CH 9 quiz

pricing structure

A company sets not a single price, but rather a ________ that covers different items in its line that change over time as products move through their life cycles.

price skimming

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.

large volumes

A quantity discount is a price reduction to buyers who purchase ________.

the products quality and image support the price

All of the following conditions support market-penetration pricing EXCEPT which one?

market-skimming pricing

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.

ceiling

Consumer perceptions of the product's value set the ________ for prices.

the reseller's reaction to price changes

Each of the following economic factors can have a strong impact on a firm's pricing strategy EXCEPT ________.

without communication with competitors

Federal legislation on price-fixing requires that sellers set their prices ________

remain the same

Fixed costs ________ as the number of units produced increases.

variable usage rate

Hotline Long Distance Service uses captive-product pricing for its phone call charges. Because this is a service, the price is broken into a fixed rate plus a per-call ________.

inelastic

If demand hardly changes with a small change in price, we say the demand is ________.

false

T/F : The simplest pricing method is break-even pricing, which involves adding a standard markup to the cost of the product.

False

T/F In industrial markets, salespeople outrank top management in determining the sales price of products, as well as pricing objectives and policies.

TRUE

T/F Melt-In-Your-Mouth Candy Stores prices its candy displays at ten different price levels, ranging from $2.00 per pound to $4.95 per pound. This is an illustration of price steps.

FALSE

T/F The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In normal cases, the higher the price, the higher the demand.

True

T/F When consumers cannot judge the quality of a product because they lack information or skill, they are likely to perceive a higher-priced product as having higher quality.

true

T/F pure monopoly have one seller

True

T/F: Target costing reverses the usual marketing process.

maintain its current price and profit margin

When a competitor cuts its price, a company might decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.

Time- Based

When a firm varies its price by the season, month, day, or even hour, it is using ________ pricing.

cash rebate

When a manufacturer offers a ________, customers buy products from manufacturers' dealers within a specified time period and the manufacturer sends the customer a check.

True

t/f: Pricing a product mix is often difficult because various products have related demand and costs, and they face different degrees of competition.

False

T/F The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In normal cases, the higher the price, the higher the demand.

false

T/F When Johnny On the Spot, a house mover, sells boxes and pads that must be used in moving a household's furniture, the company is practicing by-product pricing.

False

T/F: Some industries commonly use two-part pricing, where the price is broken down into a fixed fee and a fixed usage rate.

False

T/F: The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In normal cases, the higher the price, the higher the demand.

True

T/F: Value based pricing is the reverse of cost-based prcing

customer-segment pricing

The New Age Gallery has different admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________.

monopolies

The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________.

cost - plus

The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that adds a standard mark-up to the cost of the product. This approach to pricing is called ________ pricing.

cost-plus

The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that adds a standard mark-up to the cost of the product. This approach to pricing is called ________ pricing.

Demand curve

The relationship between the price charged and the resulting demand level can be shown as the ________.

cost-plus pricing

The simplest pricing method is ________.

channel members who perform tasks that the manufacturer would otherwise have to perform

Trade or functional discounts are offered by manufacturers to which of the following?

pure competition

Under ________, the market consists of many buyers and sellers trading in a uniform commodity such as wheat, copper, or financial securities.

promotional allowance

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(n) ________.

captive-product

When amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n) ________ pricing strategy.

Value Difference

When using price steps, the seller must establish perceived ________ that support the price differences among the products in the line.

cost based

Which of the following is NOT a reason for a company to initiate a price cut?

to obtain prestige

Which of the following is NOT a reason for a company to initiate a price cut?

bundle products together

Which of the following is NOT on an effective action that a company can take to combat a competitor's price cut on a product?

competition

Which of the following is an external factor that affects pricing decisions?

reference

________ prices are the prices that a buyer carries in his or her mind and refers to when looking at a given product.

Market Penetration

________ 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.

Large volumes

a quantity discount is a price reduction to buyers who purchase ____