Principles of Marketing Chapter 11
Assume a competitor has cut prices and a company determines they should respond. Effective actions that the company could initiate include __________. A. launch a low-price fighter brand B. raising prices C. decrease quality and increase prices D. improve quality and decrease prices E. reducing perceived value
Answer: A
Basic price adjustments, known as __________, are used to reward customers for certain responses. A. discounts and allowances B. psychological prices C. location-based pricing D. discounts and allocations E. segmented prices
Answer: A
Cheese makers in Wisconsin sell their leftover brine to local city and county highway departments, which use it in conjunction with salt to melt icy roads. Which product mix pricing strategy does this represent? A. By-product pricing B. Optional-product pricing C. Product-bundle pricing D. Two-part pricing E. Product line pricing
Answer: A
Many amusement parks charge a daily ticket or season pass charge plus additional fees for food and other in-park features. This is called __________. A. two-part pricing B. product-bundle pricing C. by-product pricing D. product line pricing E. optional-product pricing
Answer: A
What is the purpose of the Robinson-Patman Act? A. To prevent unfair price discrimination B. To prevent scanner fraud C. To prevent predatory pricing D. To prevent deceptive pricing E. To prevent price fixing
Answer: A
Which of the following statements is true regarding initiating price cuts? A. Cutting prices in an industry with excess capacity may lead to price wars. B. When faced with falling demand, firms should not cut prices. C. If faced with excess capacity a firm should not cut its price. D. Cutting price has no effect on costs. E. Firms never cut prices, they only raise them.
Answer: A
Which of the following statements regarding segmented pricing is correct? A. Segmented pricing practices can cause consumer resentment. B. Perceived value does not have to be considered when using segmented pricing. C. Different locations are not used as a basis for segmented pricing. D. For segmented pricing to be effective, the segments should have the same degree of demand. E. Segmented pricing is not used to price different versions of a product.
Answer: A
A soda pop company offers a discount to a grocer. In exchange, the grocer agrees to provide in-store advertising for the soda pop and additional sales-support. This is an example of __________. A. segment discounts B. promotional allowances C. trade-in allowances D. discounts E. cash discounts
Answer: B
Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of __________ pricing. A. by-product B. product bundle C. product line D. two-part E. captive-product
Answer: B
Gillette charges a fairly low price for their razors (relative to costs) and a high price for razor blades. They are using a strategy of __________ pricing. A. two-part pricing B. product-bundle C. captive-product D. by-product E. product line
Answer: C
One form of __________ is when movie theaters charge one price for adults and a different price for senior citizens. A. psychological pricing B. location-based pricing C. customer-segment pricing D. product form pricing E. promotional allowances
Answer: C
Which of the following is a concern when using optional-product pricing? A. How to price products that must be used with the main product B. Which products should be bundled at a lower price C. Which products to include in the base price and which to offer as options D. Whether to set a fixed fee or a variable usage rate E. How to determine the price steps between different products in a product line
Answer: C
Which of the following statements is true concerning new product pricing strategies? A. If competitors can easily enter the market, a market-skimming strategy should be used. B. For a market-penetration strategy to work, production and distribution costs must increase as sales volume increases. C. For a market-skimming strategy to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. D. When using a market-skimming strategy, marketers do not need to focus on the product's quality and image. E. A market-penetration strategy should be used if the market is not highly price sensitive.
Answer: C
Which of the following statements regarding dynamic pricing is correct? A. Because of dynamic pricing, online consumers no longer compare prices. B. Dynamic pricing is only effective when used online. C. Dynamic pricing could cause consumer resentment and damage customer relationships. D. The dynamic pricing tactic of surge pricing is legally questionable. E. Dynamic pricing benefits only consumers.
Answer: C
__________ occurs when retailers set an artificially high "regular price" and then advertise a "sale price" which is actually close to their everyday price. A. Price fixing B. Price discrimination C. Deceptive pricing D. Predatory pricing E. Retail price maintenance
Answer: C
Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Because she does not know much about wine, she will likely use the price of the wines as a(n) __________. A. type of segmented pricing B. indicator of geographic pricing C. indicator of the cost of production D. indicator of quality E. limited time offer
Answer: D
Promotional pricing tactics include __________. A. functional discounts, limited time offers, and location-based pricing B. customer-segment pricing, location-based pricing, and time-based pricing C. discounts, geographical pricing, and special-event pricing D. discounts, special-event pricing, and limited time offers E. discounts, limited time offers, and reference prices
Answer: D
When would a competitor most likely react to a firm's price change? A. When the product is differentiated B. When buyers are not well informed about prices C. When buyers are not well informed about the product D. When the number of firms involved is small E. When the number of firms involved is large
Answer: D
Which of the following statements regarding initiating price increases is correct? A. Prices should be increased when there is a lack of demand. B. Cost inflation is not a factor in price increases. C. Price increases do not impact profits. D. The company should consider ways to meet higher costs or demand without raising prices. E. Companies do not need to communicate reasons for price increases.
Answer: D
Which of the following statements regarding public policy and pricing is correct? A. Sellers are allowed to punish dealers who do not price a product at the manufacturer's suggested retail price. B. Companies are usually free to charge whatever prices they wish. C. Federal statutes apply to both interstate and intrastate commerce. D. Companies can, under some circumstances, price items below cost. E. It is legal in some industries for sellers to collude with competitors when setting prices.
Answer: D
Recently, Amazon.com has been accused of __________, which is the practice of selling products below cost to harm competitors. A. retail price maintenance B. price discrimination C. deceptive pricing D. predatory pricing E. price fixing
Answer: D
A company has set a low price on a new product it introduced. They want to maximize their market share and attract a large number of buyers quickly. Which new product pricing strategy should the company use? A. Psychological pricing B. Optional product pricing C. Market-skimming pricing D. Captive-product pricing E. Market-penetration pricing
Answer: E
One major objective of a market-penetration pricing strategy is to __________. A. attract buyers willing to pay a higher price B. prevent customer dissatisfaction C. skim off small but profitable segments D. set a high price to gain profits E. win a large market share
Answer: E
When Apple introduced their iPhone, they priced the new product at $599, considerably higher than either their iPod or competing cellular phones. Apple was pursuing a(n) __________ pricing strategy. A. by-product B. optional-product C. captive-product D. market-penetration E. market-skimming
Answer: E
Whirlpool washers and dryers are offered in many different models. Whirlpool will use __________ pricing to determine the price steps between the different models. A. product-bundle B. two-part pricing C. captive-product D. optional-product E. product line
Answer: E
