MKT 3501 CHAPTER 11
Which of the following describes zone pricing?
A geographical pricing strategy in which the company sets up two or more designated areas
Which of the following describes cost inflation?
A situation in which rising costs squeeze profit margins and lead companies to pass cost increases along to customers
Which term refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way?
Allowance
Which of the following describes product bundle pricing?
Combining several products and offering the bundle at a reduced price
Which of the following statements is true regarding initiating price cuts?
Cutting prices in an industry with excess capacity may lead to price wars.
__________ occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers.
Deceptive pricing
__________ occurs when retailers set an artificially high "regular price" and then advertise a "sale price" which is actually close to their everyday price.
Deceptive pricing
__________ is adjusting prices continually to meet the characteristics and needs of individual customers and situations.
Dynamic pricing
Electrowhip, a company that manufacturers blenders and electric whisks, has decided to use a market penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?
Electrowhip operates in a market with many competitors.
Which of the following statements is true concerning new product pricing strategies?
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.
________ is setting a low price for a new product in order to attract a large number of buyers and large market share.
Market-penetration pricing
________ is setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
Market-skimming pricing
________ is the pricing of optional or accessory products along with a main product.
Optional-product pricing
________ is setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices.
Product line pricing
__________ is pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product.
Psychological pricing
__________ is selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
Segmented pricing
Which of the following statements regarding segmented pricing is correct?
Segmented pricing practices can cause consumer resentment.
What is captive-product pricing?
Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console
What does geographical pricing entail?
Setting prices for customers located in different parts of the country or world
Which of the following statements regarding initiating price increases is correct?
The company should consider ways to meet higher costs or demand without raising prices.
What is the purpose of the Robinson-Patman Act?
To prevent unfair price discrimination
When would a competitor most likely react to a firm's price change?
When the number of firms involved is small
FOB-origin pricing is __________.
a geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination
Uniform-delivered pricing is __________.
a geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location
Basing-point pricing is __________.
a geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer
A discount is best defined as __________.
a straight reduction in price on purchases during a stated period of time or in larger quantities
A quantity discount is a price reduction for buyers who ________.
buy merchandise in bulk
Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video-game console, is __________ pricing.
captive-product
Leicestershire Renovations has a history of problems with customers who do not pay their bills on time. Leicestershire Renovations wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. Which of the following forms of pricing would most likely help the firm achieve its goal?
cash discounts
A market-skimming pricing strategy should NOT be used for a new product when ________.
competitors can undercut prices easily
The New Age Gallery has three admission prices for students, adults, and seniors, even though all three groups are entitled to the same services. This form of pricing is called ________ pricing.
customer-segment
Which of the following is a price adjustment strategy?
discount and allowance pricing
A seller offers a ________ to trade-channel members who perform certain functions, such as selling, storing, and record keeping.
functional discount
Consumers are less likely to use price to judge the quality of a product when they ________.
have experience with the product
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(n) __________.
indicator of quality
Recently, Amazon.com has been accused of __________, which is the practice of selling products below cost to harm competitors.
predatory pricing
Whirlpool washers and dryers are offered in many different models. Whirlpool will use __________ pricing to determine the price steps between the different models.
product line
By-product pricing is __________.
setting a price for by-products in order to make the main product's price more competitive
Promotional pricing is __________.
temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales
A market-penetration pricing policy should LEAST likely be used for a new product when ________.
the product's quality and image support a high price
One major objective of a market-penetration pricing strategy is to __________.
win a large market share
Cheese makers in Wisconsin sell their leftover brine to local city and county highway departments, which use it in conjunction with salt to melt icy roads. Which product mix pricing strategy does this represent?
By-product pricing
Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?
FOB-origin pricing
Gillette charges a fairly low price for their razors (relative to costs) and a high price for razor blades. They are using a strategy of __________ pricing.
captive-product
Promotional pricing tactics include __________.
discounts, special-event pricing, and limited time offers
Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of __________ pricing.
product-bundle