marketing chap 15

How does penetration pricing discourage rival companies from entering the market? (Select all that apply.)

-Competitors who enter the market will temporarily face higher unit costs. -Usually none of the companies make much profit in this situation.

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

The ______ pricing tactic lures customers into the store through aggressive advertising coupled with a very low price on something that customers often buy.

leader

Susan pays a monthly fee to use an expensive designer handbag, but her payments are not applied to the purchase price. This pricing tactic is called a ______.

lease

Gary likes to drive expensive luxury cars, but he becomes bored with them quickly. Instead of purchasing a car and keeping it for a long time, he pays a monthly fee to drive the car of his choice and then returns it and gets a different one. This arrangement is called ______.

leasing

Which of the following occur under horizontal price fixing? (Select all that apply.)

Business rivals that produce and sell the same type of merchandise scheme together. Price is eliminated as an influence on the consumer's decision-making process.

How would a business benefit from offering a cash discount to customers who pay invoices quickly? (Select all that apply.)

By collecting its income sooner, the business could avoid borrowing to pay its own bills. The business would collect and deposit its money sooner, thus earning more interest.

-based pricing encourages consumers to see how the company's prices compare to those of business rivals.

Competition

______-based pricing encourages consumers to see how the company's prices compare to those of business rivals.

Competition

Which of the following belong to the five Cs of pricing? (Select all that apply.)

Costs Channel members Company objectives

Match the discounts to their definitions.

Coupons: Savings that are instant Rebates: Savings that are usually mailed to the consumer at some later date

Which of the following is NOT a pricing tactic aimed at consumers?

Cumulative discounts

True or false: Puffery is illegal in advertising.

False

True or false: A rebate is a type of discount issued by a retailer.

False Reason: Rebate is a form of discount for consumers issued by manufacturers.

True or false: Price discrimination is illegal under all conditions.

False Reason: The Clayton Act and Robinson-Patman Act do not consider all conditions price discrimination.

Which of the following describe deceptive reference prices? (Select all that apply.)

Fictitious Inflated

Which of the following best describes the target market for leasing or renting products?

People who are less price sensitive

Which of the following does the Sherman Antitrust Act address?

Price fixing

What is NOT a pricing tactic?

Price skimming

According to the textbook, which of the following has the highest "hassle factor"?

Rebates

Which of the following is NOT a common base for pricing strategies?

Service

Which piece of legislation governs price fixing in the United States?

Sherman Antitrust Act

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 firm

Every six months, the local hardware store receives a cumulative quantity discount on the tools it buys from Ace Tool Manufacturing. Which of the following is likely true? (Select all that apply.)

The more tools the hardware store buys, the more the discount will increase. The store has a sales goal or quota for each six-month sales period. The store will offer special bargains to its customers two times a year.

In March, before most consumers begin shopping for summer products, a shoe factory offers retailers a seasonal discount on sandals. What are the purposes of this pricing tactic? (Select all that apply.)

To make it easier to plan the factory's production schedule To move inventory out of the factory as soon as possible

True or false: Businesses can offer other businesses seasonal discounts.

True

When a new product is launched in a market where similar items are already being sold, how is the price typically determined?

Value-based methods

When would an advertising allowance be illegal? (Select all that apply.)

When it is offered to only a few customers When it blatantly favors one customer

Money paid to stores to stock new products or to devote shelf space to products is known as ______.

a slotting allowance

If Apple gives an electronics store a discount on its products in return for the store promoting Apple products in its flyers and on the home page of its website, this is an example of ______.

an advertising allowance

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

When retailers want to offer a discount on the price of specific items at the point of purchase, they will issue

coupons

A ______ quantity discount is based on the amount of merchandise bought during a certain span of time and most often involves more than one transaction.

cumulative

A ______ discount encourages retailers to continue buying from the same supplier because, if they switch, they might lose the discount.

cumulative quantity

When firms use a penetration pricing strategy, they expect the experience effect to occur.

curve

In the United States, it is considered unethical and illegal for advertisements to ______ the consumer so much that the person is harmed.

deceive

A national retail chain has signs throughout its stores that say things like, "Sale! 50% off our regular price!" Journalists investigate and discover that the company has never sold any merchandise at what it calls its regular price. The business has engaged in ______.

deceptive reference pricing

Consumers typically compare a firm's products and prices with those offered by ______.

direct competitors

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)

Sometimes the cost per unit of a new product will decrease as the total sales increase. This is known as the ______ effect.

experience curve

In price bundling, two products or services are sold as a package ______.

for less than what they would cost individually

When Apple introduced the iPhone to the mobile phone marketplace, the company used customer research to estimate how much better the iPhone was. That amount is called the product's ______ value.

improvement

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

A company launches a new product that is superior to similar products offered by competitors. The price is based on consumer research that reveals how much more a customer would be willing to pay for the new product. This type of pricing is called the ______.

improvement value method

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

With a lease, the consumer does not ______ the product but merely rents it.

own

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

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

Adelaide's gift shop sells small, white candles for 50 cents each and elaborate scented candles for $15 each. In between are several other types of candles with different features and quality. Adelaide is using ______.

price lining

By engaging in ______, a business sets the highest and lowest prices for a product line and then sets a few more prices between them.

price lining

In preparation for introducing a new doll to the market, a toy company advertises and creates so much demand that little girls are lined up at the stores, determined to be the first to own one. The toy company sells these first dolls at twice their actual retail value. This is an example of ______.

price skimming

When Apple first introduced the iPhone, some consumers were willing to pay the premium $599 price tag. Apple was using a(n) ______ strategy.

price skimming

When a price is reduced because a large amount of a product is being purchased, it is called a ______ discount.

quantity

In contrast to coupons, which are offered by retailers, are discounts offered by manufacturers. The consumer purchases a product, and the manufacturer sends a cash refund for part of the price.

rebates

Setting the price for a new product is less difficult when other products like it are already being sold. This is true because ______.

the market will have established a general value for that sort of item

The key characteristic of vertical price fixing is that ______.

the parties who collude are at different levels of the same marketing channels

True or false: Businesses can offer other businesses seasonal discounts.

true

When all buyers pay the same shipping charges to a company no matter where they are located, that company is using delivered pricing.

uniform

The pricing tactic where the shipper charges one rate for all customers, regardless of their location, is called ______ pricing.

uniform delivered

When leasing merchandise, the consumer pays a fee to ______.

use the product for a certain length of time and then return it.

-based pricing focuses on how much the customer thinks the product is worth.

value

To estimate a product's ______, consumers consider what they expect to get from the product, in addition to what they will need to sacrifice to acquire it.

value

When parties at different levels of the same marketing channel agree to control the prices passed on to consumers, price fixing occurs.

vertical

In pricing, a company establishes various shipping prices, depending on where the package is being sent.

zone

Mary's Chocolate Factory charges different shipping rates for customers in various sections of the country. The firm is using ______ pricing.

zone

What is a slotting allowance?

A fee paid to a retailer to place a new product on store shelves

Which of the following are drawbacks of a market penetration pricing strategy? (Select all that apply.)

-It requires companies to have a large production capacity. -Setting the price lower than the item's value "leaves money on the table." -Setting prices so low may indicate to consumers that the product is not high quality.

Which of the following are characteristics of price bundling? (Select all that apply.)

-Several popular items are frequently sold together for a lower combined price. -A less popular item is sometimes bundled with a more desirable item. -Price bundling helps customers stock up on a product.

Why do retailers use markdowns as a pricing tactic? (Select all that apply.)

To dispose of products that have not been selling well To match low prices offered by competitors To sell products out of season

Which of the following are pricing tactics and discounts that businesses often use when selling to other businesses? (Select all that apply.)

Advertising allowances Slotting allowances Zone pricing

Which of the following are pricing tactics used in B2B pricing? (Select all that apply.)

Allowances Seasonal discounts

Pricing strategies are most often based on cost, value, or ______.

competition

What advantage is there for a company to offer products at prices below actual market value?

Customers are more likely to try the product because they are not risking as much money.

In reference to cash discounts offered between two businesses, what does "6/10, n/30" mean?

If the buyer does not take the discount, the full amount must be paid within 30 days. The buyer gets a discount of 6% if the invoice is paid within 10 days.

What are the characteristics of leader pricing? (Select all that apply.)

It involves aggressive advertising. It sets a low price on something that customers often buy.

What are the characteristics of quantity discounts? (Select all that apply.)

They are higher with high volumes.

Which of the following statements are true of seasonal discounts? (Select all that apply.)

They are offered to retailers so they will stock up on seasonal merchandise in advance. They help manufacturers plan their production schedule. They can help retailers make a larger profit.

Which of the following are true of leader pricing, price lining, and price bundling? (Select all that apply.)

They are pricing tactics. They are aimed at consumers.

Which of the following are true of pricing tactics? (Select all that apply.)

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 offer an immediate discount on items purchased. They encourage first-time users to become regular users.

What types of customers are apt to lease a product instead of buying it? (Select all that apply.)

Those who do not want to bother with selling the item after they tire of it Those who cannot afford the purchase price

Which of the following are reasons that firms implement a market penetration pricing strategy? (Select all that apply.)

To discourage competitors To earn profits To establish market share To build sales

Each time Eddie's Cars sells a vehicle, the company receives a larger discount from the manufacturer. At the end of the fiscal year, the company often slashes its prices by several hundred dollars per car because that amount will be more than offset by the increased discount the company receives from the manufacturer. The manufacturer is giving Eddie's Cars ______.

a cumulative quantity discount

McDonald's offers extra-value meals, which include a hamburger, french fries, and a soft drink. The total price is lower than if each item were purchased individually. This type of pricing tactic is called ______.

bundling

A(n) discount is applied only if the buyer pays the invoice within a certain number of days.

cash

Cost-based pricing does NOT consider the influence of ______ on the marketplace.

consumers

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

True or false: Cash discounts are reductions retailers take in the initial selling price of the product or service.

false Reason: Markdowns are reductions retailers take in the initial selling price of the product or service.

The ______ pricing strategy features frequent sales, during which prices are lowered for a short time.

high/low

When consumers relish the challenge of getting the lowest price and are willing to expend the time and effort to seek out the lowest price every time, retailers should use the ______ pricing strategy.

high/low

A small, isolated community has only four auto mechanics. They drink together in the local bar, where they all agree to charge the same inflated price for their services. When cars break down, customers have no choice but to pay whatever the mechanics ask. The mechanics are engaging in ______.

horizontal price fixing

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

Tanya buys coverage for her car, home, and business from the same insurance company because she receives a substantial discount for grouping them together. The insurance company is using ______.

price bundling

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

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

The five Cs of pricing are examples of pricing ______.

strategies

Pricing ______ are short-term ways of concentrating on specific aspects of company objectives, costs, customers, competition, and channel members.

tactics