MKTG400 Chp 14

The firm's goal in offering a cash discount is to ______.

encourage customers to pay their bills quickly

Demand-oriented pricing approaches weigh which factors most heavily?

expected customer tastes and preferences

What are the benefits to penetration pricing strategy?

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

______ discounts are also known as functional discounts.

Trade

True or false: A "manufacturer's suggested retail price" is illegal only when a manufacturer enforces the practice by coercion.

True

Vertical price fixing might occur between ______.

a manufacturer and a retailer in the same channel

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

cost-plus

Hershey changes the amount of chocolate in its candy bars depending on the price of raw chocolate rather than changing the price of the product because this product is sold with ______ pricing.

customary

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

demand

Penetration, price lining, and bundle pricing are all types of what pricing approach?

demand-oriented

When using predatory pricing, a firm sets a very low price for one or more of its products in order to

drive its competition out of business

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

dynamic price

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

increase product quality

Rocco's operates a take-out pizza shop on campus. The cost of a slice of pizza and a soft drink normally costs $4.99; however, if students show their school ID, they will only be charged $3.99. This is an example of ______.

legal price discrimination

For a special promotion, retail stores may deliberately sell a product below its customary price to attract customers, in hopes that they buy other items with large markups, in an approach known as ______ pricing.

loss-leader

FedEx encourages companies to ship a large number of packages at one time by offering a ______ quantity discount.

noncumulative

Organizations using ______ pricing set the initial price low for the introduction of the new product to appeal immediately to the mass market.

penetration

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

penetration

Which pricing approach is seen as the exact opposite of skimming pricing when introducing a new product?

penetration

Charging different prices to different buyers for goods of like grade and quality is known as ______.

price discrimination

When a manufacturer produces several products that are substitutes for one another and others that complement these products, it should use _____.

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, it is known as ______.

product-line pricing

Experience curve pricing entails ______.

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

Loss-leader pricing entails ______.

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

A marketing manager uses price lining when he ______.

sells several groups of the same type of product, with each group priced at different specific pricing points

In what pricing strategy are prices lowered in a series of steps with the demand by those who really desire the product being satisfied at the highest prices?

skimming pricing

Discounts, allowances, and geographic adjustments are considered ______ that affect the list or quoted price.

special adjustments

Adding a fixed percentage to the cost of all items in a specific product class is known as _______ pricing.

standard markup

Cost-plus pricing entails ______.

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

What is a marketer most likely trying to convey about a product if it is priced using prestige pricing?

the product is of high quality

In what way does the demand curve for prestige pricing differ from the typical demand curve?

there is a point below which a reduced price reduces sales volume, resulting in a backwards C curve.

Reductions off the list price offered to resellers in the marketing channel on the basis of where they are in the channel and the marketing activities they are expected to perform in the future are called ______ discounts.

trade

When using competition-oriented pricing approaches, price setters stress ______.

what "the market" is doing

Charging different prices for a product in order to maximize revenue for a set amount of capacity at any given time is known as ______ pricing

yield management

Prestige pricing involves setting a ______ price for a product so that ______ consumers 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

What are benefits of a penetration pricing strategy?

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

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

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

Under what two circumstances is it legal to charge different prices to different customers?

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

Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are ______approaches.

cost-oriented

For some products where tradition, a standardized channel of distribution, or other competitive factors dictate the price, ______ pricing is used.

customary

Assuming that unit costs for a good or service will drop by some predictable percentage as production increases, and passing these savings along to the consumer in the form of reduced prices is known as ______ pricing.

experience curve

Despite the Sherman Act and its implications for price fixing, a "manufacturer's suggested retail price" (MSRP) is

illegal only when enforced through coercion

Organizations choosing competitor-oriented approaches to set prices might use which two pricing strategies?

loss-leader pricing & customary pricing

How is target pricing executed?

manufacturers deliberately adjust the composition of a product to achieve the estimated price that consumers will pay.

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

A retailer that prices a laptop at $599 instead of $600 does so in the hope that consumers will see the $599 price as "something over $500" rather than "about $600." What pricing strategy does this represent?

odd-even pricing

A ______ policy is also known as fixed pricing.

one-price

Setting a price with no variation for product buyers is called a ______ policy.

one-price

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

price discrimination

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

price fixing

When a line of products is priced at a number of different specific pricing points, the ______ strategy is being used.

price lining

How does a skimming pricing strategy approach price setting?

prices are set high initially and then lowered in a series of steps

By focusing on target profit pricing or target return pricing, a firm is using a ______ pricing approach.

profit-oriented

A price reduction offered to channel members for featuring the manufacturer's product in their advertising or selling activities is called a _______ allowance.

promotional

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

promotional

When a manufacturer offers a grocery retailer an extra amount of free product for including this product in weekly advertising and in-store sales, this is considered a ______ allowance.

promotional

Cumulative and noncumulative are the two general kinds of ______ discounts.

quantity

Customers are encouraged to buy a larger number of a single product when a firm offers ______.

quantity discounts

A characteristic feature of a prestige demand curve is that as price is lowered, the curve turns back to the left toward its initial level. Why is this so?

reduced demand

For Blank______ pricing to be effective, there must be sufficient customers willing to buy the product at a high initial price, they should interpret the high price as signifying high quality, and the high price should not attract competition.

skimming

For ______ pricing to be effective, there must be sufficient customers willing to buy the product at a high initial price, they should interpret the high price as signifying high quality, and the high price should not attract competition.

skimming

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

target

What are two profit-oriented approaches to setting a price?

target profit pricing & target return pricing

Bundle pricing refers to ______.

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

What are four important types of discounts used in marketing strategy?

-cash discounts -functional -quantity discounts -seasonal discounts

A cash discount expressed in the form "3/10" on an invoice means that ______.

a 3 percent discount is available if the invoice is paid in 10 days

What is an example of deceptive pricing?

a bait and switch to lure customers into the store to sell them a higher priced product

Yield management pricing is Blank______.

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

Yield management pricing is ______.

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

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

Demand-oriented, cost-oriented, profit-oriented, and competition-oriented are four approaches used to set _____.

approximate price levels

The marketing of two or more products in a single package price is known as ______ pricing.

bundle

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

competition

If firms set prices with specific consideration of firms challenging them directly for customers, they have adopted a ______ approach to pricing.

competition-oriented

Which is an example of a demand-oriented approach to setting an approximate price? a) loss leader b) target return on sales c) experience curve d) skimming price

d) skimming price

A ______ policy is also known as dynamic pricing.

flexible price

Common approaches to pricing are oriented around which four elements?

-competition -demand -profit -cost

What are the three special adjustments that are often made to the list or quoted price?

-discounts -geographical adjustments -allowances

Cost-oriented approaches to pricing consider which three things in the setting of a product's price?

-overhead -profit -production costs

Deceptive pricing is illegal under the ______.

Federal Trade Commission

______ are made by manufacturers to list prices to reflect the cost of transportation of the products from seller to buyer.

Geographical adjustments

Price fixing is made illegal by the ______.

Sherman Antitrust Act