a product, and works backward, accounting for markups by retailers and wholesalers, to determine what is can charge for the product.

target

When a firm has a particular profit goal in the form of a specific dollar amount as its overriding concern, it is likely to implement

target profit pricing

Firms that set prices to give them a profit that is a specified percentage of the sale volume are using

target return-on-sales pricing

Bundle pricing refers to

the marketing of two or more products in a single package price

In which of the following ways does the demand curve for prestige pricing differ from the typical demand curve

there is a point below which a reduce price reduces sales volume, resulting in a backwards C-shaped curve

Companies should avoid price wars because

they often lead to a reduction in the company's profits

When a new-car dealer offers a price reduction to a buyer for a used car used as part of the payment on a new car, this is considered a __ allowance

trade-in

Single-zone, multiple-zone, and basing-point pricing are all types of

uniformed delivered pricing

A price __ involves successive price cutting by competitors to increase or maintain their unit sales or market share

war

A trade-in allowance is price reduction give

when a used product is part of the payment on a new product

American Airlines prices coach seats on its airline flights at different prices depending on demand and capacity. This is known as __ pricing

yield management