Chapter 11

Which of the following statements is true regarding initiating price​ cuts? A. When faced with falling​ demand, firms should not cut prices. B. If faced with excess​ capacity, a firm should not cut its price. C. Cutting price has no effect on costs. D. Cutting prices in an industry loaded with excess capacity might lead to price wars. E. Firms never cut​ prices; they only raise them.

Cutting prices in an industry loaded with excess capacity might lead to price wars.

​________ occurs when retailers set an artificially high​ "regular price" and then advertise a​ "sale price," which is actually close to their everyday price. A. Price discrimination B. Predatory pricing C. Deceptive pricing D. Price-fixing E. Retail price maintenance

Deceptive pricing

Many state colleges and universities charge one price for​ in-state students and a higher price for​ out-of-state students. Which form of segmented pricing are these schools​ using? A. Customer-segment pricing B. ​Time-based pricing C. Location-based pricing D. Product-form pricing E. Promotional pricing

Location-based pricing

A company has set a low price on a new product it introduced. It wants to maximize its market share and attract a large number of buyers quickly. Which new product pricing strategy should the company​ use? A. Product bundle pricing B. Psychological pricing C. Captive-product pricing D. Market-skimming pricing E. ​Market-penetration pricing

Market-penetration pricing

​________ is the practice of pricing products below cost to harm competitors. A. Retail price maintenance B. Predatory pricing C. Price discrimination D. Price-fixing E. Deceptive pricing

Predatory pricing

What is predatory​ pricing? A. Sellers offering the same price terms to customers at a given level of trade B. Setting prices without talking to competitors C. A manufacturer requiring dealers to charge a specified retail price for its product D. Selling below cost to unload excess inventory E. Selling below cost with the intention of punishing a competitor

Selling below cost with the intention of punishing a competitor

What is the purpose of the​ Robinson-Putnam Act? A. To prevent scanner fraud B. To prevent​ price-fixing C. To prevent unfair price discrimination D. To prevent predatory pricing E. To prevent deceptive pricing

To prevent unfair price discrimination

Companies that make products that must be used along with a main product are using​ __________. A. optional-product pricing B. captive-product pricing C. product bundle pricing D. by-product pricing E. product line pricing

captive-product pricing

Companies that use​ ________ continually adjust prices to meet the characteristics and needs of individual customers and situations. A. segmented pricing B. promotional pricing C. psychological pricing D. cash rebates E. dynamic pricing

dynamic pricing

The Ford Mustang is offered in several different models. Ford will use​ ________ pricing to determine the price steps between the different models. A. optional-product B. product bundle C. product line D. captive-product E. two-part

product line

In​ __________pricing, the company sells a product or service at two or more​ prices, even though the difference in prices is not based on differences in costs. A. segmented B. promotional C. dynamic D. psychological E. discount and allowance

segmented

Gillette charges a fairly low price for its razors​ (relative to​ costs) and a high price for razor blades. It is using a strategy of​ ________ pricing. A. captive-product B. product line C. ​by-product D. ​two-part E. product bundle

captive-product

A car buyer can choose a base model at one​ price, or one with a premium sound and navigation system at a higher price. This is an example of​ _______ pricing. A. optional-product B. product bundle C. product line D. by-product E. captive-product

optional-product

Which of the following statements is true concerning new product pricing​ strategies? A. When using a​ market-skimming strategy, marketers do not need to focus on the​ product's quality and image. B. A​ market-penetration strategy should be used if the market is not highly price sensitive. C. If competitors can easily enter the​ market, a​ market-skimming strategy should be used. D. For a market penetration strategy to​ work, production and distribution costs must increase as sales volume increases. E. For a​ market-skimming strategy to be​ successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more

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

Which of the following is a potentially effective action a company could take in response to a​ competitor's price​ cut? A. Raise the price. B. Reduce the price. C. Launch a​ high-price "fighter​ brand." D. Reduce both the price and quality. E. Decrease the perceived value.

Reduce the price.

Which of the following statements is true regarding initiating price​ increases? A. Price increases do not impact profits. B. Companies do not need to communicate to customers reasons for price increases. C. Wherever​ possible, the company should consider ways to meet higher costs or demand without raising prices. D. Prices should be increased when there is a lack of demand. E. Cost inflation is not a factor in price increases.

Wherever​ possible, the company should consider ways to meet higher costs or demand without raising prices.

UPS charges different prices for shipping depending on which region of the United States the item is being shipped to. The more distant the city the package is being shipped​ to, the higher the price UPS charges. Which geographic pricing method is UPS​ using? A. Freight-absorption pricing B. Uniform-delivered pricing C. Base-point pricing D. FOB origin E. Zone pricing

Zone pricing

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Because she does not know much about​ wine, she will likely use the price of the wines as​ ________. A. a limited time offer B. an indicator of the cost of production C. an indicator of geographic pricing D. an indicator of quality E. a type of segmented pricing

an indicator of quality

Market skimming prices are preferred in all of the following conditions except​ __________. A. an initial low price is set by the companies B. the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more C. enough buyers must want the product at that price D. the​ product's quality and image must support its higher price E. competitors should not be able to enter the market easily and undercut the high price

an initial low price is set by the companies

Market penetration prices are preferred in all of the following conditions except​ __________. A. the low price must help keep out the competition B. enough buyers must want the product at a higher price C. the penetration price must maintain its​ low-price position D. the market must be highly price sensitive so that a low price produces more market growth E. the production and distribution costs must decrease as sales volume increases

enough buyers must want the product at a higher price

Techniques that can be used by sellers for avoiding​ customers' perception of price gouging includes all of the following except​ __________. A. reduce prices B. increase prices C. low-price fighter items D. improve perceived value E. adjust quality

low-price fighter items

When Apple introduced its​ iPhone, it priced the new product at​ $599, considerably higher than either its iPod or competing cellular phones. Apple Computer was pursuing​ a(n) ________ new product pricing strategy. A. market-skimming B. market-penetration C. by-product D. optional-product E. ​captive-product

market-skimming

Archer Daniels Midland Co is the​ world's largest processor of​ soybeans, corn, and wheat. In the​ 1990s, the Justice Department found it guilty of regularly meeting with competitors when setting prices. ADM was guilty of​ ________. A. retail price maintenance B. deceptive pricing C. price discrimination D. price-fixing E. predatory pricing

price-fixing

Federal legislation on​ __________ states that sellers must set prices without talking to competitors. A. price-fixing B. deceptive pricing C. interstate commerce D. ​trade-restrain E. discriminatory pricing

price-fixing

Bath​ & Body Works offers​ "three-fer" deals on its soaps and lotions​ (such as three antibacterial soaps for​ $10). This is an example of​ _______ pricing. A. captive-product B. by-product C. two-part D. product bundle E. product line

product bundle

The pricing method in which sellers combine several products and offer a reduced price is known as​ __________. A. captive-product pricing B. optional-product pricing C. product bundle pricing D. by-product pricing E. product line pricing

product bundle pricing

Some sellers use​ 00-cent endings on regularly priced items and​ 99-cent endings on discount merchandise. This is an example of pricing referred to as​ __________. A. dynamic pricing B. segmented pricing C. geographical pricing D. promotional pricing E. psychological pricing

psychological pricing

Techniques that can be used by sellers for avoiding​ customers' perception of price gouging includes all of the following except​ __________. A. maintaining a sense of fairness surrounding any price increase B. the company should consider ways to meet higher costs or demand without raising prices C. the company can shrink the product or substitute​ less-expensive ingredients instead of raising the price D. rationing products to customers E. price increases should be supported by company communications telling customers why prices

rationing products to customers

Assume a competitor has cut prices and a company determines it should respond. Potential actions that the company could initiate include​ ________. A. raising​ price, raising perceived​ value, improving quality and increasing​ price, and launching a​ low-price "fighter​ brand" B. reducing​ price, reducing perceived​ value, improving quality and increasing​ price, and launching a​ low-price "fighter​ brand" C. reducing​ price, raising perceived​ value, improving quality and increasing​ price, and launching a​ low-price "fighter​ brand" D. reducing​ price, raising perceived​ value, improving quality and decreasing​ price, and launching a​ low-price "fighter​ brand" E. reducing​ price, raising perceived​ value, decreasing quality and increasing​ price, and launching a​ low-price "fighter​ brand"

reducing​ price, raising perceived​ value, improving quality and increasing​ price, and launching a​ low-price "fighter​ brand"

One major objective associated with a​ market-penetration pricing strategy is to​ ________. A. avoid everyday low pricing B. prevent customer dissatisfaction C. skim off​ small, but​ profitable, market segments D. attract buyers willing to pay a higher price E. win a large market share

win a large market share