MKT 340 Chapter Twenty
A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the markup as a percentage of selling price?
30 percent
J.C. Penney's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a percentage of cost is approximately _____ percent for this product.
57
Maintaining or increasing market share
Can be achieved even if industry sales are flat or decreasing.
Which of the following pricing objective sets prices to recover cash as quickly as possible?
Cash flow
The manager at Best Buy puts a sign up next to a Pioneer audio system that reads, "Only $199.99! $60 less than Circuit City." This is an example of what type of pricing strategy?
Comparison discounting
Suppose that Rayban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price than the current Rayban lines that are sold through more selective stores. In determining the price for this sunglass line, Rayban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands. Rayon's plan of gathering information about the other brands sold in department stores ,including their price, would most likely be used in a _____ basis for pricing.
Competition
If PepsiCo sets its twelve-pack price at $3.99 to match the price charged by Coca-Cola, Pepsi is using which of the following pricing methods?
Competition-based
Steinway produces concert grand pianos, often using the custom made material and designed desired by a specific customer. The average price of these pianos runs about $50,000 depending on the exact piano. What type of pricing does Steinway most likely use for these pianos?
Cost-plus
Amtrak prices its tickets to that it is less expensive to travel on weekends than during the week when there is heavy business travel. This illustrates ______ pricing.
Demand-based
If a product is priced based on how many or how few people want it at a particular time and place, ____ pricing is being used.
Demand-based
When establishing prices, a marketer's first step is to
Develop pricing objectives.
If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would be needed to make this a true pricing objective?
Identification of a time period for accomplishment
A firm establishes which of the following pricing objectives to maintain or increase its product's sales in relation to total industry sales?
Market share
Which of the following pricing approaches is used most often by retailers?
Markup pricing
Marketers must take steps to make sure that the pricing objectives they set are consistent with the organization's _______ objectives and _______ objectives.
Overall; marketing
Which of the following would be used in setting the price of a new product if considerable competition is expected?
Penetration pricing
A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy?
Premium pricing
Which of the following pricing strategies often results in a retailer losing money on the product?
Price leader
If an organization sets prices to recover research and development expenses and establish a premium quality image for its product, it would be using a ______ pricing objective.
Product quality
Research indicates that both market share and ______ are good indicators of profitability.
Product quality
The pricing of Clinique makeup considerably higher than brands such as Cover Girl, Revlon, and Maybelline is used to communicate ______, which is the company's primary pricing objective.
Product quality
Westin Inc. has an objective of achieving 25 percent return from its overall sales. This is an example of a _______ pricing objective.
Profit
Which of the following pricing objectives is rarely operational because its achievement is difficult to measure?
Profit Maximization
A manager at JC Penney discovers that Sears has reduced the price of its children's Levi's from $31.00 to $24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing strategy?
Random discounting
A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?
Reference pricing strategy
Most pricing objectives based on ______ are achieved by trial and error because not all cost and revenue data are available when prices are set.
Return on investment
Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and achieving price stability are all associated with a ____ pricing objective.
Status quo
What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?
Status quo
Which pricing objective de-emphasizes price and can lead to a climate of nonprime competition in an industry?
Status quo
Which type of pricing objective can reduce a firm's risk by helping stabilize demand for its products?
Status quo
When a company adjusts price levels so that it can increase sales volume to levels that match the organization's expenses, it is said to emily a ______ objective.
Survival
Which of the following is a requirement for setting pricing objectives?
The objectives should be explicitly stated.
If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using
a price leader.
Odd-even pricing is
a psychological pricing strategy.
When Gabriella logs on to Dell's website, she sees a notebook model priced well below $1,000. As she continues through the site to view the other options, she realizes the first one she saw was the cheapest model available, but she of course wants more features. Dell is utilizing
bait pricing.
When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of
bundle pricing.
Some grocery stores collect data on competitive prices
by using full-time comparison shoppers.
A market share objective
can be used effectively whether total industry sales are rising or falling.
Lexmark sells some of tis color printers for about $100, but the refill cartridges cost over $30 each. Lexmark's pricing strategy would be best labeled as
captive pricing.
Pricing the basic product in a product line low while pricing related items at a higher level is called
captive pricing.
Gambrel Designs thinks its new product, the Automatic Dog Walker, will have a short product life cycle; therefore, its marketing department sets its primary pricing objective as
cash flow.
Companies that focus on particular product categories and rely on everyday low pricing to acquire a large market share through aggressive and competitive pricing strategies are often referred to as
category killers.
Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called
comparison discounting.
When products in an industry are relatively homogeneous and price is a key purchase consideration,
competition-based pricing becomes more important.
If General Mills looks at Kellogg's cereal prices as the primary method of deterring its own prices, General Mills is using
competition-based pricing.
For custom-made equipment or commercial construction projects, which pricing method is most likely used?
cost-plus
The federal government often uses _____ pricing when it grants defense contracts.
cost-plus
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
When determining markup as a percentage of cost, divide the markup amount by
cost.
Goods that are priced primarily based on the way they have always been priced are examples of
customary pricing.
The three primary bases for developing prices are
demand, competition, and cost.
During July and August, Lakewood Links Golf Course, located in South Carolina, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of
demand-based pricing.
Many firms decide to charge various prices to individual customers for the same quality and quantity of product, a pricing strategy known as
differential pricing.
Sony management decided to use skimming as a pricing strategy for its newest line of high definition television (HDTV) sets. It should be aware that this strategy does not
discourage competitors from entering the market.
Some companies attempt to reduce or eliminate the use of frequent short-term price reductions by using
everyday low prices.
Pricing strategies and methods
help direct and structure the selection of a final price.
Competitors' price, along with the marketing variables they emphasize, are determining factors in
how important price will be to customers.
If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on
market share.
A cost-based pricing method commonly used in retail is called
markup pricing.
Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using
multiple-unit pricing.
Marketers at organizations engage in nonprice competition
need competitive price information to make sure that their products are priced at approximately the same levels as the prices of competing brands.
Maria recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell the house, she may have to use
negotiated pricing.
Price-skimming and penetration pricing are both strategies used for
new-product pricing.
The management at Allied Electronics is having a difficulty in raising the introductory price on system components to cover the increased costs of producing the sensing devices for home security systems, Apparently, Allied used a(n) _____ strategy in pricing these components.
penetration
If Nabisco wants to quickly gain a large market share with its new line of reduced-fat snack crackers, it should use
penetration pricing.
A problem associated with _____ is that consumers can predict when prices will be lowered and delay purchases until that time.
periodic discounting
The "White Sale" that many department stores have every year a few weeks after Christmas is an example of
periodic discounting.
Breyer's produces a variety of ice cream flavors and lines of varying qualities. The higher quality ice cream variety are priced higher than the basic ones. Breyer's is using _____ to price its ice cream.
premium pricing
If REVO sets the price for its sunglasses at $240, it is using psychological pricing to convey
prestige.
To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called
price leader pricing.
The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called
price lining.
All of the the following are psychological techniques except
price skimming
If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then $150 before reducing the price to $100, the firm's initial pricing strategy is known as
price skimming.
When Sharp first introduced its line of graphing calculators, it set step price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Sharp is called
price skimming.
When businesses charge the highest possible price that customers who really want the new product will pay, they are using
price skimming.
Reference pricing is
pricing a product at a moderate level and positioning it next to a more expensive model or brand.
Price leaders, comparison discounting, and special-event pricing are applications of
promotional pricing.
For customers, value is a function of the product's
quality attributes
A marketer is most likely to set prices according to a cash-flow objective when a
quick return on investment is desired.
If a business decides to reduce its prices once in a while on an unsystematic basis, it is using
random discounting.
Executives in Japan decided to price Lexus luxury cars in the United States at $55,000 while pricing them at $66,000 in their own country. This is an example of
secondary-market pricing.
Markup is measured either as a percentage of _____ or a percentage of _____.
selling price; cost
A sale at The Bon Marche the day after Thanksgiving to kick off the Christmas season would be considered
special-event pricing.
A sale that advertises prices "up to 65 percent off" the original price uses
tensile pricing.
A price-skimming strategy assumes that
the initial demand is highly inelastic.
Marketers improve their ability to establish prices appropriately when
they know prices charged for competing brands.
Bundle pricing may be pierced to be of value by customers because
they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money.
Competition-based pricing is
used when costs and revenues are secondary to competitors' prices.
When consumers are making do with less expensive products and shopping more selectively, manufacturers and retailers must focus on the _______ of their products.
value
Shat type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client?
Professional pricing
If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it knows that at that price it will reach that goal, the firm would be using a _____ pricing method.
demand-based
A penetration pricing strategy is particularly appropriate when demand is
highly elastic.
A product is a price leader when
it is sold at less than cost in the hope that sales of other products will increase.
When a company prices one item in a line low with the intention of selling a higher-priced item in the same line, it is using
bait pricing.
All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except
penetration pricing.
When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as
price lining.
When a company attempts to influence a consumer's perception of price to make a product's price more attractive and reduce "sticker shock," it is using a ____ pricing strategy.
psychological
