Chapter 11 Quiz

The market for products is highly price sensative.

Champion, Inc. is a manufacturer of lunch boxes, school bags and school stationary. Charles Payton, the CEO of Champion, hoping to sell the products at a low price to penetrate the market quickly. Which of the following best supports a market penetration strategy for the company?

Market skimming (get all the profits you can quickly)

Midnight magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using?

True

Pricing across a product mix is difficulty because various products have related demand and costs, and product face different degrees of competition.

True

Pricing strategies tend to change and evolve as the average product passes through its life cycle.

Promotional Pricing

What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buyer excitement and urgency?

False

When The Candy Store sets a low initial price in order to get its "foot in the door" and to quickly attract a larger number of buyers, the company is using market-skimming pricing.

Product Line Pricing

Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices.

True

For market skimming to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

Market Penetration

In a bid to attract more customers in a market that has several competitors, Barrymore's Bakery slashed the prices of all its prices of all its products by 50%. Managers at the firm reasoned that lower prices would draw in even more customer, making up for the reduction in price several times over. Which of the following pricing strategies are they using?

True

In product line pricing, pricing steps should amount for differences in customer perception of the value of the different features.