Question 1

When museums charge a lower admission fee to students and senior citizens, then this form of price discrimination is known as ________.

Accepted Answer

A)  location pricing 
B)  channel pricing 
C)  customer-segment pricing 
D)  special-customer pricing 
E)  loss-leader pricing 
A)  location pricing 
B)  channel pricing 
C)  customer-segment pricing 
D)  special-customer pricing 
E)  loss-leader pricing

Question 2

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 3

The reservation price or the maximum that most consumers would 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 4

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 ________.

Accepted Answer

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

Question 5

The decline in the average cost of production with accumulated production experience is called the ________.

Accepted Answer

A)  demand curve 
B)  supply chain 
C)  learning curve 
D)  value chain 
E)  indifference curve 
A)  demand curve 
B)  supply chain 
C)  learning curve 
D)  value chain 
E)  indifference curve

Question 6

In oligopolistic industries, all firms normally charge the same price. What kind of a pricing method are they said to be following?

Accepted Answer

Oligopolistic industries follo

Question 7

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

Accepted Answer

These are examples o

Question 8

Market skimming pricing makes sense under all the following conditions, EXCEPT ________.

Accepted Answer

A)  if a sufficient number of buyers have a high current demand 
B)  if the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear 
C)  if the high initial price does not attract more competitors to the market 
D)  if consumers are likely to delay buying the product until its price drops 
E)  if the high price communicates the image of a superior product 
A)  if a sufficient number of buyers have a high current demand 
B)  if the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear 
C)  if the high initial price does not attract more competitors to the market 
D)  if consumers are likely to delay buying the product until its price drops 
E)  if the high price communicates the image of a superior product

Question 9

Trade-in allowances reward dealers for participating in advertising and sales support programs.

Accepted Answer

A) True 
 B)False

Question 10

In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees
to accept as partial payment products manufactured with the supplied equipment.

Accepted Answer

A) True 
 B)False

Question 11

The price of tickets to the opera vary depending on where the person would like to be seated-in the gallery or in the stalls. This is an example of ________.

Accepted Answer

A)  channel pricing 
B)  time pricing 
C)  image pricing 
D)  product-form pricing 
E)  location pricing 
A)  channel pricing 
B)  time pricing 
C)  image pricing 
D)  product-form pricing 
E)  location pricing

Question 12

Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be-not the marketer's stated price.

Accepted Answer

A) True 
 B)False

Question 13

________ refers to selling below cost with the intention of destroying competition.

Accepted Answer

A)  Bid rigging 
B)  Loss-leader pricing 
C)  Predatory pricing 
D)  Price discrimination 
E)  Price penetration 
A)  Bid rigging 
B)  Loss-leader pricing 
C)  Predatory pricing 
D)  Price discrimination 
E)  Price penetration

Question 14

A firm is said to be following a market-skimming pricing strategy, if it introduces a product into the market at a high price and slowly drops the price over time.

Accepted Answer

A) True 
 B)False

Question 15

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 16

________ is the cost per unit at that level of production.

Accepted Answer

A)  Target cost 
B)  Average cost 
C)  Marginal cost 
D)  Opportunity cost 
E)  Fixed cost 
A)  Target cost 
B)  Average cost 
C)  Marginal cost 
D)  Opportunity cost 
E)  Fixed cost

Question 17

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 18

Companies strive to maximize their current profits if they are plagued with overcapacity, intense competition, or changing consumer wants.

Accepted Answer

A) True 
 B)False

Question 19

Companies prefer customers who are less price sensitive.

Accepted Answer

A) True 
 B)False

Question 20

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 has 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

Exam 14: Developing Pricing Strategies and Programs

When museums charge a lower admission fee to students and senior citizens, then this form of price discrimination is known as ________.

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

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

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 ________.

The decline in the average cost of production with accumulated production experience is called the ________.

In oligopolistic industries, all firms normally charge the same price. What kind of a pricing method are they said to be following?

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

Market skimming pricing makes sense under all the following conditions, EXCEPT ________.

Trade-in allowances reward dealers for participating in advertising and sales support programs.

In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

The price of tickets to the opera vary depending on where the person would like to be seated-in the gallery or in the stalls. This is an example of ________.

Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be-not the marketer's stated price.

________ refers to selling below cost with the intention of destroying competition.

A firm is said to be following a market-skimming pricing strategy, if it introduces a product into the market at a high price and slowly drops the price over time.

Consumers are less price sensitive ________.

________ is the cost per unit at that level of production.

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.

Companies strive to maximize their current profits if they are plagued with overcapacity, intense competition, or changing consumer wants.

Companies prefer customers who are less price sensitive.

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 has come down to $399. What kind of a pricing did Apple adopt?

Defining Marketing for the 21st Century

Developing Marketing Strategies and Plans

Collecting Information and Forecasting Demand

Conducting Marketing Research

Creating Long-Term Loyalty Relationships

Analyzing Consumer Markets

Analyzing Business Markets

Identifying Market Segments and Targets

Creating Brand Equity

Crafting the Brand Positioning

Competitive Dynamics

Setting Product Strategy

Designing and Managing Services

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 Personal Communications: Direct and Interactive Marketing, Word of Mouth, and Personal Selling

Introducing New Market Offerings

Tapping into Global Markets

Managing a Holistic Marketing Organization for the Long Run

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