Marketing Chapter 9

22) There are more than 20 stores on a street in Sao Paulo that specialize in selling the same quality and brand of wheat products. An individual seller cannot charge more than the going market price without the risk of losing business to the other stores. What type of market does this example represent? A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a black market

a

13) Costs that change directly with the level of production are referred to as ________ costs. A) fixed B) variable C) target D) capital E) payroll

b

16) ________ pricing is when a firm tries to determine the price at which it will break even or make the profit it is seeking. A) Competition-based B) Target return C) Cost-plus D) Good-value E) Value-added

b

11) Rent, electricity, and executive salaries that do not vary with production level are referred to as ________ costs. A) fixed B) variable C) break-even D) target E) promotional

a

12) ________ costs are also known as overhead. A) Fixed B) Variable C) Target D) Capital E) Payroll

a

2) ________ is the only element in the marketing mix that produces revenue. A) Price B) Place C) Promotion D) Product E) Profit

a

21) In ________, the market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities. A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a pure monopsony

a

28) A firm uses ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future. A) market-skimming pricing B) target costing C) deceptive pricing D) market-penetration pricing E) predatory pricing

a

30) Which of the following conditions is most likely essential for implementing a successful market-skimming pricing strategy for a product? A) The product's quality and image support its high price. B) Lower-priced alternatives can enter the market easily. C) Low prices promote more market growth than high prices. D) The product's price matches its manufacturing costs. E) A low-price position of the product is maintained.

a

4) Which of the following sets the lower limit for a product's pricing? A) product costs B) profits C) competition D) elements of the product mix E) consumer perceptions of value

a

5) ________ uses buyers' perceptions of what a product is worth as the key to pricing. A) Customer value-based pricing B) Target return pricing C) Cost-plus pricing D) Psychological pricing E) Competition-based pricing

a

23) Under ________, the market consists of many buyers and sellers trading over a range of prices rather than a single market price. A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a pure monopsony

b

29) The strategy of setting a low initial price to attract a large number of buyers quickly and win a large market share is referred to as ________. A) market-skimming pricing B) market-penetration pricing C) value-added pricing D) target costing E) deceptive pricing

b

10) ________ pricing involves setting prices based on the expenses involved in producing, distributing, and selling a product plus a fair rate of return for a company's effort and risk. A) Competition-based B) Value-added C) Cost-based D) Good-value E) Demand-based

c

15) A company designs what it considers to be a good product, calculates the expenses of making the product, and sets a price that adds a standard markup to the cost of the product. This approach to pricing is called ________ pricing. A) value-added B) good-value C) cost-plus D) competitor-based E) break-even

c

20) Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company's pricing approach is referred to as ________. A) mass production B) cost-plus pricing C) target costing D) value-added pricing E) target return pricing

c

14) ________ costs refer to the sum of the fixed and variable costs for any given level of production. A) Target B) Marginal C) Value-based D) Total E) Break-even

d

42) When Luxury Motors gives price reductions to its new car dealers to reward them for participating in advertising and sales support programs, the firm is granting ________. A) cash discounts B) seasonal discounts C) quantity discounts D) promotional allowances E) trade-in allowances

d

45) When a firm varies the price of a product by the season, month, day, or even hour, without changing product features, it is using ________ pricing. A) product form B) market-penetration C) market-skimming D) time-based E) value-added

d

49) What type of pricing is being used when a company temporarily prices its products below the list price to create buying excitement and urgency? A) segmented pricing B) psychological pricing C) geographical pricing D) promotional pricing E) dynamic pricing

d

25) The relationship between the price charged for a product and the resulting demand level can be shown in a ________. A) demand curve B) supply curve C) elastic demand slope D) break-even chart E) inelastic demand slope

a

Combining several products and offering the collection at a reduced price is referred to as ________ pricing. A) by-product B) product bundle C) captive-product D) optional-product E) product line

b

Glow, a gift card store, offers a price reduction to customers who buy Christmas cards the week after Christmas. In this case, the store offers a ________. A) functional discount B) seasonal discount C) promotional allowance D) trade-in allowance E) quantity discount

b

Netcorp, an Internet service provider, charges its users a fixed rental fee for its basic package, which has a download limit. If a user exceeds this download limit, an additional fee is charged for every download. In this case, the firm's pricing strategy is referred to as ________ pricing. A) by-product B) two-part C) optional-product D) segmented E) promotional

b

Qriosity Inc. released a new antivirus program at half-price to attract buyers. This is most likely an example of ________. A) market-skimming pricing B) market-penetration pricing C) optional-product pricing D) by-product pricing E) allowance pricing

b

Selling accessory products along with the main product is referred to as ________ pricing. A) product bundle B) optional-product C) market-penetration D) by-product E) product line

b

1) ________ refers to the amount of money charged for a product or service. A) Payroll B) Profit C) Price D) Cost E) Salary

c

24) Under ________, the market consists of a few large sellers who are highly sensitive to each other's pricing and marketing strategies. A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) pure monopsony

c

26) When demand hardly changes with a small change in the price of a product, then the demand for the product is best described as ________. A) elastic B) flexible C) inelastic D) variable E) cyclical

c

3) Which of the following sets the upper limit for a product's pricing? A) profits B) product costs C) consumer perceptions of value D) elements of the product mix E) competition

c

47) Consumers rely less on price to judge the quality of a product when they ________. A) lack information about the product B) are unable to research the product C) have prior experience with the product D) are unable to judge the quality of the product E) rely on cues from sellers to differentiate a high or low price

c

52) Which of the following pricing strategies is the opposite of FOB-origin pricing? A) basing-point pricing B) dynamic pricing C) uniform-delivered pricing D) freight-absorption pricing E) zone pricing

c

55) Chef Brown's Health Food Store sells nutritional, energy-producing foods. Product prices are adjusted frequently to meet the needs of individual customers and situations. For example, long-time customers receive discounts. This strategy is most likely an example of ________ pricing. A) zone B) competition-based C) dynamic D) basing-point E) penetration

c

6) Value-based pricing is the reverse process of ________ pricing. A) good-value B) target costing C) cost-based D) value-added E) competition-based

c

How do firms that use captive-product pricing make up for the low prices of their main products? A) They reduce the cost of the captive products. B) They provide the captive products as freebies. C) They set high markups on the captive products. D) They increase the price of the main products. E) They offer the captive products and main products together at a reasonable price.

c

Metro Museum has different admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________ pricing. A) time-based B) location-based C) customer-segment D) by-product E) product form

c

Which of the following conditions is most likely essential for implementing a successful market-penetration pricing strategy for a product? A) The product's quality supports its high price. B) Alternative products can enter the market easily. C) The market for the product is highly price sensitive. D) Prices increase incrementally as sales volume increases. E) Production costs rise with an increase in marketing efforts.

c

50) When a manufacturer offers a ________, a customer buys a product from a manufacturer's dealer within a specified time period, and the manufacturer sends the customer a check. A) cash rebate B) quantity discount C) promotional allowance D) flash sale E) functional discount

a

53) Wilkinson & Company sells plumbing supplies across the United States. Wilkinson uses Chicago as its central location for determining freight costs regardless of the city from which products are actually shipped. For example, a Dallas customer pays the freight cost from Chicago to Dallas even if the goods are shipped from Dallas. Wilkinson most likely uses ________ pricing. A) basing-point B) FOB-origin C) freight-absorption D) zone E) reference

a

7) A value-based pricing strategy most likely begins with ________. A) assessing customer needs B) designing a stylish product C) evaluating the product's costs D) promoting the product's benefits E) setting a price based on perceived value

a

Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, even though each seat costs the same for the owners of the stadium. What is this form of pricing called? A) location-based pricing B) market-skimming pricing C) product-form pricing D) time-based pricing E) market-penetration pricing

a

NerdHerd Electronics sells three different sizes of televisions at three different prices. In this case, the company's pricing strategy is referred to as ________ pricing. A) product line B) optional-product C) by-product D) product bundle E) captive-product

a

Which group is most likely offered functional discounts by manufacturers? A) trade-channel members that perform sales tasks B) consumers who buy products in large quantities C) buyers who pay their bills before the due date D) buyers who purchase merchandise out of season E) retailers that participate in advertising programs

a

19) Which of the following is an external factor that affects pricing decisions? A) the marketing mix B) competition C) top management D) marketing objectives E) marketing strategy

b

46) Pricing a product based on consumers' reference prices is referred to as ________ pricing. A) geographical B) psychological C) allowance D) by-product E) captive-product

b

48) ________ prices are carried in buyers' minds and used when looking at a given product. A) Captive-product B) Reference C) Promotional D) Geographical E) Dynamic

b

9) Providing extra amenities to differentiate and support high-priced products is referred to as ________ pricing. A) high-low B) value-added C) target return D) everyday low E) cost-plus

b

54) Computer Works is a computer accessories manufacturer based in Brazil. All customers in South America pay the same freight charge, $20, when they order products from the company. All customers in North America pay a freight charge of $50. The company's pricing strategy is referred to as ________ pricing. A) basing-point B) FOB-origin C) freight-absorption D) zone E) uniform-delivered

d

8) ________ pricing involves charging a constant low price with few or no temporary price discounts. A) High-low B) Target return C) Cost-plus D) Everyday low E) Market-skimming

d

Vac "N" Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine. This is an example of a ________. A) functional discount B) cash discount C) seasonal discount D) trade-in allowance E) by-product allowance

d

17) The Fashion Store, a new startup, sets product prices so that revenues will equal manufacturing and marketing costs. The pricing strategy used by the company is referred to as ________ pricing. A) good-value B) value-added C) cost-plus D) competition-based E) target return

e

18) Which of the following statements about break-even analysis is most likely true? A) It determines how customer-perceived value changes with value-added pricing. B) It is a tool used to calculate fixed costs. C) It is used to determine the maximum price that can be set on a product. D) It is a tool marketers use to examine the relationship between supply and demand. E) It fails to consider customer value and the relationship between price and demand.

e

51) Which of the following pricing strategies charges the same price plus freight to all customers, regardless of their location? A) basing-point pricing B) freight-absorption pricing C) FOB-origin pricing D) zone pricing E) uniform-delivered pricing

e

Setting a price for products that must be used along with a main product is known as ________ pricing. A) by-product B) market-penetration C) product line D) product bundle E) captive-product

e

Which of the following is an economic factor that affects the pricing decisions of a company? A) market-penetration practices B) top management decisions C) promotional activities D) reseller policies E) interest rates

e