Chapter 11

What is the purpose of the​ Robinson-Patman Act?

To prevent unfair price discrimination

Companies​ can, under some​ circumstances, price items below

cost

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) __________.

indicator of quality

Basic price adjustments known as​ __________ are used to reward customers for certain responses.

discounts and allowances

Assume a competitor has cut prices and a company determines they should respond. Effective actions that the company could initiate include​ __________.

launch a​ low-price fighter brand

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?

market penetration

When Apple Computer Company introduced their​ iPhone, they priced the new product at​ $599, considerably higher than either their iPod or competing cellular phones. Apple Computer was pursuing​ a(n) __________ pricing strategy.

market skimming

Promotional pricing tactics include​ __________.

​discounts, special-event​ pricing, and limited time offers

​__________ occurs when retailers set an artificially high​ "regular price" and then advertise a​ "sale price" which is actually close to their everyday price.

Deceptive pricing

Which of the following statements regarding dynamic pricing is​ correct?

Dynamic pricing could cause consumer resentment and damage customer relationships.

When would a competitor most likely react to a​ firm's price​ change?

When the number of firms involved is small

Which of the following is a concern when using​ optional-product pricing?

Which products to include in the base price and which to offer as options

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?

by-product pricing

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.

captive-product

Segmented pricing practices can cause

consumer resentment

One form of​ __________ is when movie theaters charge one price for adults and a different price for senior citizens.

customer-segment

​Recently, Amazon.com has been accused of​ __________, which is the practice of selling products below cost to harm competitors.

predatory pricing

Cutting prices in an industry with excess capacity may lead to

price wars

Whirlpool washers and dryers are offered in many different models. Whirlpool will use​ __________ pricing to determine the price steps between the different models.

product line pricing

Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of​ __________ pricing.

product-bundle

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​ __________.

promotional allowances

The company should consider ways to meet higher costs or demand without

raising prices

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.

One major objective of a​ market-penetration pricing strategy is to​ __________.

win a large market share