chapter 10

What are two of the most common and effective strategies marketers can use for raising prices?

A. unbundling and escalator clauses

Joey set up a lawn-mowing business

B. $175.00

What is Joey's weekly profit?

C. $148.00

Which of the following statements regarding break-even analysis is TRUE?

D. Break-even analysis does not measure price sensitivity

All of the following are advantages of using a price bundling strategy EXCEPT

D. it benefits the consumer more than the firm.

Robinson-Patman Act EXCEPT:

E. allowing a significant price reduction on an artificially high retail price.

Scotts Fertilizer has a 4-step program for lawn care.

E. unbundling

As noted in your text, producers in which country were accused of dumping by selling silk at unreasonably low prices?

A. China

Which of the following is NOT true regarding global pricing?

A. Firms do not encounter any unique challenges when pricing products globally.

The illegal buying and selling of products outside of sanctioned channels is referred to as the

A. black market.

Which of the following is a variable cost?

A. delivery cost

The practice of charging different customers different prices for the same product is called

A. price discrimination.

A measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price is known as

A. price elasticity of demand.

When Apple released its first iPhone in 2007, it charged customers $599.

A. price skimming

The amount a product sells for above the total cost of the product itself is called

A. profit margin.

According to your text, pricing resembles a game of

B. chess.

The price strategy of unbundling involves

C. separating out the individual goods that make up a product and pricing each one individually.

Which of the following has allowed for easier import/export transactions between the United States, Mexico, and Canada?

C. the absence of tariffs

Fenton, a marketer for a major retailer, uses the Internet to aggressively review the prices of products sold by his competitors. Accordingly, he constantly updates his prices based on his findings and what changes he sees in consumer demand. What type of pricing strategy is Fenton most likely using?

A. dynamic pricing.

Robinson-Patman Act was passed in 1936 and

A. requires sellers to charge everyone the same price for a product.

Which of the following provides the best source of information for marketers regarding how high they can price a product before customers stop considering the product a good value?

A. salespeople

Sunny Pines campground, located in the Midwest, promotes the months of September and October as its value camping months. During this time, it offers reduced rates on camper rentals and campgrounds. It does this, in part, because the weather is not as favorable for camping at this time. The pricing tactic Sunny Pines is using to encourage camping during these months is most likely

A. seasonal discounts.

What is marginal revenue?

A. the change in total revenue that results from selling one additional product unit

Which of the following accurately describes break-even analysis?

A. the process of calculating the sales volume needed to achieve a profit of zero

Greg is the owner of a full-service car wash. For the month of December he paid $2,000 in rent

B. 625

November the appliance store priced its front-loading washing machines at $899.00 and sold 50 units. In December they reduced the price to $799.00 and sold 53 units. Which of the following statements is accurate regarding this situation?

B. Demand is inelastic and total revenue fell from November to December.

Which of the following statements regarding pricing is TRUE?

B. Pricing strategies should be reevaluated throughout the product life cycle.

Your text notes that technology has helped to shift the balance of power from companies to customers. Which of the following exemplifies this statement?

B. The Internet has made it possible for customers to comparison shop for products.

Dumping occurs when

B. a company sells its exports to another country at a lower price than it sells the same product in its domestic market.

According to your text, one of the most common mistakes in modern pricing is

B. charging someone less than they are willing to pay.

One of the most commonly used pricing tactics, markup pricing, is also referred to as

B. cost-plus pricing.

A retailer inflated the price of its leather jackets so that when it put the jackets on sale, it appeared to customers that they were getting a better deal than they really were. This is an example of what pricing strategy?

B. deceptive pricing

For an airline, the price of economy-class seats on any given flight may fluctuate over time. For example, the airline may try to fill economy-class seats by lowering the price as the day of the flight draws closer, or try to fill business-class seats first by raising prices on economy tickets. This is an example of

B. dynamic pricing.

Which of the following is NOT a fixed cost?

B. material

Volume maximization is also referred to as

B. penetration pricing.

A new Home Depot opened up down the street from Hank's Hardware and has drastically reduced prices on many of the same products that Hank sells, forcing him to go out of business. After Hank closed his store, he noticed that Home Depot began raising its prices to more normal levels. This is an example of

B. predatory pricing.

When Sony launched its new PS4 gaming system, the product was sold as a package that included the game console, game controllers, wireless headset, and one video game. This is an example of

B. price bundling.

Prestige pricing involves

B. pricing a product higher than competitors to signal that it is of higher quality.

Taxes on imports and exports between countries are called

B. tariffs.

What technological advancement created for mobile devices has unleashed a new era of pricing transparency for consumers?

B. wireless apps

What can be said regarding the role of industry structure on setting price?

C. In an industry in which there are many buyers and sellers, the pricing impact of any single firm will be fairly small.

In the price-setting process, the next step after demand has been evaluated is to

C. determine the costs.

The protectionist strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market is referred to as

C. dumping.

A pricing strategy that involves constantly updating prices to reflect changes in supply, demand, or market conditions is called

C. dynamic pricing

Branded products sold through legal but unauthorized distribution channels is referred to as the

C. gray market.

As a pricing tactic, markup pricing is

C. not very effective at maximizing profits.

Bowman's shoe store just received a shipment of dress boots. The manufacturer's suggested retail price for the boots is $150.00, but Bowman's decides to price the boots at $149.95. What pricing tactic is Bowman's most likely using?

C. odd pricing

If luxury brands such as Versace clothing, Lexus automobiles, and Dom Perignon champagne wanted to promote an image of superior quality and exclusivity to customers, they would most likely use which pricing tactic?

C. prestige pricing

Located on a college campus, Ben's Burger Barn charges $4.99 for its burger basket. However, students receive a 10% discount off the price for showing their student ID. This is an example of

C. price discrimination.

The three largest manufacturers of solenoid values for plumbing applications conspired together so that all three firms would charge the same price for its 3-way valve. This is an example of

C. price fixing.

The degree to which the price of a product affects consumers' purchasing behavior is referred to as

C. price sensitivity

The amount of something (money, time, or effort) that a buyer exchanges with a seller to obtain a product is referred to in marketing terms as

C. price.

Recent research indicates that approximately _______ of consumers search for and purchase a low-priced product using an in-store shopping app or online search engine.

D. 40%

Which of the following statements regarding the gray market is TRUE?

D. Gray market goods allow consumers to purchase items for less than they could normally.

The first step in the price-setting process is to

D. define the pricing objectives

For the first quarter of the year, the price of the company's most popular e-reader was $129.00. The company sold 750,000 units at this price. For the second quarter, the company decided to reduce the price of the e-reader to $109.00. At this price point, the company sold 1.5 million units indicating that demand for the product is

D. elastic.

A section in a contract that ensures that providers of goods and services do not encounter unreasonable financial hardship as a result of uncontrollable increases in the costs of or decreases in the availability of something required to deliver products to customers is referred to as a(n)

D. escalator clause.

A pricing tactic in which a firm prices products a few cents below the next dollar amount is called .

D. odd pricing.

Because it could be considered an attempt to create a monopoly, which pricing strategy is illegal under U.S. law but is difficult to prove? A. price discrimination. B. deceptive pricing. C. price fixing. D. predatory pricing. E. price inflation.

D. predatory pricing.

According to your text, which of the elements of the marketing mix is one of the most watched and regulated activities?

D. price

Yield management is a strategy for maximizing a firm's

D. revenue.

Charging someone less than they are willing to pay is a practice referred to as

D. underpricing.

Variable costs are defined as costs that

D. vary depending on the number of units produced or sold.

Compare the following statements and select the one that is accurate regarding a profit maximization strategy.

E. Profit maximization assumes that customers value a product's differentiating attributes and are willing to pay a higher price to take advantage of those attributes.

Which of the following is also called the Advertising Act?

E. The Wheeler-Lea Act

A couple living in the United States travels to China and buys huge amounts of designer purses for a much lower price than could be purchased at home. They import the purses back into the States where they sell them for less than the normal market price. The purses are considered to be

E. gray market goods.

One of the most important concepts in marketing is the price elasticity of demand, which is the

E. percentage change in quantity demanded in response to a percentage change in price.

One of the most important strategic decisions a firm faces is _______ because it reflects the value the product delivers to consumers as well as the value it captures for the firm.

E. pricing

Justine went to the specialty grocery store by her office after work. When looking at the offerings at the meat counter, she was surprised to see ground beef selling for $4.49/lb. At her normal grocery store, she can get the same quality beef for $3.29/lb., a price Justine feels is reasonable. $3.29/lb. for ground beef is Justine's

E. reference price.

Since consumers have the tendency to compare prices on almost everything they buy

E. reference price.

If a resort wanted to promote visitors to come during its off-peak times, it would most likely choose which pricing tactic?

E. seasonal discounts

Which of the following established the Federal Trade Commission, giving it the authority to enforce laws aimed at prohibiting unfair methods of competition? A. the Sherman Antitrust Act B. the Robinson-Patman Act C. the Clayton Antitrust Act D. the Federal Trade Commission Act E. The Wheeler-Lea Act

the Federal Trade Commission Act