Question 1

When a company introduces a product at a high price and then gradually drops the price over time, it is pursuing a ________ strategy.

Accepted Answer

A)  market-penetration pricing 
B)  market-skimming pricing 
C)  value-pricing 
D)  switching cost 
E)  loss-leader pricing 
A)  market-penetration pricing 
B)  market-skimming pricing 
C)  value-pricing 
D)  switching cost 
E)  loss-leader pricing

Question 2

Which of the following auctions is characterized by one seller and many buyers?

Accepted Answer

A)  Walrasian auctions 
B)  ascending bid auctions 
C)  closed auctions 
D)  sealed-bid auctions 
E)  reverse auctions 
A)  Walrasian auctions 
B)  ascending bid auctions 
C)  closed auctions 
D)  sealed-bid auctions 
E)  reverse auctions

Question 3

Which of the following is the first step in setting a pricing policy?

Accepted Answer

A)  selecting a pricing method 
B)  selecting the pricing objective 
C)  determining demand 
D)  estimating cost 
E)  analyzing competitors' costs, prices, and offers 
A)  selecting a pricing method 
B)  selecting the pricing objective 
C)  determining demand 
D)  estimating cost 
E)  analyzing competitors' costs, prices, and offers

Question 4

Value pricing requires a company to reengineer its operations to become a low-cost producer.

Accepted Answer

A) True 
 B)False

Question 5

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Accepted Answer

A)  auction-type 
B)  target-plus 
C)  everyday low 
D)  high-low 
E)  going-rate 
A)  auction-type 
B)  target-plus 
C)  everyday low 
D)  high-low 
E)  going-rate

Question 6

Total costs consist of the sum of the fixed and the variable costs for any given level of production.

Accepted Answer

A) True 
 B)False

Question 7

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

Accepted Answer

A)  shrink the amount of the product available 
B)  substitute expensive materials or ingredients 
C)  reduce product features 
D)  reduce product services 
E)  augment the product 
A)  shrink the amount of the product available 
B)  substitute expensive materials or ingredients 
C)  reduce product features 
D)  reduce product services 
E)  augment the product

Question 8

The airline industries implement yield pricing by offering discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.

Accepted Answer

A) True 
 B)False

Question 9

A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

Accepted Answer

A) True 
 B)False

Question 10

A low price buys market share but not market loyalty. The same customers will shift to any lower-priced product that may come along. This is called the ________ trap.

Accepted Answer

A)  low-price 
B)  relative-market-share 
C)  shallow-pockets 
D)  target-market-share 
E)  fragile-market-share 
A)  low-price 
B)  relative-market-share 
C)  shallow-pockets 
D)  target-market-share 
E)  fragile-market-share

Question 11

A firm in a homogeneous market that has the ability to augment its product is more likely to need to meet a competitive price reduction than one that does not have the ability to augment its product.

Accepted Answer

A) True 
 B)False

Question 12

When PepsiCo sold its cola syrup to Russia for rubles and agreed to buy Russian vodka at a certain rate for sale in the United States, it was engaged in the form of countertrade known as an offset.

Accepted Answer

A) True 
 B)False

Question 13

Bella's Inc. has estimated the demand and costs associated with alternative prices. It has finally chosen to price its new offering in such a way that it will maximize the rate of return on investment. What can be deduced about the company's objective?

Accepted Answer

It can be deduced th

Question 14

Companies prefer customers who are less price sensitive.

Accepted Answer

A) True 
 B)False

Question 15

If demand changes considerably, with a small change in price, the demand is said to be ________.

Accepted Answer

A)  unit elastic 
B)  elastic 
C)  inelastic 
D)  marginal 
E)  strained 
A)  unit elastic 
B)  elastic 
C)  inelastic 
D)  marginal 
E)  strained

Question 16

Movie matinees are priced lower than the evening shows at local theaters; television advertising costs less when run after midnight. These are examples of what type of price discrimination?

Accepted Answer

These are examples o

Question 17

The reservation price, the maximum that most consumers will pay for a given product, is known as the ________ price.

Accepted Answer

A)  expected future 
B)  usual discounted 
C)  upper-bound 
D)  typical 
E)  historical competitor 
A)  expected future 
B)  usual discounted 
C)  upper-bound 
D)  typical 
E)  historical competitor

Question 18

Briefly describe the different types of pricing objectives.

Accepted Answer

When a company is preparing to sets its

Question 19

In second-degree price discrimination, the seller charges ________.

Accepted Answer

A)  less to buyers of larger volumes 
B)  different prices depending on the season, day, or hour 
C)  a separate price to each customer depending on the intensity of his or her demand 
D)  different prices for different versions of the same product 
E)  different prices for the same product depending on the channel through which it is sold 
A)  less to buyers of larger volumes 
B)  different prices depending on the season, day, or hour 
C)  a separate price to each customer depending on the intensity of his or her demand 
D)  different prices for different versions of the same product 
E)  different prices for the same product depending on the channel through which it is sold

Question 20

When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs), it was using ________.

Accepted Answer

A)  target costing 
B)  experience-curve pricing 
C)  ceiling pricing 
D)  the learning curve 
E)  promotional price elasticities 
A)  target costing 
B)  experience-curve pricing 
C)  ceiling pricing 
D)  the learning curve 
E)  promotional price elasticities

Exam 16: Developing Pricing Strategies and Programs

When a company introduces a product at a high price and then gradually drops the price over time, it is pursuing a ________ strategy.

Which of the following auctions is characterized by one seller and many buyers?

Which of the following is the first step in setting a pricing policy?

Value pricing requires a company to reengineer its operations to become a low-cost producer.

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Total costs consist of the sum of the fixed and the variable costs for any given level of production.

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

The airline industries implement yield pricing by offering discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.

A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

A low price buys market share but not market loyalty. The same customers will shift to any lower-priced product that may come along. This is called the ________ trap.

A firm in a homogeneous market that has the ability to augment its product is more likely to need to meet a competitive price reduction than one that does not have the ability to augment its product.

When PepsiCo sold its cola syrup to Russia for rubles and agreed to buy Russian vodka at a certain rate for sale in the United States, it was engaged in the form of countertrade known as an offset.

Bella's Inc. has estimated the demand and costs associated with alternative prices. It has finally chosen to price its new offering in such a way that it will maximize the rate of return on investment. What can be deduced about the company's objective?

Companies prefer customers who are less price sensitive.

If demand changes considerably, with a small change in price, the demand is said to be ________.

Movie matinees are priced lower than the evening shows at local theaters; television advertising costs less when run after midnight. These are examples of what type of price discrimination?

The reservation price, the maximum that most consumers will pay for a given product, is known as the ________ price.

Briefly describe the different types of pricing objectives.

In second-degree price discrimination, the seller charges ________.

When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs), it was using ________.

Defining Marketing for the New Realities

Developing Marketing Strategies and Plans

Collecting Information and Forecasting Demand

Conducting Marketing Research

Creating Long-Term Loyalty Relationships

Analyzing Consumer Markets

Analyzing Business Markets

Tapping Into Global Markets

Identifying Market Segments and Targets

Crafting the Brand Positioning

Creating Brand Equity

Addressing Competition and Driving Growth

Setting Product Strategy

Designing and Managing Services

Introducing New Market Offerings

Designing and Managing Integrated Marketing Channels

Managing Retailing, Wholesaling, and Logistics

Designing and Managing Integrated Marketing Communications

Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations

Managing Digital Communications: Online, Social Media, and Mobile

Managing Personal Communications: Direct and Database Marketing and Personal Selling

Managing a Holistic Marketing Organization for the Long Run

Filters