Chapter 11
Amazon developed the Kindle electronic book reader and sells it at a reasonably low margin. The firm uses which pricing strategy to capture additional profits through the sale of easily downloaded online books and magazines?
Captive-product pricing
Companies introducing a new product can choose between two broad strategies. One is market-skimming pricing. Which of the following is an alternative strategy?
Market-penetration pricing
Which of the following companies uses product line pricing?
Mobile Point, which launched a range of cell phone models, each priced according to its features
Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.
by-product
Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs?
discount and allowance pricing
The Internet offers ________, where the price can easily be adjusted to meet changes in demand.
dynamic pricing
A seller offers a ________ to trade-channel members who perform certain functions, such as selling, storing, and record keeping.
functional discount
Freight-absorption pricing is used for ________.
holding on to increasingly competitive markets
When Bic introduced disposable razors, the product and market met several criteria for using ________ pricing. The market was price sensitive, and there were substantial economies of scale in distribution and production.
market-penetration
Companies that set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.
market-penetration pricing
Which of the following would most likely lead to a company initiating a price increase?
over-demand
Which of the following product mix pricing strategies involves pricing multiple products to be sold together?
product bundle pricing
Hearth & Home, a store which sells household products, has announced a one-week sale on its new carpet line. This is an example of ________.
promotional pricing
By definition, ________ pricing 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.
segmented
Companies set not a single price, but a pricing ________ that covers different items in its line and changes over time as products move through their life cycles.
structure
Segmented pricing is only effective when ________.
the cost of segmenting does not exceed the revenue obtained from the price difference
Competitors are most likely to react to a price change when ________.
the product is uniform
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
In the early periods of the introduction of HDTV, the prices were extremely high. The strategy being used is considered to be what?
Price skimming
Throughout most of history, prices were set by negotiation between buyers and sellers. Fixed-price policies are a relatively modern idea that arose with the development of large-scale retailing at the end of the nineteenth century. However, some companies are now reversing the fixed-pricing trend and are using what form of price setting?
Dynamic pricing
________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.
Promotional
________ are formed by noting current prices, remembering past prices, or assessing the buying situation.
Reference prices
Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?
captive product pricing
Which of the following product mix pricing strategies involves pricing products that can only be used with the main product?
captive product pricing
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?
promotional pricing
Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?
psychological pricing
Which term refers to prices that buyers carry in their minds and check with when they look at a given product?
reference prices________ are formed by noting current prices, remembering past prices, or assessing the buying situation.
To combat a competitor's price cut or lower-priced store brands, a national brand such as Luvs disposable diapers was launched along with P&G's flagship brand of disposable diapers, Pampers. Which type of brand is Luvs considered to be in this case?
Fighter brand
Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices?
product line pricing
