MKTG 409 Chapter 20 Practice Tests

Assume a retailer purchases a can of premium dog food at $2.25 and adds 75 cents to the cost, making the price $3. What is the markup as a percentage of selling price?

25%

Kara Thrace operates a service business that engages in systematically collecting data on brands and prices at competitors' stores. For which stage of the price establishment process would this service be most appropriate?

Evaluating Competitors Prices

Adidas is establishing a ______ pricing objective to maintain or increase its product's sales in relation to total industry sales.

Market share

Which of the following objectives is likely to be more expensive for a firm as the cost of materials and research may be greater?

Product Quality

Which of the following pricing objectives can reduce a firm's risks by helping to stabilize demand for its products?

Status Quo

If Albertsons Market advertise 2-liter bottles of Coke for 89 cents to generate store traffic so that shoppers will purchase other items at regular prices, the grocer is using

a price leader

Which of the following should be accomplished after developing pricing objectives?

assessing the target market's evaluation of price.

Which of the following pricing strategies sets the basic product line low, but the price on the items required to operate or enhance it are higher?

captive pricing

Which of the following pricing objectives set prices to recover cash as quickly as possible?

cash-flow

The Federal Trade Commission has established guidelines for ______. If the higher price against which the comparison is made is the price formerly charged for the product, the seller must have made the previous price available to customers for a reasonable time period.

comparison discounting

Which of the following is often used by producers of relatively homogenous products, especially when the target market considers price to be an important purchase considerations?

competition-based pricing

When determining markup as a percentage of cost, divide the markup amount by

cost

When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using ____ pricing.

cost-plus

Which of the following prices bases is mostly likely to be used for commercial construction projects or custom-made equipment?

cost-plus pricing

The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ___________ pricing. a) price-line b) promotional c) professional d) differential e) psychological

differential

In the absence of government controls, pricing is a(n) ______ and ______ way to adjust the marketing mix.

flexible; convenient

ACME Corp. has a pricing objective to increase its primary product's sales relative to total industry sales. This is best described as a(n) _______.

market share objective

Which of the following bases for pricing is most commonly used by retailers?

markup pricing

All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except

penetration pricing

If Kashi wants to gain a large market share quickly with its new reduced-fat crackers, it should use

penetration pricing

Chevrolet's president's day sales are an example of _________.

periodic discounting

Which of the following pricing strategies often results in a retailer losing money on the product?

price leader

When Texas Instruments first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used is called

price skimming

Which pricing strategy provides the most flexible introductory base price?

price skimming

Reference pricing is

pricing a product at a moderate level and positioning it next to a more expensive model or brand.

Which of the following product line pricing strategies is NOT generally used for business products?

psychological pricing

______ is pricing a product at a moderate level and positioning it next to more expensive models or brands.

reference pricing

Maintaining a certain market share, meeting competitors' prices. Maintaining favorable image, and achieving price stability are all associated with a _______ pricing objective.

status quo

When pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry?

status quo

A price skimming strategy assumes that

the initial demand will be highly inelastic

Firefly Space Shuttles is using a strategy of maximizing revenues by making numerous price changes in response to demand, competitors' prices, or environmental conditions. This is best described as _____.

yield management