MAR 3023
________-oriented approaches to pricing set the price to reflect the way the marketer wants consumers to interpret prices relative to competitor's offerings.
Competition
________ quantity discounts apply to the repeated purchases of a particular product over a given time period, typically a year.
Cumulative
________-oriented pricing approaches weigh factors underlying expected customer tastes and preferences more heavily than other factors.
Demand
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
Deceptive pricing is illegal under the ______.
Federal Trade Commission Act
________ are made by manufacturers to list prices to reflect the cost of transportation of the products from seller to buyer.
Geographical adjustments
Cost-oriented approaches to pricing consider which three things in the setting of a product's price?
Overhead Profit Production costs
________ pricing is seen as the exact opposite of skimming pricing when introducing a new product.
Penetration
How does a skimming pricing strategy approach price setting?
Prices are set high initially and then lowered in a series of steps.
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.
_______ 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
What are two 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? (Select all that apply)
When the price differences do not lessen competition When the price differences are due to changing market conditions
Successive price cutting by competitors to increase or maintain their unit sales or market share is known as ______.
a price war
Demand-oriented, cost-oriented, profit-oriented, and competition-oriented are four approaches used to set ______.
approximate price levels
The purpose of using low prices in a loss-leader pricing strategy is to ______.
attract customers that will hopefully buy other products too, at higher margins
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
A ________ policy is also known as dynamic pricing.
flexible-price
Select the three special adjustments that are often made to the list or quoted price
geographical adjustments discounts allowances
Prestige pricing means the organization deliberately prices a product ________ so that ________ consumers will be attracted to the product and buy it.
high; quality-conscious
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
Marketers who use ______ to signal the quality of an item, must be careful not to drop the price of the product below the point where customers become skeptical of its quality and refuse to purchase it.
prestige pricing
Charging different prices to different buyers for goods of like grade and quality is known as ______.
price discrimination
If a firm sells the same product to different buyers at different prices, it may be considered ________.
price discrimination
When a new product appeals to those segments of consumers who are willing to pay a high initial price to have an innovation first, marketers should use a ________ pricing strategy.
skimming
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
Because the weather in April is often cold and rainy, not as many fans attend major league baseball games. Knowing this, some teams will price tickets for games in April much lower than games played during the summer months. This is an example of ________ pricing.
yield management
What is a characteristic of bundle pricing?
Consumer value is enhanced by not having to make separate purchases.
________ promises to reduce the average price to consumers while minimizing promotional allowances that cost manufacturers billions of dollars every year.
Everyday low pricing
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-shaped curve.
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
Which 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 ______.
a complex approach that continually matches demand and supply to customize the price for a service
A reduction from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller is referred to as ______.
a discount
Vertical price fixing might occur between ______.
a manufacturer and a retailer in the same channel
Rolex takes pride in emphasizing that it makes one of the most expensive watches you can buy, which is an example of ______.
above-market pricing
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
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?
because of reduced demand
The marketing of two or more products in a single package price is known as ________ pricing.
bundle
If firms set prices with specific consideration of firms challenging them directly for customers, they have adopted a ________ approach to pricing.
competition-oriented
Pricing approaches that consider the production and marketing costs and then add enough to cover direct expenses, overhead, and profit are ______ approaches.
cost-oriented
Adding a fixed percentage or fixed fee to the total costs for a product is known as ________ pricing.
cost-plus
What type of quantity discount is likely to encourage repeat buying by a single customer?
cumulative
For some products where tradition, a standardized channel of distribution, or other competitive factors dictate the price, ________ pricing is used.
customary
Common approaches to pricing are oriented around which four elements?
demand cost competition profit
Penetration, price lining, and bundle pricing are all types of what pricing approach?
demand-oriented
Under the Robinson-Patman Act, promotional allowances can be legally offered to buyers when the seller ______.
does so on an equal basis to all buyers distributing the seller's product
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
The firm's goal in offering a cash discount is to ______.
encourage customers to pay their bills quickly
The practice of replacing promotional allowances with lower manufacturer list prices is known as ________ pricing.
everyday low
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
Demand-oriented pricing approaches weigh which factors most heavily?
expected customer tastes and preferences
What are the two options when choosing a price policy?
fixed-price dynamic-price
When two or more competitors explicitly or implicitly set prices, this practice is called ________ price fixing.
horizontal
Despite the Sherman Act and its implications for price fixing, a "manufacturer's suggested retail price" (MSRP) is
illegal only when enforced through coercion.
Odd-even pricing is used to ________, although overuse of this approach may mute its effect.
increase demand for products
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
Organizations choosing competitor-oriented approaches to set prices might use which two pricing strategies?
loss-leader pricing customary pricing
In penetration pricing, the initial price of the product is set ______.
low, to appeal to the mass market
In target pricing, ______.
manufacturers deliberately adjust the composition of a product to achieve the estimated price that consumers are willing to pay for it.
Price deals that ________ fall into the category of deceptive pricing.
mislead consumers
A ________ quantity discount is based on the amount purchased in a single order, and encourages a large individual purchase.
noncumulative
FedEx encourages companies to ship a large number of packages at one time by offering a ________ quantity discount.
noncumulative
In ________ pricing, an organization sets a price a few dollars or cents under an even number, such as at $3.99.
odd-even
Sears offers a Craftsman radial saw for $499.99 rather than $500, using a(n) ________ pricing approach.
odd-even
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
Cash discounts are offered because they encourage customers to ______.
pay their bills quickly
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
Fixed-price and dynamic-price are the two options when choosing a price ______.
policy
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
When Lexmark sells a laser printer for slightly below its cost, but prices its ink-jet printers with a large profit margin that makes up for the loss on the laser printers, it is using ______.
product-line pricing
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
Select all of the following that are benefits of a penetration pricing strategy.
production costs drop with increased volume discourages competitors potential to gain market share
By focusing on target profit pricing or target return pricing, a firm is using a ________ pricing approach.
profit-oriented
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
Experience curve pricing entails ______.
reducing prices in a systematic way over time based on the learning effect
Geographic adjustments to prices are used to ______.
reflect the cost of transportation of products from seller to buyer
The firm's goal in offering a trade discount is to ______.
reward wholesalers and retailers for marketing functions
Which of the following would probably be an example of loss-leader pricing?
selling a carton of eggs for $0.99 which is way below cost
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
Price fixing is the conspiracy among firms to ______.
set prices for a product
Customary pricing entails ______.
setting a price at a certain level based on factors like tradition or a standardized channel of distribution
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
Which is an example of a demand-oriented approach to setting an approximate price?
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
A price war entails ______.
successive price cutting by competitors to increase or maintain their competitive position
Cost-plus pricing entails ______.
summing total units costs and adding a fixed percentage or fee to arrive at a price
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
Which two are profit-oriented approaches to setting a price?
target return pricing target profit pricing
Bundle pricing refers to ______.
the marketing of two or more products in a single package price.
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
Price differentials under the Robinson-Patman act are legal under what two circumstances?
when price differences attempt to meet competitors' prices and do not injure competition when price differences result from changing market conditions
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