MKTG 350 Exam 3

HP sells an inexpensive printer for an entry-level user, but the printer cartridges that need continual replacement are fairly expensive. This demonstrates the concept of ___________. A. product line pricing B. captive pricing C. prestige pricing D. reference pricing

captive pricing

The fundamental philosophy behind ________ is to reduce investment in promotion and transfer part of the savings to lower price. A. reverse auctions B. target return on investment pricing C. everyday low pricing D. variable pricing

everyday low pricing

Jean Claude has just completed a new line of designer handbags. He wants the price to communicate to the customer that the handbags are high quality and exclusive, so he sets the price high. He knows that after this season, the price may need to decrease as the market evolves. Jean Claude is using a ________ strategy. A. value pricing B. competitor-based pricing C. price skimming D. penetration pricing

price skimming

Dag runs a hardware store. He learned that customers process the price of $9.99 as significantly lower than the price of $10.00 because of the reduced digit count in the price point. Accordingly, he follows this rule to set up the prices for all products. Dag uses a ________ strategy. A. high/low pricing B. everyday low pricing (EDLP) C. psychological pricing D. one-price strategy

psychological pricing

_______ refers to products sold at prices below cost to attract shoppers to a store. A. Loss leader B. Prestige C. Free on board (FOB) D. Price bundling

Loss leader

________ require that a certain percentage markup be applied to all products. A. Criminal laws B. Minimum markup laws C. Fair trade laws D. Partnership laws

Minimum markup laws

Blue ocean strategies can be developed by: A. Breaking the value-cost tradeoff B. Reconstructing market boundaries C. Reaching beyond existing demand D. All of the above

All of the above

Among the five groups of adopters, which group is considered critical to long-term success? A. late majority B. laggards C. innovators D. early majority

early majority

The first step in the new-product development process is to ________. A. define the product potential B. define the market opportunity C. develop the product D. generate new-product ideas

generate new-product ideas

An individual moves through stages before adopting a product. During the awareness stage, consumers ________. A. purchase the product for the purpose of making a value decision B. find they have a passion for the product C. know of the product, but have insufficient information to move forward through the adoption process D. receive additional information and be motivated to seek out added information for further evaluation

know of the product, but have insufficient information to move forward through the adoption process

Estimating total demand is a function of three separate purchase situations, which are ________ purchases. A. new, impulse, and replacement B. new, repeat, and impulse C. new, repeat, and replacement D. new, ideal, and impulse

new, repeat, and replacement

Firms should be careful with a ________ strategy, as price is a cue for developing customer perceptions of product quality. The value proposition may be reduced if a low price belies the product's actual quality attributes. A. penetration pricing B. competitor-based pricing C. price skimming D. target ROI

penetration pricing

When a firm's objective is to gain as much market share as possible, a likely pricing strategy is ________, sometimes also referred to as pricing for maximum marketing share. A. price skimming B. target ROI C. competitor-based pricing D. penetration pricing

penetration pricing

A strategy to intentionally sell below cost to push a competitor out of a market, then raise prices to new highs, is called ________. A. bait and switch B. deceptive pricing C. price discrimination D. predatory pricing

predatory pricing

One rationale for establishing a price skimming objective is that ________ lends status to a product or brand by virtue of a price relatively higher than the competition. A. product line pricing B. captive pricing C. reference pricing D. prestige pricing

prestige pricing

Yoko is trying to explain to one of her ticket counter associates the differences in price associated with concert tickets. She explains that the lowest-priced tickets are for the least desirable seats and the highest-priced tickets are for the most desirable seats, with the rest of the ticket prices falling somewhere in between. Yoko is describing ________ pricing. A. product line B. reference C. odd/even D. prestige

product line

Among the five groups of adopters, laggards are people who ________. A. seek out new products consistent with their personal self-image B. are willing to pay the premium price for a product C. put off purchasing until there is no other option D. enjoy being the first to try and master a new product

put off purchasing until there is no other option

While screening and evaluating ideas, a go-to-market mistake happens when ________. A. a company fails to stop a bad product idea from moving into product development B. a good idea is prematurely eliminated during the screening process C. a company uses only external sources to generate product ideas D. a company uses only internal sources to generate product ideas

a company fails to stop a bad product idea from moving into product development

The rate at which new products become accepted is known as the ________ process. A. variance B. steering C. adoption D. diffusion

adoption

Golf ball manufacturers use "Iron Mike," a machine that swings a golf club at a constant velocity, to test the distance for new golf ball designs. When using Iron Mike, the manufacturers are engaged in A. market testing. B. premarket testing. C. concept testing. D. alpha testing

alpha testing

The Internet created a rise in ________ as more and more people decided to meet online to sell products to the highest bidder. A. stability pricing B. auction pricing C. price elasticity of demand D. product line pricing

auction pricing

Bella is a discount furniture store. Most of the items in the store are overstock and hence tend to be more inexpensive than other furniture. Recently Bella started to display the manufacturers' suggested retail price next to the price it charges to show the savings. Bella is using a ________ strategy. A. product line pricing B. prestige pricing C. price bundling D. reference pricing

reference pricing

The probability of a product's success is determined in the ________ stage of the product development process. A. business case analysis B. marketing plan C. idea generation D. product roll-out

business case analysis

Priceline.com is a firm that serves as a clearinghouse for extra capacity from airlines, hotels, and cruise lines. It is an example of a firm that uses a(n) ________ strategy. A. target return pricing B. reverse auction C. cost-plus pricing D. price war

reverse auction

Hector is opening an appliance store. He has estimated a monthly profit goal based on his anticipated expenses and earning goals and uses it to set product prices. Hector is implementing a ________ pricing strategy. A. penetration B. price skimming C. competitor-based D. target return on investment (ROI)

target return on investment (ROI)

Internal sources of generating product ideas include ________. A. company salespeople B. distributers C. existing customers D. wholesalers

company salespeople

Horses and Harnesses wanted to increase its price for hand-made saddles, but it knew its customers were very price sensitive, so it only raised prices by $2. None of the customers reacted to the new price. This minimal price change is known as ________. A. FOB pricing B. the just noticeable difference C. price-fixing D. a zone price

the just noticeable difference

Product followers who purchase older generation models with lower prices and fewer features are called ________. A. early adopters B. the late majority C. innovators D. the early majority

the late majority

Dyani runs Cute Cakes, a gourmet cupcake bakery. To set prices for her cupcakes, Dyani looks at the cost of making each cupcake and then adds an additional amount on top of that to arrive at her price. Dyani is using ________. A. cost-plus pricing B. high/low pricing C. average-cost pricing D. target return pricing

cost-plus pricing

External sources of generating product ideas include ________. A. marketing executives B. customer service representatives C. customers D. employees from R&D

customers

An individual moves through five stages before adopting a product. The five stages include all of the following EXCEPT ________. A. interest B. evaluation C. awareness D. validation

validation

Jameson purchased an alarm system for his car during a promotion. He considered the price after the promotion to be very attractive. However, he later learned that the firm set an artificially high reference price for the alarm system just before the promotion to make the advertised sale price more attractive. Jameson just experienced ________. A. predatory pricing B. bait and switch C. deceptive pricing D. price discrimination

deceptive pricing

With ________ pricing, customers are allowed—even encouraged—to haggle about prices. A. odd/even B. high/low C. psychological D. variable

variable

In the context of criteria used to prioritize product ideas, time to market refers to the time taken to ________. A. create awareness about a product among new market segments B. analyze market conditions to forecast sales C. get the product through the introduction stage to the growth stage D. develop and get the product to market

develop and get the product to market

Products that are new-to-the-world create a fundamental change in the marketplace and are known as ________. A. convenience goods B. technological transformations C. enhanced products D. disruptive innovations

disruptive innovations

In the context of product testing, beta testing is designed to ________. A. let engineers test a product's performance B. allow product specialists to check the quality of a product C. clarify the basic operationalization of a product D. encourage customers to evaluate and provide feedback on a prototype

D. encourage customers to evaluate and provide feedback on a prototype

________ are direct, immediate reductions in price provided to purchasers. A. Rebates B. Allowances C. Allotments D. Discounts

Discounts

Price wars occur when a company sells a product for one price in a particular geographic region and a different price in another geographic region. A. True B. False

False

. ________ costs are incurred over time, regardless of volume, whereas ________ costs fluctuate with volume. A. Total; variable B. Fixed; variable C. Variable; total D. Marginal; total

Fixed; variable

________ is used by firms that rely on periodic heavy promotional pricing, primarily communicated through advertising and sales promotion, to build traffic and sales volume. A. Everyday low pricing (EDLP) B. High/low pricing C. One-price strategy D. Variable pricing

High/low pricing

The four-actions framework for achieving value innovation include all the following actions EXCEPT: A. Imitate B. Reduce C. Create D. Raise

Imitate

________ are product enthusiasts who enjoy being the first to try and master a new product. A. Laggards B. Early adopters C. Innovators D. Early majority

Innovators

________ could result in overall higher prices for consumers since various competitors are all pricing the same to maximize their profits. A. Price-fixing B. Predatory pricing C. Reference pricing D. Price discrimination

Price-fixing

A stop-to-market mistake happens when a good idea is prematurely eliminated during the screening process. A. True B. False

True

Price is a key element in determining value. A. True B. False

True

Trial purchase is the focus of a product launch marketing plan. A. True B. False

True