101 chap 11

a

A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future. a. price skimming b. trial pricing c. value pricing d. market-penetration pricing e. prestige pricing

d

A marketer must be familiar with the five major product mix pricing situations. Which of the following is NOT one of them? a. product line pricing b. optional product pricing c. captive product pricing d. unbundled product pricing e. by-product pricing

e

A number of top fashion-modeling agencies would most likely be charged with ________ for jointly determining what commissions they would charge for models. a. prestige pricing b. predatory pricing c. price bundling d. dynamic pricing e. price fixing

b

A quantity discount is a price reduction to buyers who purchase ________. a. frequently b. large volumes c. close outs d. inferior merchandise e. superior merchandise

c

amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n) ________ pricing strategy. a. by-product b. optional product c. two-part d. skimming e. penetration

b

A car maker's strategy of advertising a basic vehicle model with few conveniences and comforts at a low price to entice buyers and then convincing customers to buy higher-priced models with more amenities is an example of which of the following? a. product line pricing b. optional product pricing c. captive product pricing d. by-product pricing e. cost-based pricing

c

Among the following, a market-penetration strategy will likely be most effective with ________. a. pharmaceuticals b. an electronic device for which R&D must be recouped c. convenience items for which there is much competition d. any specialty item e. a product manufactured in small quantities and distributed in limited areas

c

Big Mike's Health Food Store sells nutritional energy-producing foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________. a. price elasticity b. cost-plus pricing c. dynamic pricing d. everyday low pricing e. penetration pricing

a

By definition, ________ is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost. a. segmented pricing b. variable pricing c. flexible pricing d. cost-plus pricing e. reference pricing

c

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________. a. market-level pricing b. market-competitive pricing c. market-skimming pricing d. market-price lining e. market-price filling

b

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing. product bundle b. optional product c. captive product d. by-product e. skimming

b

Companies usually develop ________ rather than ________. a. single products; product families b. product lines; single products c. product families; product lines d. product brands; product images e. product images; product brands

c

Consumers are less likely to use price to judge the quality of a product when they ________. a. lack information b. lack skills to use the product c. have experience with the product d. are shopping for a specialty item e. cannot physically examine the product

b

Consumers usually perceive higher-priced products as ________. a. being in the maturity stage of the product life cycle b. having a higher quality c. having low profit margins d. popular brands e. being in the introductory stage of the product life cycle

b

Durango China Company charges all customers within different identified geographical areas a single total price. The more distant the area, the higher the price. This is ________. a. freight-absorption pricing b. zone pricing c. uniform-delivered pricing d. FOB-origin pricing e. bulk rate pricing

b

HiPoint Telephone Company uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed fee plus a(n) ________. a. fixed usage rate b. variable usage rate c. standard usage rate d. market usage rate e. optional usage rate

d

If Northwest Awnings charges the same price for delivery of its product to any customer that is located within the Great Lakes states, but a different price to customers outside of the Great Lakes states, the company is using ________. a. psychological pricing b. promotional pricing c. reference pricing d. zone pricing e. uniform-delivered pricing

c

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________. a. price collusion b. price fixing c. predatory pricing d. discriminatory pricing e. penetration pricing

d

In response to price cuts from competitors, a cereal company with several more expensive and higher quality cereals introduced a lower-priced option to its product line. This is an example of which of the following responses to a competitor's price cut? a. raising the perceived value of a product b. improving product quality c. accepting a reduced market share d. launching a "fighter brand" e. using high-low pricing

c

In the case of services, captive product pricing is called ________ pricing. a. by-product b. optional product c. two-part d. bundle e. segmented

b

Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a ________ pricing strategy. a. market-skimming b. market-penetration c. zone d. loss-leader e. captive-product

c

Lancaster Recycling has a history of problems with customers who do not pay their bills on time. Lancaster Recycling wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. The company might consider which of the following forms of pricing? a. by-product b. inflation-adjusted c. cash discounts d. captive-product e. penetration

b

Low-interest financing and longer warranties are both examples of ________. a. segmented pricing b. promotional pricing c. allowances d. discounts e. product-form pricing

c

Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is being used? a. product line pricing b. optional product pricing c. captive product pricing d. by-product pricing e. product bundle pricing

a

Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m. when accompanied by a paying customer. This is an example of ________. a. promotional pricing b. discounts and allowances c. by-product pricing d. product bundle pricing e. location-based pricing

a

Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________. a. price fixing b. retail price maintenance c. price discrimination d. price collusion e. unfair price skimming

b

Market-skimming pricing would likely be most effective in selling ________. a. any convenience item b. an electronic device for which research and development must be recouped c. shampoo and bath soap d. anything easily copied by competitors e. most items at EDLP retailers such as Walmart

d

Of the following, which statement(s) would NOT support a market-skimming policy for a new product? a. The product's quality and image support its higher price. b. Enough buyers want the products at that price. c. Competitors are not able to undercut the high price. d. Competitors can enter the market easily.

b

Price fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of ________. a. common pricing policies b. major public policy issues in pricing c. ethical pricing strategies d. pricing policies used mostly in the wholesale sector e. pricing used mostly in the retail sector

c

Promotional pricing can have all of the following adverse effects EXCEPT ________. a. creating deal-prone customers b. eroding the brand's value in the eyes of customers c. giving pricing secrets away to competitors d. becoming addictive to both the customer and business e. delaying the company's focus on long-term strategies

e

Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most at risk of being accused of ________. a. market skimming b. price fixing c. deceptive pricing d. price confusion e. predatory pricing

c

Secret Sneaker will give anyone $10 for an old pair of sneakers, regardless of condition, when that person purchases a new pair of sneakers. The end result is essentially reducing the price of the new sneakers by $10. What is this type of price adjustment called? a. functional discount b. captive product c. seasonal discount d. trade-in allowance e. by-product

d

The Internet offers ________, where the price can easily be adjusted to meet changes in demand. a. captive pricing b. dynamic pricing c. basing-point pricing d. price bundling e. cost-plus pricing

d

The JC Whitney Company of Chicago offers replacement parts for older Volkswagen Beetles. Parts are often shipped from other locations throughout the United States. However, the company charges for shipping as if every part was shipped from its Chicago headquarters. The company practices ________. a. FOB-origin pricing b. uniform-delivered pricing c. zone pricing d. basing-point pricing e. none of the above

c

The New Age Gallery has three admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________. a. time pricing b. location pricing c. customer-segmented pricing d. revenue management pricing e. generational pricing

d

There are many reasons why a firm might consider cutting its price. All of the following are among them EXCEPT ________. a. excess capacity b. falling demand in the face of strong price competition c. a drive to dominate the market through lower costs d. a drive to reduce market share e. a drive to gain market share and cut costs through volume

a

Trade or functional discounts are offered by manufacturers to ________. a. channel members who perform tasks that the manufacturer would otherwise have to perform b. consumers who earn a price reduction for buying in bulk c. intermediaries such as financing institutions as a cost of doing business with them d. other channel members that agree to exclusive distribution contracts e. the government market and other organizations that require bid proposals

c

Typically, producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product. a. low; low markups b. high; low markups c. low; high markups d. high; high markups e. moderately; moderate markups

d

Using ________, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive. a. product bundle pricing b. optional product pricing c. captive product pricing d. by-product pricing e. skimming

b

Using product bundle pricing, sellers combine several products and offer the bundle ________. a. as a functional unit b. at a reduced price c. as a complete self-service package d. as a reward to loyal customers e. at a premium price

b

Valeo Fashions has just introduced a new line of fashion dresses for teens. It will initially enter the market at high prices in a ________ pricing strategy. a. market-penetration b. market-skimming c. competitive market d. psychological e. demographic

a

What is a major advantage of product bundle pricing? a. It can promote the sales of products consumers might not otherwise buy. b. It allows a company to offset the costs of disposing of by-products. c. It combines the benefits of the other pricing strategies. d. It creates a brand experience for consumers. e. It offers consumers less value for the money.

d

What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency? a. segmented pricing b. psychological pricing c. referent pricing d. promotional pricing e. basing-point pricing

a

When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is using ________. a. product line pricing b. market-skimming pricing c. market-penetration pricing d. break-even pricing e. target return pricing

d

When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs, it is granting a ________. a. trade discount b. functional discount c. cash discount d. promotional allowance e. trade credit

b

When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers, Pepsi was using ________. a. market-skimming pricing b. market-penetration pricing c. new-product pricing d. discount pricing e. value-added pricing

d

When Polaroid set the general price range of its cameras low and the markup on its film high, it was practicing ________. a. market-penetration pricing b. market-skimming pricing c. product line pricing d. captive product pricing e. price bundling

b

When Whallans Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas, Whallans is giving a(n) ________ discount. a. functional b. seasonal c. annual d. allowance e. credit

d

When a company charges the same rate to ship a product anywhere in the United States, it is using which form of geographic pricing? a. FOB delivered b. FOB factory c. FOB origin d. uniform-delivered e. basing-point

c

When a competitor cuts its price, a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price. a. stabilize its production costs b. reduce its marketing costs c. maintain its current prices and profit margin d. increase its marketing budget to raise the perceived value of the product e. increase its production costs to improve the quality of the product

c

When consumers cannot judge quality because they lack the information or skill, price becomes ________. a. less important b. insignificant c. an important quality signal d. the only driver of the purchase e. negotiable

c

Which of the following conditions would NOT support the use of a market-penetration pricing strategy? a. The market is highly price sensitive. b. Production and distribution costs will fall as sales volume increases. c. The product's quality and image support a high price. d. A low price would help keep out the competition.

c

Which of the following is NOT a geographical pricing strategy? a. FOB-origin pricing b. zone pricing c. dynamic pricing d. uniform-delivered pricing e. basing-point pricing

c

Which of the following is NOT a price adjustment strategy? a. segmented pricing b. promotional pricing c. free samples d. geographical pricing e. seasonal pricing

d

Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product? a. reduce price b. raise perceived value c. improve quality and increase price d. improve quality and decrease price e. launch a low-price "fighter brand"

a

Which of the following is a reason for a company to raise its prices? a. to address the issue of overdemand for a product b. to win a larger share of the market c. to use excess capacity d. to boost sales volume e. to balance out decreasing costs

e

Which of the following is a reason that a marketer would choose a penetration pricing strategy? a. to ensure the company has the ability to increase prices once demand decreases b. to focus on the rapid achievement of profit objectives c. to appeal to different consumer segments with different levels of price sensitivity d. to create markets for highly technical products e. to discourage competition from entering the market

b

Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product? a. target prices b. reference prices c. promotional prices d. geographical prices e. dynamic prices

b

Which of the following would most likely be considered predatory pricing? a. pricing below cost to get rid of a surplus b. pricing below cost to drive out competitors c. offering a volume discount d. offering a suggested retail price on the manufacturer's package e. offering real-time pricing online

b

________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share. a. Market-skimming b. Market-penetration c. Below-market d. Value-based e. Leader