Ch 15 Marketing
What are the characteristics of leader pricing? (Select all that apply.)
It sets a low price on something that customers often buy. It involves aggressive advertising.
A(n) _______ discount is applied only if the buyer pays the invoice within a certain number of days.
cash
Consumers typically compare a firm's products and prices with those offered by ______.
direct competition
Price discrimination is illegal under all conditions.
false
When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first.
penetration pricing
Which of the following is NOT a pricing tactic aimed at consumers?
Cumulative discounts
Which of the following are characteristics of price bundling? (Select all that apply.)
Price bundling helps customers stock up on a product. A less popular item is sometimes bundled with a more desirable item. Several popular items are frequently sold together for a lower combined price.
When a price is reduced because a large amount of a product is being purchased, it is called a ______ discount.
Quanity
Match the following B2B pricing tactics to the appropriate description.
Quantity discounts Offered according to the amount purchased Allowances Offered in return for specific behavior Seasonal discounts Offered as an incentive to buy before the buying season
Which of the following are pricing tactics used in B2B pricing? (Select all that apply.)
Seasonal discounts Allowances
How would a business benefit from offering a cash discount to customers who pay invoices quickly? (Select all that apply.)
The business would collect and deposit its money sooner, thus earning more interest. By collecting its income sooner, the business could avoid borrowing to pay its own bills.
In reference to cash discounts offered between two businesses, what does "6/10, n/30" mean?
The buyer gets a discount of 6% if the invoice is paid within 10 days. If the buyer does not take the discount, the full amount must be paid within 30 days.
What are the characteristics of quantity discounts?
They are higher with high volumes.
Which of the following are true of pricing tactics?
They can be used to counter a competitor's temporary sale prices. They are a widely accepted method of setting short-term prices.
Which of the following are true of coupons? (Select all that apply.)
They encourage first-time users to become regular users. They offer an immediate discount on items purchased.
Why do retailers use markdowns as a pricing tactic? (Select all that apply.)
To match low prices offered by competitors To sell products out of season To dispose of products that have not been selling well
Price fixing is the illegal tactic of cooperating with other firms to ______ prices.
artificially establish
Business-to-business seasonal discounts are price reductions offered to stimulate purchases ______.
before the buying season for that product begins
Pricing strategies are most often based on cost, value, or ______.
competition
______-based pricing encourages consumers to see how the company's prices compare to those of business rivals.
competition
Cost-based pricing does NOT consider the influence of ______ on the marketplace.
consumer
Quantity discounts, rebates, and coupons are examples of price reductions aimed at ______.
consumers
A company prices all of its products at twice what it cost to produce them. The company is using a ______-based pricing method.
cost
When retailers want to offer a discount on the price of specific items at the point of purchase, they will issue_____.
coupons
n the United States, it is considered unethical and illegal for advertisements to ______ the consumer so much that the person is harmed.
deceive
Using predatory pricing, a firm sets a very low price for one or more of its products with the goal of ______.
driving its competition out of business
With the ______ pricing strategy, a company adopts retail prices that are typically somewhere between the product's regular price and the sharply discounted sale prices that competitors occasionally offer.
everyday low
The strategy of ______ appeals to consumers because it reduces their need to spend time comparing prices at various stores.
everyday low pricing (EDLP)
Cash discounts are reductions retailers take in the initial selling price of the product or service.
false
Puffery is illegal in advertising.
false
In price bundling, two products or services are sold as a package ______.
for less than what they would cost individually
The ______ pricing strategy features frequent sales, during which prices are lowered for a short time.
high/low
When evaluating a new product, customers decide that they are willing to pay a certain amount, more or less, than they would for similar products offered by competitors. This difference in perceived worth is called ______ value.
improvement
The ______ pricing tactic lures customers into the store through aggressive advertising coupled with a very low price on something that customers often buy.
leader
After the holidays, Toys "R" Us reduces prices of popular holiday gift items to attract consumers who were unwilling to brave long lines or pay higher prices. This pricing tactic is called a ______.
markdown
When a retailer reduces the initial selling price of a product or service, the pricing tactic is called a ______.
markdown
The goal of a(n) ______ strategy is to generate profit and establish a new product or service in the market as quickly as possible.
market penetration
A firm sets extremely low prices for its products so that most customers will stop shopping elsewhere. This will cause other companies to go out of business and leave the firm with no more competition. The firm has engaged in ______.
predatory pricing
If a firm sells the same product to different resellers at different prices, it can be considered ______.
price discrimination
Scheming with other companies to control prices is called ______.
price fixing
What is NOT a pricing tactic?
price skimming
A price reduction offered to encourage purchase of a product at an off-peak time of year is called a(n) discount.
seasonal
Patio furniture is often sold at a reduced price when the weather is cold. This is an example of a(n) ______ discount.
seasonal
Cash discounts are encouraged because the ______ gets the benefit from the time value of money.
seller
Which of the following is NOT a common base for pricing strategies?
service
A(n) ______ discount is when large quantities or packages cost only a little more than smaller ones.
size
Warehouse club stores like Sam's Club or Costco offer customers low prices on a variety of merchandise, but often the merchandise is sold in large-quantity packaging. This is an example of a(n) ______ discount.
size
A pricing ______ is the general way a company decides how its prices will be determined over the long term, based on the five Cs of pricing.
strategy
Pricing ______ are short-term ways of concentrating on specific aspects of company objectives, costs, customers, competition, and channel members.
tactics
The improvement value method of pricing assigns a price based on how much more or less the product is perceived to be worth in comparison to comparable products. Who estimates what that price should be?
the manufacturer
Which of the following are true of leader pricing, price lining, and price bundling? (Select all that apply.)
they are aimed at consumers they are pricing tactics
Businesses can offer other businesses seasonal discounts.
true
