Question 1

A company does not set a final price until the product is finished or delivered. This is known as ________.

Accepted Answer

A)  delayed quotation pricing 
B)  an escalator clause 
C)  special-event pricing 
D)  time pricing 
E)  the shallow-pockets trap 
A)  delayed quotation pricing 
B)  an escalator clause 
C)  special-event pricing 
D)  time pricing 
E)  the shallow-pockets trap

Question 2

Many consumers use price as an indicator of quality and value.

Accepted Answer

A) True 
 B)False

Question 3

If a calculator company produces 100,000 hand calculators at a cost of $10, but the cost drops to $9 when it produces 200,000 and $8 when it produces 400,000 hand calculators, the decline in average cost with accumulated product experience is called the price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 4

Consumers are less price sensitive ________.

Accepted Answer

A)  to high cost items 
B)  when they frequently change their buying habits 
C)  when there are more substitutes 
D)  when there are more competitors 
E)  when they do not readily notice higher prices 
A)  to high cost items 
B)  when they frequently change their buying habits 
C)  when there are more substitutes 
D)  when there are more competitors 
E)  when they do not readily notice higher prices

Question 5

Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products.

Accepted Answer

A) True 
 B)False

Question 6

When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?

Accepted Answer

A)  loss-leader pricing 
B)  market-penetration pricing 
C)  market-skimming pricing 
D)  target-return pricing 
E)  value pricing 
A)  loss-leader pricing 
B)  market-penetration pricing 
C)  market-skimming pricing 
D)  target-return pricing 
E)  value pricing

Question 7

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Accepted Answer

A) True 
 B)False

Question 8

Companies that aim to ________ strive to be affordable luxuries.

Accepted Answer

A)  survive in the market 
B)  partially recover their costs 
C)  maximize their market share 
D)  pursue value pricing 
E)  be product-quality leaders 
A)  survive in the market 
B)  partially recover their costs 
C)  maximize their market share 
D)  pursue value pricing 
E)  be product-quality leaders

Question 9

When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, then this form of price discrimination is known as ________ pricing.

Accepted Answer

A)  product-form 
B)  loss-leader 
C)  special event 
D)  channel 
E)  location 
A)  product-form 
B)  loss-leader 
C)  special event 
D)  channel 
E)  location

Question 10

A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product.

Accepted Answer

A)  $18.10 
B)  $18.23 
C)  $20.25 
D)  $20.70 
E)  $25.50 
A)  $18.10 
B)  $18.23 
C)  $20.25 
D)  $20.70 
E)  $25.50

Question 11

In reality, it is very easy for firms to estimate their demand and cost functions.

Accepted Answer

A) True 
 B)False

Question 12

Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a ________ strategy.

Accepted Answer

A)  market-skimming 
B)  market-penetration 
C)  survival 
D)  market share maximization 
E)  product-quality leadership 
A)  market-skimming 
B)  market-penetration 
C)  survival 
D)  market share maximization 
E)  product-quality leadership

Question 13

Which of the following is NOT one of the possible consumer reference prices?

Accepted Answer

A)  typical price 
B)  actual future price 
C)  last price paid 
D)  expected future price 
E)  upper-bound price 
A)  typical price 
B)  actual future price 
C)  last price paid 
D)  expected future price 
E)  upper-bound price

Question 14

In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?

Accepted Answer

A)  a Dutch auction with one buyer and many sellers 
B)  an English auction with one seller and many buyers 
C)  an ascending bid auction 
D)  a sealed-bid auction 
E)  a Dutch auction with one seller and many buyers 
A)  a Dutch auction with one buyer and many sellers 
B)  an English auction with one seller and many buyers 
C)  an ascending bid auction 
D)  a sealed-bid auction 
E)  a Dutch auction with one seller and many buyers

Question 15

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

Accepted Answer

A) True 
 B)False

Question 16

In the case of prestige goods, the demand curve sometimes slopes upward.

Accepted Answer

A) True 
 B)False

Question 17

________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and recordkeeping.

Accepted Answer

A)  Consumer promotions 
B)  Quantity discounts 
C)  Functional discounts 
D)  Seasonal discounts 
E)  Trade-in allowances 
A)  Consumer promotions 
B)  Quantity discounts 
C)  Functional discounts 
D)  Seasonal discounts 
E)  Trade-in allowances

Question 18

Despite its weaknesses, markup pricing remains popular for which of the following reasons?

Accepted Answer

A)  Sellers can determine demand much more easily than they can estimate costs. 
B)  By tying the price to cost, the pricing task becomes more sophisticated. 
C)  When all firms in the industry use markup pricing, price competition flourishes. 
D)  Sellers take advantage of buyers when the latter's demand becomes acute. 
E)  Many people feel that cost-plus pricing is fairer to both buyers and sellers. 
A)  Sellers can determine demand much more easily than they can estimate costs. 
B)  By tying the price to cost, the pricing task becomes more sophisticated. 
C)  When all firms in the industry use markup pricing, price competition flourishes. 
D)  Sellers take advantage of buyers when the latter's demand becomes acute. 
E)  Many people feel that cost-plus pricing is fairer to both buyers and sellers.

Question 19

A Japanese firm is ready to sell its recent technological innovation to the US government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the US government.

Accepted Answer

A)  functional discount 
B)  compensation deal 
C)  buyback arrangement 
D)  offset agreement 
E)  barter deal 
A)  functional discount 
B)  compensation deal 
C)  buyback arrangement 
D)  offset agreement 
E)  barter deal

Question 20

Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building.

Accepted Answer

A) True 
 B)False

Exam 16: Developing Pricing Strategies and Programs

A company does not set a final price until the product is finished or delivered. This is known as ________.

Many consumers use price as an indicator of quality and value.

If a calculator company produces 100,000 hand calculators at a cost of $10, but the cost drops to $9 when it produces 200,000 and $8 when it produces 400,000 hand calculators, the decline in average cost with accumulated product experience is called the price elasticity of demand.

Consumers are less price sensitive ________.

Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products.

When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Companies that aim to ________ strive to be affordable luxuries.

When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, then this form of price discrimination is known as ________ pricing.

A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product.

In reality, it is very easy for firms to estimate their demand and cost functions.

Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a ________ strategy.

Which of the following is NOT one of the possible consumer reference prices?

In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

In the case of prestige goods, the demand curve sometimes slopes upward.

________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and recordkeeping.

Despite its weaknesses, markup pricing remains popular for which of the following reasons?

A Japanese firm is ready to sell its recent technological innovation to the US government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the US government.

Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building.

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

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