Ch. 15 MAR 3023
What type of pricing tactic is being used when several airlines agree to charge the same fare for a single route? A. Horizontal price fixing B. Vertical price fixing C. Horizontal price discrimination D. Vertical price discrimination E. Loss leader pricing
A. Horizontal price fixing
A pricing strategy is A. a long-term approach to setting prices in a companywide integrated effort. B. the use of one-time seasonal discounts to reduce inventory. C. the use of slotting allowances to gain access to distribution channels. D. a short-term approach to setting prices. E. associated with competitive threats in the marketplace.
A. a long-term approach to setting prices in a companywide integrated effort.
Chris works for a hardware store. His boss directs him to make a list of manufacturers whose brand names were included in the store's recent newspaper ads and to put copies of the ads with the invoices from each manufacturer. Chris's boss is documenting a(n) A. advertising allowance. B. slotting allowance. C. quantity discount. D. loss leader pricing deduction. E. seasonal discount.
A. advertising allowance.
Many stores now e-mail codes to their customers that can be used on their websites or printed and brought into the store to receive discounts. The customer is using a __________ to receive the discount. A. coupon B. rebate C. size discount D. seasonal discount E. markdown
A. coupon
Dan is especially price sensitive. He has been known to line up on "Black Friday" (the day after Thanksgiving) at 4 a.m. in order to be among the first to buy sale items. Dan would likely respond to a __________ pricing strategy. A. high/low B. premium C. slotting allowance D. horizontal flattening E. vertical triangulation
A. high/low
In a __________ pricing strategy, marketers rely on the promotion of sales, during which prices are temporarily reduced to encourage purchases. A. high/low B. premium C. discount D. horizontal flattening E. vertical triangulation
A. high/low
In determining the price for his company's new small business accounting software, Raymond is assessing how much better the software is as compared to alternative products available in the market. Raymond is using __________ pricing. A. improvement value B. odd-even C. everyday low pricing D. reference-based E. cost-based
A. improvement value
Price skimming focuses on selling products to __________ and __________ in the consumer adoption process model. A. innovators and early adopters B. early adopters and early majority C. early majority and late majority D. late majority and laggards E. laggards and innovators
A. innovators and early adopters
Supermarkets often offer great deals on milk, beef, or eggs to get customers into their stores, knowing that many customers will also purchase items that have higher markups for the store. These supermarkets are using a __________ pricing tactic. A. leader B. bundling C. price lining D. cumulative quantity discount E. seasonal allowance
A. leader
The primary reasons manufacturers offer seasonal discounts to retailers are to more easily plan production schedules and to A. lessen inventories of finished goods. B. reduce advertising allowances. C. increase price skimming. D. control vertical pricing. E. alter consumers' perceived reference price.
A. lessen inventories of finished goods.
Odd prices often suggest __________ to consumers. A. low quality B. superior quality C. uniqueness D. expired merchandise E. foreign-made goods
A. low quality
When a new product is not being sold at the rate originally forecasted, the retailer may reduce the price in order to reduce the inventory of the product. This reduction is known as a A. markdown. B. rebate. C. quantity discount. D. coupon. E. cash discount.
A. markdown.
Retailers use ____________ to get rid of slow moving or obsolete merchandise. A. markdowns B. slotting allowances C. price lining D. rebates E. seasonal allowances
A. markdowns
Mario is the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a __________ pricing strategy. A. market penetration B. bundling C. price fixing D. reference E. skimming
A. market penetration
When HP first introduced their inkjet printers, consumers could only buy refill cartridges from HP. HP made significant profits from the sale of replacement cartridges. In this situation, HP logically used a __________ pricing strategy for their printers. A. market penetration B. loss leader C. price fixing D. reference E. skimming
A. market penetration
With a __________ pricing strategy, marketers set a low initial price for the introduction of a new product or service. A. market penetration B. bundling C. price fixing D. reference E. skimming
A. market penetration
A major airline sells an aggressively low priced ticket compared to a new low-fare airline, which is trying to enter the market. The airline may be accused of engaging in the unethical practice of A. predatory pricing. B. price fixing. C. leader pricing. D. price skimming. E. deceptive reference prices.
A. predatory pricing.
The Clayton Act and the Robinson-Patman Act forbid certain types of A. price discrimination. B. bait and switch pricing. C. price fixing. D. predatory pricing. E. loss leader pricing.
A. price discrimination.
Mary decided to purchase an electronic toothbrush priced at $100 because of a special offer from the manufacturer. By sending proof of purchase and the receipt to the manufacturer, she could receive a $40 check in return, making the final price $60. This pricing tactic is known as a A. rebate. B. markdown. C. coupon. D. cash discount. E. price line.
A. rebate.
The local furniture store will only purchase outdoor furniture during winter months because the manufacturer offers a better price to the furniture store. This type of pricing tactic is known as a A. seasonal discount. B. cash discount. C. customary discount. D. cumulative quantity discount. E. flexible price.
A. seasonal discount.
When Burroughs-Wellcome introduced the first anti-AIDS drugs, they initially set the price at $10,000 for a year's supply. Burroughs-Wellcome was probably pursuing a __________ pricing strategy. A. skimming B. introductory C. slotting allowance D. market penetration E. cost-based
A. skimming
Retailers often require manufacturers to pay _________ in order to obtain shelf space for new products. A. slotting allowances B. shelf rental fees C. zone pricing D. quantity discounts E. cash discounts
A. slotting allowances
B2B quantity discounts are legal if A. the discounts are available to all customers. B. they do not exceed 25 percent of the regular price. C. they are not short term. D. new customers can "buy up" to reach the minimum quantity. E. cumulative discounts do not run for more than a calendar year.
A. the discounts are available to all customers.
The difference between a coupon and a rebate is that A. the retailer handles coupons while manufacturers handle most rebates. B. coupons are always for greater amounts off than rebates. C. coupons are for cents or dollars off while rebates are for percentages off the listed price. D. there is no difference. E. the manufacturer handles coupons while retailers handle rebates.
A. the retailer handles coupons while manufacturers handle most rebates.
One of the difficulties associated with value-based pricing is that A. the way consumers perceive value constantly changes. B. only the creator of a new product can fully understand its value to consumers. C. value depends on variable costs and not fixed costs. D. everyday low pricing has neutralized the impact of price on consumers' purchase decisions. E. costs are invaluable.
A. the way consumers perceive value constantly changes.
When Sony introduced its new PlayStation 3 game system, buyers who could not get them the first day bid up the price of the systems on eBay and other auction sites. As Sony provided more PlayStation 3 units to the market and early demand was satisfied, prices dropped because A. the way consumers perceived their value changed. B. Sony fully understood its value to consumers. C. variable costs became constant and fixed costs increased. D. everyday low pricing neutralized the impact of price on consumers' purchase decisions. E. Sony discontinued using the improvement value method of pricing.
A. the way consumers perceived their value changed.
Betty's Bird Seed Company charges $50 for 10 pounds of bird feed, including shipping. Betty is using __________ to determine shipping costs. A. uniform delivered pricing B. zone pricing C. advertising allowances D. predatory pricing E. vertical price fixing
A. uniform delivered pricing
Rebates provide manufacturers with greater control than coupons and provide the firm with A. valuable customer information. B. access to wholesalers. C. a measure of consumers' income elasticity of demand. D. reference price analysis. E. guaranteed repeat customers.
A. valuable customer information.
Despite the economic downturn, Alban-Turner Advertising Agency has a reputation for developing campaigns that increase sales at least 10 percent. In sales presentations, Alban-Turner emphasizes its track record in order to demonstrate that its services are worth the cost. This is an example of which pricing strategy? A. value-based pricing B. competitor-based pricing C. cost-based pricing D. everyday low pricing E. high/low pricing
A. value-based pricing
Christina owns and operates a shop that sells home furnishings. One of her vendors has just offered her a greatly reduced price for some traditional Christmas decorations, even though it is really too early to be thinking about holiday merchandise. One of the main pricing issues Christina will have to address as she considers the offer is A. whether the cost reduction will be low enough to cover the additional inventory costs she will have to incur. B. whether she can get an even lower price by waiting. C. whether the company is going out of business. D. whether this offer is legal. E. whether she should open a Christmas shop instead of her home furnishing store.
A. whether the cost reduction will be low enough to cover the additional inventory costs she will have to incur.
When Sheila decided to sell her shoe racks on eBay, she stated the price and a shipping rate according to delivery area. Which method of pricing was Sheila using? A. zone pricing B. uniform delivered pricing C. leader pricing D. price bundling E. price fixing
A. zone pricing
Supermarket A always waits until Thursday to price their canned beans in an effort to match Supermarket B's prices, which are advertised on Wednesday. This demonstrates what type of pricing strategy? A. Value-based pricing B. Competitor-based pricing C. Cost-based pricing D. Everyday low pricing E. High/low pricing
B. Competitor-based pricing
_________ lowers the price below the store's cost. A. Recessionary pricing B. Loss leader pricing C. Radical markdown pricing D. Employee pricing E. Sales promotion pricing
B. Loss leader pricing
3/10, n/30 means A. a 10 percent discount if paid in full within 3 days, or the net amount is due in 30 days. B. a 3 percent discount if paid in full within 10 days, or the net amount is due in 30 days. C. a 3 percent discount if paid in full within 3 days, or the net amount is due in 10 days. D. a 3 percent discount if paid in full within 30 days, or the net amount is due in 10 days. E. no discount is available on this order; the net amount is due between 10 and 30 days.
B. a 3 percent discount if paid in full within 10 days, or the net amount is due in 30 days.
A noncumulative B2B quantity discount is A. used to encourage consumers to purchase larger quantities each time they buy. B. based only on the amount purchased in a single order. C. considered illegal under the Robinson-Patman Act. D. used primarily to attract new retail customers. E. only offered to one-time purchasers.
B. based only on the amount purchased in a single order.
Price advertisements should never A. include "puffery." B. deceive customers to the point of doing harm. C. include the price. D. use advertising allowances to increase sales promotion. E. use price skimming after using price penetration
B. deceive customers to the point of doing harm.
The major objectives associated with a market penetration pricing strategy are to A. capture the high end of the market demand curve and lower introduction costs. B. quickly build sales and market share. C. minimize customer dissatisfaction and maximize reference price value. D. provide an incentive to purchase a less desirable product in order to obtain a more desirable product. E. match competitors' prices and communicate high quality.
B. quickly build sales and market share.
Marketers advertising an artificially high "regular price" are unethically attempting to influence consumers'__________ perceptions. A. fixed price B. reference price C. seasonal price D. leader price E. cost-based price
B. reference price
Marlie designs and manufactures specialty furniture. She has a number of unique products but can only produce in limited quantities. Marlie will probably NOT use a market penetration strategy because A. there are few barriers to competitive entry in the market. B. she could not meet a rapid rise in demand. C. a low price would indicate low quality. D. she would have to determine zone pricing discounts. E. the experience curve effect would drop unit costs too rapidly.
B. she could not meet a rapid rise in demand.
One of the problems associated with an everyday low pricing (EDLP) strategy is that A. stores may have to offer too many noncumulative wholesale discounts. B. some consumers may associate EDLP with lower quality goods. C. the retailer may be accused of price discrimination. D. too many coupons may be redeemed. E. it may conflict with price-based cost calculations
B. some consumers may associate EDLP with lower quality goods.
Because market and operating conditions are different in each target market A. all consumers will react similarly to the firm's pricing strategy. B. the choice of a pricing strategy is specific to the target market. C. prices need to be held constant because everything else is changing. D. only horizontal price fixing should be used. E. external reference prices will always be the best strategy.
B. the choice of a pricing strategy is specific to the target market.
A reference price is A. the actual price. B. the price against which buyers compare the actual selling price. C. the manufacturer's cost. D. a cumulative quantity discount price. E. the external horizontal fixed price.
B. the price against which buyers compare the actual selling price.
A reference price might be considered deceptive if A. the internal reference point is different from the external reference point. B. the reference point has been inflated or is fictitious. C. the reference price is more than two times the cost of the item. D. the reference price has changed more than once in the past 12-month period. E. it reflects actual manufacturing costs plus 50 percent.
B. the reference point has been inflated or is fictitious.
One important reason manufacturers like rebates is that A. the transaction costs are the responsibility of the retailer. B. their redemption rates are low. C. rebates expire faster than coupons do. D. there are fewer price discrimination issues. E. they build strong brand recognition.
B. their redemption rates are low.
Clark Manufactured Housing Company charges $500 for deliveries within 50 miles and $800 for deliveries 51 to 100 miles away from their factory. The company is using a ____________ pricing tactic. A. uniformed delivered B. zone C. cumulative D. horizontal E. noncumulative
B. zone
Yurgen is opening a financial consulting service for high-income retirees in his area. This target market is used to paying for quality and associates high quality with high prices. Yurgen should probably NOT use a market penetration pricing strategy because A. he might be missing out on customers who would pay more for his products. B. there are moderate barriers to competitive entry in the market. C. a low price might signal low quality. D. he would have to determine zone pricing discounts. E. the experience curve effect would drop unit costs too rapidly
C. a low price might signal low quality.
Value-based pricing methods include approaches to setting prices that focus on the overall value of the product offering A. when the product is produced. B. as recognized by competitors. C. as perceived by the consumer. D. in order to minimize bundling charges. E. relative to production costs.
C. as perceived by the consumer.
Bill desperately needed tires for his car, and he found an ad with an incredibly low price. When he got there, he found out that those had been sold out, and he was pressured into buying tires that were more expensive than he wanted. Bill found out later that Marcelo had had the same experience at the store a few weeks earlier. It's quite possible that both Bill and Marcelo had become the victim of a deceptive pricing tactic known as A. loss leader pricing. B. desperation selling. C. bait and switch. D. off-season deceptions. E. inventory reduction pricing
C. bait and switch.
Firms using a(n) ____________ pricing method set their prices relative to what other firms are charging. A. improvement value B. value-based C. competitor-based D. reference-based E. cost-based
C. competitor-based
A weakness associated with cost-based pricing methods is that they A. are too difficult to calculate. B. infer a cost-price ratio. C. do not recognize the role that consumers or competitors' prices play in the marketplace. D. do not allow for predatory pricing. E. are structurally inflexible and ignore vertical price fixing alternatives.
C. do not recognize the role that consumers or competitors' prices play in the marketplace.
If the Amador County Pest Control Association got together and all members agreed to charge 3 percent of the value of a home for a termite inspection letter, the association members would be engaging in A. loss leader pricing. B. bait and switch pricing. C. horizontal price fixing. D. monopolistic competition. E. predatory pricing.
C. horizontal price fixing.
Each generation of cell phones has provided greater clarity, range, and multi-functionality. Marketers of cell phones can use these upgrades in __________ pricing. A. everyday low pricing B. odd-even C. improvement value D. reference-based E. cost-based
C. improvement value
When the first hybrid automobiles became available on the market, manufacturers had only minimal production capacity. They used a price skimming strategy primarily to A. recoup high research and development costs. B. signal high quality. C. limit demand. D. penetrate a market. E. test consumers' price sensitivity.
C. limit demand.
Developing pricing strategies for __________ is one of the most challenging tasks a manager can undertake. A. cost-based pricing B. seasonal rebate items C. new products D. zone pricing products E. quantity discounts
C. new products
A video gaming system is being sold. The package includes one game console, two gaming accessories, and one video game for $200, which is $60 less than what it would cost to purchase the items separately. This type of pricing is known as A. price skimming. B. loss leader pricing. C. price bundling. D. odd pricing. E. quantity discount.
C. price bundling.
When Toyota introduced its Scion line of cars, the lowest priced model was listed for $15,000 while the highest priced model was listed for $21,000, with two or three other list prices in between. Toyota used a __________ pricing approach. A. market penetration B. zone C. price lining D. loss leader E. noncumulative quantity discount
C. price lining
When a marketer establishes a price floor and a price ceiling for an entire line of similar products and then sets price points in between for differences in quality among the products, he or she is using a __________ pricing approach. A. market penetration B. zone C. price lining D. loss leader E. noncumulative quantity discount
C. price lining
The advantage of zone pricing to the seller is the shipping charges typically A. are not marked down during the off season. B. complement the advertising allowances. C. reflect more closely the cost of delivery. D. result in a cumulative quantity discount. E. are the same for all shipments, making it easy to calculate total price
C. reflect more closely the cost of delivery.
For marketers to advertise a price as their __________, the Better Business Bureau recommends that at least 50 percent of the sales of a product occur at that price. A. fixed price B. zone price C. regular price D. leader price E. cost-based price
C. regular price
The most common form of a quantity discount for consumers is a A. cash discount. B. markdown. C. size discount. D. coupon. E. rebate.
C. size discount.
The manufacturers of the early electric cars are charging relatively high prices to consumers who are willing to pay the price. They need to use a price skimming strategy because of A. the relatively high emissions produced by electric cars. B. the potential benefits of price bundling. C. the high costs associated with producing a small volume of cars. D. the slotting allowances needed to gain greater distribution. E. a vertical price fixing arrangement among vendors supplying the needed components.
C. the high costs associated with producing a small volume of cars.
It is legitimate for a manufacturer to charge a retailer a lower price than its usual price if A. the retailer is related to the seller. B. neither the retailer nor the seller are publicly traded companies. C. the seller is trying to match a competitor's price. D. the different price is a one-time occurrence. E. the difference between the regular price and the reduced price is less than or equal to 10 percent
C. the seller is trying to match a competitor's price.
If a market penetration pricing strategy results in lower per-unit cost, competitors will be discouraged from entering the market because A. selective consumer demand will increase gross profit margins. B. a high/low cost-based pricing strategy will not work. C. they would likely need to quickly produce a large volume in order to compete. D. profits would increase too rapidly. E. they will only be able to advertise in the same media as the firm using the market penetration strategy
C. they would likely need to quickly produce a large volume in order to compete.
Cost-based pricing assumes costs A. vary with the level of prices. B. are used to estimate value. C. will not vary much for different levels of production. D. are calculated based on historical consumer perceptions of what things should cost. E. will continue to decrease as production increases.
C. will not vary much for different levels of production.
__________ pricing tactics lower the price of a product below cost. A. Fixed B. Zone C. Regular D. Loss leader E. Cost-based
D. Loss leader
_________ is the practice of colluding with other firms to control prices. A. Competitive favoritism B. Industry tightening C. Monopolistic competition D. Price fixing E. Regressive pricing
D. Price fixing
__________ occurs when members of the marketing channel collude to control the prices passed on to consumers. A. Loss leader price fixing B. Bait and switch price fixing C. Horizontal price fixing D. Vertical price fixing E. Predatory pricing
D. Vertical price fixing
A pricing tactic is A. a long-term and broad-based approach to pricing. B. an integrative pricing approach based on the 5 Cs. C. an approach that can be used only with consumers. D. a short-term approach that often is a response to a competitive threat. E. an approach that can only be used in a business-to-business setting.
D. a short-term approach that often is a response to a competitive threat.
An everyday low pricing strategy stresses the continuity of retail prices A. at a level above regular retail prices and below deep-discount prices. B. based on horizontal price fixing. C. bundled with cost-based, cash discounts. D. at a level somewhere between the regular price and the deep-discount sale prices competitors may offer. E. at a price skimming level
D. at a level somewhere between the regular price and the deep-discount sale prices competitors may offer.
In a __________ pricing tactic, sellers advertise low prices and then aggressively pressure customers to purchase higher-priced versions of the product advertised with the low price. A. fixed offer B. reference C. seasonal D. bait and switch E. cost-based
D. bait and switch
With a price skimming strategy, a marketer will NOT benefit from A. increased consumer value associated with price increases. B. the ability to use seasonal discounts. C. the opportunity to offer advertising allowances. D. economies of scale associated with a larger volume of production. E. market substitution price elasticity.
D. economies of scale associated with a larger volume of production.
Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the __________, a decrease in unit cost as product volume increases. A. slotting allowance benefit B. price fixing return C. improvement value effect D. experience curve effect E. cumulative bundling benefit
D. experience curve effect
The __________ occurs when unit cost drops as the quantity sold increases. A. slotting allowance benefit B. price fixing return C. improvement value effect D. experience curve effect E. cumulative bundling benefit
D. experience curve effect
One reason marketers of new, innovative products often start out with a price skimming strategy rather than a market penetration strategy is that A. few consumers understand a penetration strategy. B. a price skimming strategy lowers the value for consumers. C. few marketers understand pricing. D. it is easier to lower prices than to raise them. E. price skimming is legal while price penetration is not
D. it is easier to lower prices than to raise them.
Which of the following is NOT a common business-to-business pricing tactic? A. seasonal discounts B. slotting allowances C. quantity discounts D. loss leader pricing E. advertising allowances
D. loss leader pricing
For marketers using a price skimming strategy, once the initial demand is met for new and innovative products, they will likely A. leave the market. B. discontinue the product and create a new one. C. offer deep discounts in order to create a loss leader pricing strategy. D. lower the price to capture the next most price sensitive market segment. E. use zone pricing to maximize differences.
D. lower the price to capture the next most price sensitive market segment.
It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit. A. the Better Business Bureau B. federal regulators C. the American Marketing Association D. marketers themselves E. industry standards boards
D. marketers themselves
Pricing __________ products is especially challenging because little or nothing is known about consumers' perceptions of value. A. cost-based B. seasonal C. large-quantity D. new-to-the-world E. zone pricing
D. new-to-the-world
Everyday low pricing (EDLP) provides value to consumers by A. continually offering items on sale. B. minimizing the number of options a consumer can evaluate. C. noncumulative quantity discounts. D. reducing their search costs. E. creative use of referencing pricing
D. reducing their search costs.
In determining the price for his company's new pocket digital camera, Matt determines what consumers consider the regular or original price for similar cameras available in the market. Matt is assessing the influence of __________ on pricing strategy. A. improvement value B. odd-even prices C. everyday low pricing D. reference prices E. cost of ownership
D. reference prices
Manufacturers use cash discounts primarily because they benefit from A. uniformed delivered pricing. B. seasonal slotting allowances. C. price skimming. D. the time value of money. E. high/low pricing.
D. the time value of money.
Marketers use a price skimming strategy for any or all of the following reasons EXCEPT A. to recoup high research and development costs. B. to signal high quality. C. to limit demand. D. to gain market share quickly. E. to test consumers' price sensitivity.
D. to gain market share quickly.
The saying "leaving money on the table" is associated with A. the use of odd pricing to force consumers to use their coins in making purchases. B. loss leader pricing. C. a predatory pricing strategy that results in excessive seasonal discounts. D. using a market penetration strategy when there is an opportunity for price skimming. E. vertical price fixing in markets where horizontal price fixing would be more appropriate
D. using a market penetration strategy when there is an opportunity for price skimming.
One of the benefits of offering a size discount to consumers is they will purchase more of a marketer's product and A. earn a cash discount. B. experience the experience curve effect. C. will not fall prey to predatory pricing. D. will be less likely to switch brands. E. will be able to take advantage of zone pricing benefits
D. will be less likely to switch brands.
__________ price fixing occurs when competitors collude to control prices, and __________ price fixing occurs within a marketing channel to control prices passed on to consumers. A. Industry; supply chain B. General; specific C. Widespread; integrated D. Strategic; tactical E. Horizontal; vertical
E. Horizontal; vertical
When Greenbelt Construction Company began building houses in a large subdivision with many other builders, they priced their homes slightly higher than their competitors and promoted the added quality features in their homes. Greenbelt was using a(n) __________ pricing strategy. A. improvement value B. value-based C. everyday low pricing D. reference-based E. competitor-based
E. competitor-based
Ben owns a lawn care business. From experience, Ben has found that John Deere equipment lasts almost twice as long as competitors' machines. For John Deere, Ben's perception about its products makes __________ pricing possible. A. improvement value B. odd-even C. everyday low pricing D. reference-based E. cost of ownership
E. cost of ownership
In determining the price for his company's new personal computer photography printer, Raymond is assessing the total cost of owning his printer as compared to alternative products available in the market. Raymond is using __________ pricing. A. improvement value B. odd-even C. everyday low pricing D. reference-based E. cost of ownership
E. cost of ownership
Compared to other pricing methods, __________ pricing is relatively simple. A. improvement value B. value-based C. cost of ownership D. reference-based E. cost-based
E. cost-based
Yvonne estimates the average cost of her floral arrangements is $14 regardless of whether she is doing 5 or 20 arrangements that day. She adds a standard markup to the $14 estimate to determine her price. Yvonne is using a(n) __________ pricing method. A. improvement value B. value-based C. everyday low pricing D. reference-based E. cost-based
E. cost-based
Retailers use __________ because they believe the use will induce customers to try new products, convert first-time users to regular users, increase purchases, and protect market share. A. seasonal discounts B. rebates C. cumulative quantity discounts D. noncumulative quantity discounts E. coupons
E. coupons
It is important to Joanne to get value for her money, but she does not want to spend time comparison shopping. Joanne will likely respond to __________ pricing but not __________ pricing. A. high/low; everyday low B. premium; everyday low C. discount; vertical D. horizontal; flattening E. everyday low; high/low
E. everyday low; high/low
For a price skimming strategy to be successful, A. price need to be reduced on a slow, uniform basis. B. horizontal zone pricing needs to be employed. C. marketers need to somehow get consumers to redeem coupons. D. the price should be odd, not even. E. it must be difficult for competitors to enter the market.
E. it must be difficult for competitors to enter the market.
One of the difficulties associated with value-based pricing is that A. costs are impossible to compute. B. only the creator of a new product can fully understand its value to consumers. C. value depends on variable costs and not fixed costs. D. everyday low pricing has neutralized the impact of price on consumers' purchase decisions. E. it necessitates a great deal of consumer research to be implemented successfully.
E. it necessitates a great deal of consumer research to be implemented successfully.
Jill knows her wholesaler will give an additional 20 percent off if she orders more than 100 new swimsuits at a time for her store. The wholesaler is using a __________ pricing tactic. A. uniformed delivered pricing subsidy B. seasonal slotting allowance C. cumulative quantity discount D. horizontal fixed wholesale price discount E. noncumulative quantity discount
E. noncumulative quantity discount
For a price skimming strategy to work, the product or service must A. be bundled with products or services already available on the market. B. be similar to what consumers are already comfortable with. C. have wide market appeal. D. have low production costs. E. offer consumers some new benefit currently unavailable.
E. offer consumers some new benefit currently unavailable.
If a telecommunications company drastically cuts the price for cellular phone service in order to eliminate local competitors, the company could be charged with A. loss leader pricing. B. bait and switch pricing. C. price fixing. D. unfair slotting. E. predatory pricing
E. predatory pricing
Cosmetic retailers often have one price for each item but another price for three or four similar items with the same brand, all attractively packaged together. These retailers are using A. price lining. B. slotting allowances. C. cumulative quantity discounts. D. loss leaders. E. price bundling
E. price bundling
Mona is selling her artwork at a local festival. Her art is selling well, but t-shirts she had made up with her artwork are not selling. She decides to offer a package price for her art with a t-shirt included. Mona is using A. price lining. B. slotting allowances. C. cumulative quantity discounts. D. loss leaders. E. price bundling.
E. price bundling.
A mobile carrier decides to introduce a new cellular phone at a high price. This is known as A. market penetration. B. everyday low pricing. C. competitor pricing. D. loss leader pricing. E. price skimming.
E. price skimming.
Generally, a __________ represents either a short-term response to a competitive threat or a broadly accepted method of calculating a final price for the customer that is short-term in nature. A. pricing strategy B. reference price C. high/low strategy D. loss leader price E. pricing tactic
E. pricing tactic
Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price A. penetration. B. bundling. C. fixing. D. referencing. E. skimming
E. skimming
When Apple Computer Company introduced the iPhone—a combination phone, MP3 player, and Internet access device—in 2007, it was priced at $499, considerably higher than either the iPod or competing cell phones. Apple was probably pursuing a __________ pricing strategy. A. market penetration B. slotting allowance C. price fixing D. reference price E. skimming
E. skimming
Some consumers make it a point to go shopping the day after Christmas in order to A. collect coupons as holiday gifts. B. enjoy odd pricing benefits. C. take advantage of everyday low pricing strategies. D. avoid bait and switch strategies. E. take advantage of seasonal discounts.
E. take advantage of seasonal discounts.
Because market and operating conditions are all very similar, marketers' pricing strategies should be uniform. True False
FALSE
Competitor-based pricing is when a company determines the final price of a good based on the cost. True False
FALSE
Manufacturers like rebates because it provides them with information they can use in developing new products. True False
FALSE
Proving that a company has engaged in the deceptive bait and switch practice is easy. True False
FALSE
Slotting allowances are used to get retailers to feature a manufacturer's product in their advertising and promotional efforts. True False
FALSE
When Sony released its PlayStation 3 game machines, it charged a high price, attracting the most avid game players. This was a market penetration pricing strategy. True False
FALSE
Cost-based pricing assumes costs will not vary much for different levels of production. True False
TRUE
Coupons may confuse customers and therefore do little to increase store loyalty. True False
TRUE
Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens. To do this, she will likely use a market penetration pricing strategy. True False
TRUE
3/10, n/30 means a 3 percent discount if paid in full within 10 days, or the net amount is due in 30 days. True False
TRUE
Kristina sells sports equipment and wants to get customers into her store. She knows from past experience that sales generate customer traffic, particularly when she puts children's baseball equipment on sale. She may consider a leader pricing strategy. True False
TRUE
Odd prices suggest low quality. True False
TRUE
One of the reasons a manufacturer may decide to sell its products in a bundle is to encourage trial of a new product. True False
TRUE
Price lining is setting a price floor and a price ceiling for a line of products and then setting price points in between to represent differences in quality. True False
TRUE
The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur. True False
TRUE
The methods used to develop pricing strategies are cost-based pricing, competitor-based pricing, and value-based pricing. True False
TRUE
Value-based pricing necessitates a great deal of consumer research to be implemented successfully. True False
TRUE
When a retail store rarely sells deeply discounted or sale products, it is known as "everyday low pricing." True False
TRUE
