mkt chptr 11
The price equation formula is price equals list price minus discounts and allowances plus: a. salaries. b. commissions. c. trade-ins. d. extra fees. e. taxes.
D
The ratio of perceived benefits to price is called: a. the price-quality relationship. b. prestige pricing. c. value-added pricing. d. value. e. value analysis.
D
To encourage retailers to pay their bills quickly, manufacturers offer them: a. quantity discounts. b. flexible pricing policies. c. promotional allowances. d. cash discounts. e. manufacturers' inducements.
D
Uniform delivered pricing means: a. title of goods remains with the manufacturer until sold to the ultimate consumer. b. pricing and title of goods passes to the buyer upon arrival at final destination. c. title of the goods passes to the buyer at the point of shipment. d. the price the seller sets includes all transportation costs. e. title of goods passes to the buyer when the state boundary is crossed.
D
When General Mills divides the sales revenue in a single year obtained by all its breakfast cereals by the breakfast cereal sales of all its competitors plus its own for that same year, it is calculating its: a. unit volume b. long-run profit. c. current profit. d. market share. e. target return.
D
When Pizza Hut announced it was add going to 25 percent more toppings to its Lover's Line of pizzas without increasing the price, what consumer motivation was it appealing to? a. cost b. appearance c. reliability d. value e. prestige
D
In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery, but unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market. Energizer used: a. penetration pricing. b. prestige pricing. c. skimming pricing. d. price lining. e. cost plus fixed fee pricing
A
In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery, but unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market. Was Energizer's strategy to steal market share from Duracell a success? a. No, because consumers equate quality of batteries with higher prices. b. No, because retailers did not respond appropriately to the target market pricing strategy. c. No, because consumers are price-insensitive when it comes to batteries. d. Yes, because consumers typically respond positively to cost-plus pricing. e. Yes, because the demand for batteries has unitary elasticity.
A
Inelastic demand exists when a(n): a. slight increase or decrease in price will not significantly affect the demand, or units sold for the product. b. a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases. c. an increase in price causes a larger increase in quantity demanded and total revenue falls to zero. d. the quantity demanded increases regardless of level of price and total revenue is unchanged. e. a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.
A
Manufacturers use seasonal discounts to: a. entice dealers to purchase seasonal merchandise earlier than their normal demand would require. b. rid themselves of dated merchandise. c. prolong the peak seasonal selling season. d. "load up" their dealers. e. show consumers holiday goodwill.
A
One problem in the interstate trucking industry is the number of trucks that return after making a delivery with an empty truck. There is a website where independent interstate truckers can look for loads that they can carry with them on their return trip. Because the trucks would be returning empty (and inefficiently), truckers, who use this website to get business that they would not have had without it, give a reduced shipping rate. This reduced rate is an example of: a. yield management pricing. b. penetration pricing. c. target pricing. d. cost plus pricing. e. odd-even pricing
A
Other things equal, if a firm finds the demand for one of its products is inelastic, it can INCREASE its total revenues by: a. raising its price. b. lowering its price. c. reducing fixed costs. d. reducing variable costs. e. reducing both fixed and variable costs.
A
Patty O'Rourke hired an attorney to represent her in a court case involving an auto accident. The attorney charged O'Rourke a fee for his services. Terry Thomas needed a haircut--the local stylist charged him $12 for her services. Aaron Mathison mowed his neighbor's lawn; in exchange, the neighbor roto-tilled Mathison's garden. The attorney fees paid by O'Rourke, the $12 charged by the hair stylist, and exchange of lawn mowing for garden tilling are examples of: a. price. b. barter. c. fee setting. d. unfair market exchanges. e. product fares.
A
Setting the highest initial price that customers really desiring the product are willing to pay is: a. skimming pricing. b. penetration pricing. c. price lining. d. odd-even pricing. e. prestige pricing
A
Ships Ahoy is a small company that makes model sailboat kits priced at $120 each. (There is no quantity discount.) The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in sailing and hobby magazines, and $3,500 for the monthly salary of its owner. If Ships Ahoy sells 150 kits in a given month, its monthly profit will be: a. $5,300. b. $10,500. c. $12,700. d. $12,800. e. $15,700
A
The Hummer is an attention-getting SUV that sold for $80,000 in a limited number of outlets. Then, General Motors proved the smaller version for $50,000 could be sold in many more outlets. To cover costs and reach the market faster, the Hummer 2 shared some parts with other GM cars. To which customer effects did Hummer marketing managers need to pay particular attention? a. The original Hummer is prestige priced; therefore, the price of Hummer 2 should make sense to customers and reflect differences in the perceived value of the products offered. b. High gas mileage will be important for Hummer 2. c. Color choices will be important for Hummer 2. d. Comfort and space for families will be important for Hummer 2. e. The original Hummer was penetration priced, so that the Hummer 2 continues this pricing strategy to maximize expected profit.
A
The practice of replacing promotional allowances with lower manufacturer list prices is called: a. everyday low pricing. b. FOB origin pricing. c. trade-in allowances. d. single-zone pricing. e. basing-point pricing.
A
The prices for all fruit trees sold in Stark Bros. fruit trees and landscaping catalog end in $.99. Stark Bros. uses: a. odd-even pricing. b. dynamic pricing. c. price lining. d. bundle pricing. e. experience curve pricing
A
Vending machines are a good example of the application of what type of competition-based pricing? a. customary pricing b. above-,at-,or below-market pricing c. loss-leader pricing d. penetration pricing e. bundle pricing
A
When microwave ovens were in the introduction stage of the product life cycle, some consumers were willing to pay exorbitant prices for the innovative ovens. Taking advantage of this strong consumer desire, marketers set the price for microwave ovens at the highest initial price that customers with a very strong desire for the product were willing to pay. Marketers of microwave ovens were using a __________ pricing strategy. a. skimming b. penetration c. prestige d. price lining e. bundle
A
Which of the following companies would be most likely to use target return-on-investment pricing? a. a public utility b. a florist shop c. a book publisher d. a veterinarian e. a farmer
A
Which of the following is true about survival pricing objectives? a. Profits, sales, and market share may be less important objectives than survival. b. Firms using survival pricing objectives need to match the unit volume demanded by customers with that demanded by competitors. c. Firms using survival pricing objectives are not seeking to improve cash flow. d. Market share pricing objectives are the same as survival pricing objectives. e. All of the above statements are true.
A
Which of the following statements about sales objectives is true? a. Increases in sales revenue will lead to increases in market share and profit. b. Increases in sales revenue will lead to decreases in market share and profit. c. Sales objectives are not a subset of pricing objectives. d. Sales revenues are not meaningful targets for managers. e. All of the above are true about profit objectives.
A
A __________ is most often used in marketing to study the impact on profits of changes in price, fixed costs, and variable costs. a. Gantt chart b. break-even chart c. ROI analysis d. cross-tabulation e. demand curve
B
A __________ policy involves setting one price for all buyers of a product or service. a. customary pricing b. one-price c. flexible-price d. standard markup e. blanket price
B
A break-even point is: a. the point of greatest difference between marginal revenue and marginal cost. b. the point at which total revenue and total cost are equal. c. the point at which marginal revenue equals marginal cost. d. the point at which total revenue and average revenue converge. e. the point at which profit is at a maximum.
B
A company that sets a low initial price on a new product to appeal immediately to the mass market is using: a. skimming pricing. b. penetration pricing. c. price lining. d. odd-even pricing. e. prestige pricing.
B
A firm's profit equation demonstrates that its profit equals: a. total cost + total revenue. b. total revenue - total cost. c. total cost - marginal cost. d. total cost - variable cost. e. total revenue x total cost
B
A shift in the demand curve means: a. the availability of substitutes remains the same. b. at a given price, more (or less) product is sold. c. consumer incomes remain the same. d. consumer tastes remain the same. e. the same thing as a movement along the demand curve
B
Bijan's in New York City has offered a five-piece set of crocodile luggage for $55,000. This is an example of __________ pricing. a. penetration b. prestige c. odd-even d. experience curve e. loss-leader
B
When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid cash rather than used his credit card. The convenience store was offering him a: a. trade discount. b. cash discount. c. promotional allowance. d. rebate. e. functional discount.
B
Elastic demand exists when a(n): a. a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls. b. a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases. c. an increase in price causes a larger increase in quantity demanded and total revenue falls to zero. d. the quantity demanded remains the same regardless of level of price and total revenue is unchanged. e. a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.
B
Four types of price discounts are: a. quantity, trade-in, promotional, and cash. b. seasonal, functional, cash, and quantity. c. quantity, seasonal, promotional, and cash. d. cash, trade-in, seasonal, and promotional. e. trade-in, promotional, geographic, and functional.
B
From a marketing viewpoint, price is __________ exchanged for the ownership or use of a good or service. a. money or other considerations (including goods but not intangibles and services) b. money or other considerations (including other goods and services) c. money exclusively earmarked for the transaction d. what is recognized as barter within a particular culture e. anything of value to the buyer but not necessarily of value to the seller
B
If you were to buy five dwarf peach trees from the Stark Bros. fruit trees and landscaping catalog in five separate orders, you will pay $108.99, but if you order its assortment (1 each of five different dwarf peach trees), you pay $89.99. In this example, Stark Bros. uses: a. standard markup pricing. b. bundle pricing. c. prestige pricing. d. price lining. e. demand-backward pricing
B
Katherine was shopping for a new pair of sunglasses. While in the Marshall Field's department store in the shopping center, Katherine visited the optical department. Here she found a pair of Oakley brand sunglasses that she considered very attractive. However, the price of $225 was more than she expected to pay for sunglasses and asked the salesperson why the glasses carried such a high price tag. The salesperson informed Katherine that the $225 ensured her of the finest quality glasses featuring ultra-strong titanium frames and specially formulated lenses, which would protect Katherine from all harmful UV and blue light. Finally, the lenses would offer optimum optical clarity, and the glasses would "look great" on Katherine. The salesperson was attempting to help Katherine realize the value offered by the Oakley glasses by: a. comparing the features of the glasses to those of other glasses. b. comparing the perceived benefits of the glasses to the price of the glasses. c. creating a value analysis for Katherine. d. creating a price/cost/benefit equation. e. comparing the technology of the glasses to the price of the glasses
B
Leupold & Stevens, Inc. makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous at a price much lower than it has ever sold a rifle scope before. The new scope offers several different magnifications and is the only scope in the $200 range that is made in the United States. Which pricing strategy is Leupold & Stevens using to appeal to a larger market? a. skimming pricing b. penetration pricing c. price lining d. odd-even pricing e. demand-backward pricing
B
Manufacturers of generic products use which method of competition-based pricing? a. demand backward pricing b. below-market pricing c. loss-leader pricing d. prestige pricing e. skimming pricing
B
Odd-even pricing is most closely related to: a. retailers' perceptions of price. b. customers' perceptions of price. c. wholesalers' markups. d. manufacturers' costs. e. cost of product facilitation to market.
B
Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus a profit for the law firm. Which pricing method are they using? a. target pricing b. cost-plus pricing c. customary pricing d. experience curve pricing e. bundle pricing
B
Reductions in unit cost for a larger order are: a. promotional allowances. b. quantity discounts. c. one-price policy prices. d. penetration prices. e. size of order allowances.
B
Rents, executive salaries, and insurance are examples of typical: a. variable costs. b. fixed costs. c. dividends. d. liquidity payments. e. total costs.
B
Target pricing is the result of a manufacturer __________ in a product to achieve the target price. a. setting the highest costs possible b. deliberately adjusting the cost and quality of the component parts c. researching what mark-ups wholesalers will accept d. studying competitive prices and making fixed-cost adjustments e. relying on a jury of executive opinion to establish cost factors
B
The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a skimming pricing strategy for its new product. Which of the following conditions would suggest using a skimming pricing strategy for the tasty fat-free ice cream? a. The ice cream market is highly conservative. b. A large portion of the market has inelastic demand for ice cream—over a fairly broad range of prices. c. Economies of scale in production are substantial. d. Retailers are willing to pay for new brands of premium ice cream in an extremely overcrowded category. e. Once the initial price is set, it is nearly impossible to lower price because of the possibility of alienating early buyers.
B
Value-pricing is: a. the ratio of perceived benefits to price. b. the practice of increasing a product's benefits while maintaining or decreasing price. c. the practice of simultaneously increasing product and service benefits and increasing price. d. the ratio of price to perceived benefits. e. list price minus discounts and allowances plus extra fees
B
Which of the following is NOT a profit-oriented pricing method? a. target profit pricing b. below-market pricing c. target return on sales d. target return on investment e. All of the above are profit-oriented pricing methods.
B
Which of the following is NOT a profit-oriented pricing method? a. target profit pricing b. below-market pricing c. target return on sales d. target return on investment e. All of the above are profit-oriented pricing methods
B
Which of the following statements about cost-oriented approaches is true? a. These methods focus on the demand side of the pricing problem and involve stimulating demand and decreasing revenue. b. These methods focus on the supply side of the pricing problem and involve considerations of production and marketing expenses. c. Target return on investment is an example of a cost-based method. d. Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production. e. Cost-oriented approaches are subcategories of competition-based methods so revenues are a critical factor.
B
Which of the following statements about profit objectives is true? a. Managers in the United States have long been praised for their insistence on managing for long-run profits. b. Profit objectives are frequently measured in terms of return on investment. c. Firms that are interested in strategic planning set their objectives to maximize current profit. d. A target return pricing objective would only be used by a company that needs to attract more customers to survive. e. Market share and unit volume are two types of profit objectives.
B
Which of the following statements about the factors that influence demand is true? a. As the availability of close substitutes increases, the demand for a product increases. b. As real consumer income increases, demand for a product increases. c. As the price of close substitutes increases, demand for a product declines. d. Changing consumer tastes have little impact on demand for a product. e. All of the above statements about the factors that influence demand are true.
B
__________ refers to how sensitive consumer demand and the firm's revenues are to changes in the product's price. a. Marginal revenue b. Price elasticity of demand c. Average demand d. Marginal demand e. Demand shift
B
A __________ involves setting different prices for products and services depending on individual buyers and purchase situation in light of demand, cost, and competitive factors. a. price lining policy b. customary pricing policy c. a flexible-price policy d. price fixing policy e. discretionary pricing policy
C
A bottle of shampoo shrink-wrapped with a bottle of conditioner for 10 cents more than the regular price of the shampoo is an example of __________ pricing. a. penetration b. prestige c. bundle d. odd-even e. standard mark-up
C
A company that manages apartments decides to buy 17 new dishwashers at a list price of $750, each as replacements for old dishwashers in a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150 per unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for the 17 dishwashers traded in. What is the actual price the company will pay for each dishwasher? a. $590 b. $600 c. $610 d. $730 e. $760
C
A demand curve shows: a. the total number of buyers for all products in a particular industry. b. the total sales for specified product lines, usually over a three-year period. c. a maximum number of products consumers will buy at a given price. d. anticipated marginal revenue obtained under specified customer demand conditions. e. the opposing axis on a profit equation projection
C
Assume it costs Lady Marion Seafood, Inc. $30 to catch, process, freeze, package, and ship 5-pound packages of Alaskan salmon. It uses a 60 percent markup on its salmon products and charges customers $48 for a postage-paid vacuum-sealed package of salmon. What type of pricing does Lady Marion Seafood use? a. target return-on-sales pricing b. cost-plus-fixed-fee pricing c. standard markup pricing d. target profit pricing e. customary pricing
C
Barter is the practice of exchanging goods and services for other goods and services rather than for: a. value. b. perceptions. c. money. d. promises. e. tariffs.
C
Break-even analysis is: a. a process that investigates the magnitude of difference between marginal revenue and marginal cost. b. a method of determining just how much a consumer is willing to pay for a product or service. c. a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. d. the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm. e. the graph that shows the maximum number of products consumers will buy at a given price.
C
Demand factors are factors that determine: a. the number of consumers who can afford to purchase a product or service. b. the price that should be charged for a given product. c. consumers' willingness and ability to pay for goods and services. d. the number of consumers who want to purchase a product. e. the number of consumers who can purchase a product.
C
FOB origin pricing is a method of pricing where: a. title of goods remains with the manufacturer until sold to the ultimate consumer. b. title of goods passes to the buyer upon arrival at the final destination. c. title of goods passes to the buyer at the point of loading. d. the price the seller sets includes all transportation costs. e. title of goods passes to the buyer when the state boundary is crossed.
C
Fixed cost refers to: a. the sum of the firm's expenses that vary directly with the quantity of the product produced and sold. b. the total expense incurred by a firm in producing and marketing a product or service. c. the firm's expenses that are stable and do not change with the quantity of the product that is produced and sold. d. the consideration exchanged for the ownership or use of a good or service. e. total firm expenses incurred in producing or selling one additional unit of product
C
Hallmark was the official supplier of flowers at the last Winter Olympics. Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch. Consumers can buy a smaller version of this same bouquet at the Hallmark website for $74.95. The Olympic bouquet that consumers can buy contains two dozen yellow roses, yet you can buy two dozen yellow roses for less than $35 at most supermarkets. If Hallmark is treating the Olympic bouquet as an innovative product, then it is using which demand-oriented approach to pricing? a. bundle pricing b. yield management pricing c. skimming pricing d. target return-on-sales pricing e. penetration pricing
C
Loss-leader pricing is: a. a pricing method where the price the seller quotes includes all transportation costs. b. setting the same price for similar customers who buy the same product and quantities under the same conditions. c. deliberately selling a product below its customary price to attract attention to it. d. a method of pricing based on a product's tradition, standardized channel of distribution, or other competitive factors. e. pricing based on intensity of customer demand.
C
Odd-even pricing is: a. setting prices one way for product lines and another way for individual brands. b. setting prices of luxury items at even price points and setting the price of necessities at odd price points. c. setting prices a few dollars or cents under an even number. d. a method of pricing where price often falls following the reduction of costs associated with the firm's production experience. e. adding a fixed percentage to the cost of all items in a specific product class
C
Often, the earlier a product is in its life cycle: a. the lower the price the firm must charge. b. the more competition it has. c. the greater the flexibility to charge a higher price. d. the lower the production costs. e. the lower the unit variable cost.
C
Penetration pricing is intended to appeal to which market? a. highly selective quality-seeking consumers b. price-insensitive markets c. the mass market d. specialty goods markets e. the same markets as skimming pricing
C
Price discrimination is: a. an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. b. the practice of charging a very low price for a product with the intent of driving competitors out of business. c. the practice of charging different prices to different buyers for goods of like grade and quality. d. a conspiracy among firms to set prices for a product or service. e. a seller's requirement that the purchaser of one product also buy another product in the line
C
Standard markup pricing: a. adjusts the price of a product so it is "in line" with that of its largest competitor. b. sets the price of a line of products at a number of different price points. c. adds a fixed percentage to the cost of all items in a specific product class. d. sets prices to achieve a profit that is a specified percentage of the sales volume. e. increases the price slightly to protect against undue profit losses from unforeseen environmental factors
C
The cash payment or extra amount of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote the product is a: a. quantity discount. b. flexible pricing policy. c. promotional allowance. d. payoff. e. manufacturer's inducement.
C
The manufacturer of a DVD-RW, a recordable DVD disk that can be erased and reused, is thinking of using a skimming pricing strategy for its new product. Which of the following conditions would argue AGAINST using a skimming pricing strategy for the DVD-RW disks? a. large potential market, even at a high price b. technological problems still exist for competitors c. increasing volume reduces production costs substantially d. consumers perceive a price-quality relationship e. all of the above
C
Trade discounts are given to: a. take business away from competitors. b. reward wholesalers and retailers for functions they have performed in the past. c. resellers on the basis of where they are in the channel of distribution. d. keep the prices offered the same. e. all of the above
C
Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic. a. customary pricing b. above-market pricing c. loss-leader pricing d. prestige pricing e. skimming pricing
C
What type of pricing involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price? a. standard markup pricing b. experience curve pricing c. cost-plus pricing d. penetration pricing e. bundle pricing
C
When Hallmark cards introduced a line of $.99 cards (about half the price of the previously least expensive cards sold by Hallmark), the greeting card company was trying to appeal to a mass market that was price sensitive. Hallmark was using a __________ pricing strategy. a. prestige b. skimming c. penetration d. demand-backward e. experience-curve
C
When you buy a Wilson Sting tennis racket from a discount store, you are offered the product at a single price. You can buy it or not, but there is no variation in price under the seller's: a. penetration strategy. b. odd-even pricing. c. one-price policy. d. bundle-pricing policy. e. flexible-price policy.
C
You are president of a manufacturer of small electronic appliances company. You want to reduce your break-even quantity. Other things equal, you can do this by: a. increasing the quantity sold, while keeping price unchanged. b. reducing marginal revenue. c. reducing unit variable cost. d. increasing fixed cost. e. doing all of the above.
C
You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989. Since Bosch uses its pricing strategy to project a product image, it is most likely using __________ pricing. a. bait and switch b. standard markup c. prestige d. penetration e. cost plus fixed-fee
C
__________ is charging different prices to maximize revenue for a set amount of capacity at any given time. a. Demand backward pricing b. Target pricing c. Yield management pricing d. Skimming pricing e. Penetration pricing
C
__________ is the marketing of two or more products for a single "package" price. a. Packaged pricing b. Loss-leader pricing c. Bundle pricing d. Tie-in pricing e. Multi-product pricing
C
__________ is the practice of changing a very low price for a product with the intent of driving competitors out of business. a. Price fixing b. Price discrimination c. Predatory pricing d. Deceptive pricing e. Geographical pricing
C
__________ specify the role of price in an organization's marketing and strategic plans. a. a business mission. b. pricing constraints. c. pricing objectives. d. a pricing plan. e. list or quoted prices.
C
Chico's sells women's sportswear. A simple tank top with the Chico's label costs $48. If you know you simply want a tank top, you can buy a tank top for $5 at a Family Dollar Store, but it won't have the Chico's label. What kind of demand-oriented approach to pricing is being used by this manufacturer? a. experience curve pricing b. target market share pricing c. demand-backward pricing d. prestige pricing e. flexible pricing
D
College tuitions, initiation fees, bus fares, and club dues are all: a. premiums. b. bartering tools. c. mediums of exchange. d. synonyms for price. e. examples of liquidity.
D
Creative marketers engage in __________, the practice of simultaneously increasing product and service benefits and maintaining or decreasing price. a. revenue sharing b. diminishing returns c. quantitative analysis d. value-pricing e. cost-plusing
D
Customary pricing is: a. a pricing method where the price the seller quotes includes all transportation costs. b. setting the same price for similar customers who buy the same product and quantities under the same conditions. c. deliberately selling a product below its list price to attract attention to it. d. a method of pricing a product based on tradition, standardized channel of distribution, or other competitive factors. e. pricing based on what the market will bear.
D
For precision shooting competitions, Leupold & Thomas, U.S. manufacturers of rifle scopes, introduced a revolutionary new patented optical system. Competitions are won by hundredths of an inch, so the image seen through the scope is crucial. That's why the Leupold rifle scope with its new optical system is designed to offer an image that is crisp, sharp, flat and second to none in image contrast. The initial price of the Competition Series scope will be $1,605.40. Which pricing strategy will best attract price-insensitive customers and help Leupold & Stevens recoup its research and development costs? a. price lining b. experience curve pricing c. customary pricing d. skimming pricing e. target pricing
D
If the CEO of the Clorox Company were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a _____ pricing objective. a. profit b. sales c. unit volume d. market share e. social responsibility
D
Marketing executives must translate estimates of customer demand into estimates of: a. personnel requirements. b. advertising expenditures. c. public relations efforts. d. revenues. e. none of the above.
D
Price fixing is: a. an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. b. the practice of charging a very low price for a product with the intent of driving competitors out of business. c. the practice of charging different prices to different buyers for goods of like grade and quality. d. a conspiracy among firms to set prices for a product. e. a seller's requirement that the purchaser of one product also buy another product in the line
D
Pricing constraints are: a. barriers that must be overcome in order to set pricing objectives. b. competitive pricing advantages one firm has over another. c. different pricing strategies for each of the firm's products. d. factors that limit the range of prices a firm may set. e. another name for demand curves.
D
Target return-on-investment pricing is: a. setting the price of a line of products at a number of different price points. b. adding a fixed percentage to the cost of all items in a specific product class. c. setting prices to achieve a profit that is a specified percentage of the sales volume. d. setting prices to achieve a specified percentage return-on-investment. e. setting an annual target of a specific dollar amount of profit.
D
Target return-on-sales pricing is: a. adjusting the price of a product so it is "in line" with that of its largest competitor. b. setting the price of a line of products at a number of different price points. c. adding a fixed percentage to the cost of all items in a specific product class. d. setting prices to achieve a profit that is a specified percentage of the sales revenue. e. setting an annual target of a specific dollar amount of profit.
D
The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other machine on the market. Based on this price, Asko determined the margins that would have to be allowed for wholesalers and retailers to give the $989 retail price. Asko used: a. prestige pricing. b. price lining. c. cost-plus pricing. d. target pricing. e. customary pricing
D
When buyers and sellers are separated by vast distances, geographical adjustments may be made to reflect the cost of transportation of the products from sellers to buyers. Which method of quoting prices would be chosen by a seller who wants to maximize profits? a. uniform delivered pricing b. single-zone pricing c. multiple-zone pricing d. FOB origin pricing e. FOB buyer's location
D
Which of the following pricing techniques is most sensitive to customers' responses to price? a. cost-plus-percentage-of-cost pricing b. experience curve pricing c. cost plus fixed fee pricing d. target pricing e. standard markup pricing
D
Which of the following statements about penetration pricing is true? a. Penetration pricing is a profit-oriented approach to pricing. b. Penetration pricing is a cost-based pricing method. c. Penetration pricing encourages competitors to enter a market. d. A penetration pricing strategy is more effective in a marketplace with price-sensitive consumers. e. Because penetration pricing is a high initial-price strategy, it will not attract competitors
D
Which of the following statements is true with respect to setting the list or quoted price? a. One should consider that demand is unrelated to price. b. The only policy used to set list prices is the one-price policy. c. The only policy used to set list prices is the flexible-price policy. d. The step of setting the list or quoted price follows selecting an approximate price level. e. Consumers do not use price as an indication of quality.
D
Which of the following would be an example of a variable cost for a publication like SHAPE magazine that is targeted to young women seeking a healthier lifestyle? a. increase in women in targeted demographics b. salary of publisher c. rent for parking deck used by employees d. paper and ink e. advertising purchased by new accounts
D
Woodsgift Farm sells floral jellies—jellies made from pansies, honeysuckle, wisteria, and other flowers. To price its jellies, the owners of the farm, add 30 percent to the cost of everything that goes into making the jellies including their salaries, jars, sugar, and pectin. What is this pricing method called? a. target return-on-sales pricing b. flexible pricing c. cost-plus-fixed-fee pricing d. standard markup pricing e. customary pricing
D
A computer retailer shrink-wraps Microsoft Works to his private label Pentium IV computer and sells the microcomputer and software for $2,500.00. This pricing scenario might best be described as: a. price lining. b. loss-leader pricing. c. customary pricing. d. prestige pricing. e. bundle pricing.
E
A manufacturer using __________ is setting a high price so that status-conscious consumers will be attracted to the product and buy it. a. skimming pricing. b. penetration pricing. c. price lining. d. odd-even pricing. e. prestige pricing
E
A movement along the demand curve assumes: a. the availability of substitutes remains the same. b. price is the only factor that will change quantity sold. c. consumer incomes remain the same. d. consumer tastes remain the same. e. A movement along the demand curve assumes all of the above.
E
A skimming pricing policy is likely to be most effective when: a. consumers perceive your product to be similar to other products on the market. b. a lower price will have a major effect on reducing unit costs. c. competitors will be attracted to the market due to the potential for high sales revenues. d. consumers tend to be price sensitive. e. none of the above is true
E
Most consumers realize the quality of diamonds varies, and most believe the higher the price of the diamond, the higher its quality. This is an example of price influencing the perception of overall quality, and __________ to consumers. a. acceptable cost b. perceptual investment c. barter potential d. return on investment e. value
E
Target profit pricing is: a. adjusting the price of a product so it is "in line" with that of its largest competitor. b. setting the price of a line of products at a number of different price points. c. adding a fixed percentage to the cost of all items in a specific product class. d. setting prices to achieve a profit that is a specified percentage of the sales volume. e. setting an annual target of a specific dollar amount of profit.
E
The demand curve for which type of pricing method slopes downward and to the right, then turns back to the left? a. skimming pricing b. penetration pricing c. price lining d. demand-backward pricing e. prestige pricing
E
The practice of exchanging goods and services for other goods and services rather than for money is called: a. pricing. b. pricing substitution. c. debt restructuring. d. value-pricing. e. barter.
E
The sum of fixed and variable costs is called: a. marginal cost. b. value added. c. average cost. d. total administrative overhead. e. total cost.
E
Variable cost is the: a. total expense incurred by a firm in producing and marketing a product or service. b. sum of the expenses of the firm that are stable and do not change with the quantity of the product that is produced and sold. c. money or other considerations (including other goods and services) exchanged for the ownership or use of a good or service. d. change in total cost that results from producing and marketing one additional unit of product. e. sum of the expenses of the firm that vary directly with the quantity of products that is produced and sold.
E
Which of the following factors would act as a constraint on pricing? a. The product is in high demand. b. The product is in the maturity stage of its product life cycle. c. The cost of the product to the firm is $100. d. Competitors' prices average $300 per unit. e. All of the above factors would act as constraints on pricing.
E
Which of the following is NOT a competition-oriented pricing approach? a. loss-leader pricing b. below-market pricing c. customary pricing d. above-market pricing e. penetration pricing
E
Which of the following is NOT a demand-oriented approach to pricing? a. prestige pricing b. bundle pricing c. odd-even pricing d. penetration pricing e. customary pricing
E
Which of the following is a major pricing objective? a. profit b. unit volume c. market share d. survival e. All of the above are major pricing objectives.
E
Which of the following is true about unit volume pricing objectives? a. Firms using unit volume pricing objectives often sell multiple products t very different prices. b. Firms using unit volume pricing objectives need to match the unit volume demanded by customers with production capacity. c. Firms using unit volume pricing objectives need to match the unit volume demanded by customers with the price. d. A unit volume pricing objective can be achieved and profit can decrease. e. All of the above statements are true.
E
Which of the following is true when selecting an approximate price level? a. The marketing manager must understand the marketing environment. b. The marketing manager must understand the goals of the firm. c. A balance must be struck between factors that might drive a price higher and other forces that may drive a price down. d. Marketing managers consider pricing objectives and constraints first, before choosing the general pricing approach they will use to arrive at an approximate price level. e. All of the above statements are true when selecting an approximate price level.
E
Which of the following statements about a flexible-price policy is true? a. Dell Computer uses a flexible-price policy. b. A flexible-price policy may be used when selling a house. c. This flexible-price policy may be used when selling a car. d. Flexible pricing may result in race and gender discrimination. e. All of the above statements about a flexible-price policy are true.
E