Question 1

Differentiate between dynamic and fixed pricing.

Accepted Answer

Throughout most of history, prices were set by negotiation between buyers and sellers.The fixed price policy-setting one price for all buyers-is a relatively modern idea that arose with the development of large-scale retailing at the end of the nineteenth century. Today most prices are set this way. However, some companies are now reversing the fixed pricing trend. They are using dynamic pricing, adjusting prices continually to meet the characteristics and needs of individual customers and situations. Dynamic pricing makes sense in many contexts. It adjusts prices according to market forces, and it often works to the benefit of the customer.

Question 2

Which of the following is true of the bottom of the pyramid?

Accepted Answer

A)  It is a market segment that has been tapped into and depleted. 
B)  It consists of people who have easy access to luxury goods. 
C)  It comprises people who have easy access to the basic amenities of life. 
D)  It is considered a source of fresh growth opportunities. 
E)  It is a market segment which has insignificant purchasing power. 
A)  It is a market segment that has been tapped into and depleted. 
B)  It consists of people who have easy access to luxury goods. 
C)  It comprises people who have easy access to the basic amenities of life. 
D)  It is considered a source of fresh growth opportunities. 
E)  It is a market segment which has insignificant purchasing power. D

Question 3

When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?

Accepted Answer

Competitors are most likely to react when the number of firms involved is small, when the product is uniform, and when the buyers are well informed. If the firm faces one large competitor, and if the competitor tends to react in a set way to price changes, that reaction can be easily anticipated. But if the competitor treats each price change as a fresh challenge and reacts according to its self-interest, the company will have to figure out just what makes up the competitor's self-interest at the time.

Question 4

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Accepted Answer

A)  FOB-origin 
B)  uniform-delivered 
C)  zone 
D)  basing-point 
E)  freight-absorption 
A)  FOB-origin 
B)  uniform-delivered 
C)  zone 
D)  basing-point 
E)  freight-absorption

Question 5

Constantly reduced prices can erode a brand's value in the eyes of customers.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

Accepted Answer

A)  product line pricing 
B)  product bundle pricing 
C)  optional product pricing 
D)  by-product pricing 
E)  captive product pricing 
A)  product line pricing 
B)  product bundle pricing 
C)  optional product pricing 
D)  by-product pricing 
E)  captive product pricing

Question 7

________ allowances are price reductions given for turning in an old item when buying a new one.

Accepted Answer

A)  Promotional 
B)  Trade-in 
C)  Depreciation 
D)  Segmented 
E)  Functional 
A)  Promotional 
B)  Trade-in 
C)  Depreciation 
D)  Segmented 
E)  Functional

Question 8

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

Accepted Answer

A)  price collusion 
B)  price fixing 
C)  predatory pricing 
D)  competitive pricing 
E)  penetration pricing 
A)  price collusion 
B)  price fixing 
C)  predatory pricing 
D)  competitive pricing 
E)  penetration pricing

Question 9

Discuss the conditions under which a company might consider using price cuts or price increases.

Accepted Answer

Price cuts may be necessary when there i

Question 10

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

Accepted Answer

A)  zone pricing 
B)  basing-point pricing 
C)  uniform-delivered pricing 
D)  FOB-origin pricing 
E)  dynamic pricing 
A)  zone pricing 
B)  basing-point pricing 
C)  uniform-delivered pricing 
D)  FOB-origin pricing 
E)  dynamic pricing

Question 11

Which of the following is true of public policies and pricing?

Accepted Answer

A)  The government imposes no limits on intrastate pricing issues. 
B)  The Robinson-Patman Act governs interstate commerce. 
C)  Companies have free reign when it comes to setting prices. 
D)  The Sherman Act governs intrastate commerce. 
E)  The Clayton Act encourages the formation of monopolies. 
A)  The government imposes no limits on intrastate pricing issues. 
B)  The Robinson-Patman Act governs interstate commerce. 
C)  Companies have free reign when it comes to setting prices. 
D)  The Sherman Act governs intrastate commerce. 
E)  The Clayton Act encourages the formation of monopolies.

Question 12

Sellers cannot influence or use consumers' reference prices when setting prices.

Accepted Answer

A) True 
 B)False

Question 13

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Accepted Answer

A)  captive pricing 
B)  dynamic pricing 
C)  basing-point pricing 
D)  price bundling 
E)  cost-plus pricing 
A)  captive pricing 
B)  dynamic pricing 
C)  basing-point pricing 
D)  price bundling 
E)  cost-plus pricing

Question 14

Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

Accepted Answer

A)  product bundle 
B)  optional product 
C)  captive product 
D)  by-product 
E)  product line 
A)  product bundle 
B)  optional product 
C)  captive product 
D)  by-product 
E)  product line

Question 15

A quantity discount is a price reduction for buyers who ________.

Accepted Answer

A)  buy merchandise out of season 
B)  buy merchandise in bulk 
C)  pay their bills on time 
D)  buy discontinued products 
E)  return old items while buying new ones 
A)  buy merchandise out of season 
B)  buy merchandise in bulk 
C)  pay their bills on time 
D)  buy discontinued products 
E)  return old items while buying new ones

Question 16

Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________.

Accepted Answer

A)  market skimming 
B)  price fixing 
C)  deceptive pricing 
D)  price collusion 
E)  predatory pricing 
A)  market skimming 
B)  price fixing 
C)  deceptive pricing 
D)  price collusion 
E)  predatory pricing

Question 17

For market skimming to be successful, the cost of producing a smaller quantity of goods should not be higher than the prices charged.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

Accepted Answer

A)  product-segmented pricing 
B)  by-product pricing 
C)  customer-segmented pricing 
D)  captive product pricing 
E)  product bundling pricing 
A)  product-segmented pricing 
B)  by-product pricing 
C)  customer-segmented pricing 
D)  captive product pricing 
E)  product bundling pricing

Question 19

When a firm varies its price by the season, it is using ________.

Accepted Answer

A)  product-form pricing 
B)  customer-segment pricing 
C)  location-based pricing 
D)  time-based pricing 
E)  value-added pricing 
A)  product-form pricing 
B)  customer-segment pricing 
C)  location-based pricing 
D)  time-based pricing 
E)  value-added pricing

Question 20

Differentiate between market skimming and market penetration pricing strategies. Explain the conditions within which they are effective.

Accepted Answer

Market skimming is used to skim revenues

Differentiate between dynamic and fixed pricing.

Which of the following is true of the bottom of the pyramid?

When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Constantly reduced prices can erode a brand's value in the eyes of customers.

Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

________ allowances are price reductions given for turning in an old item when buying a new one.

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

Discuss the conditions under which a company might consider using price cuts or price increases.

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

Which of the following is true of public policies and pricing?

Sellers cannot influence or use consumers' reference prices when setting prices.

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

A quantity discount is a price reduction for buyers who ________.

Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________.

For market skimming to be successful, the cost of producing a smaller quantity of goods should not be higher than the prices charged.

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

When a firm varies its price by the season, it is using ________.

Differentiate between market skimming and market penetration pricing strategies. Explain the conditions within which they are effective.

Marketing: Creating and Capturing Customer Value

Company and Marketing Strategy: Partnering to Build Customer Relationships

Analyzing the Marketing Environment

Managing Marketing Information to Gain Customer Insights

Consumer Markets and Consumer Buyer Behavior

Business Markets and Business Buyer Behavior

Customer-Driven Marketing Strategy: Creating Value for Target Customers

Products, Services, and Brands: Building Customer Value

New-Product Development and Product Life Cycle Strategies

Pricing: Understanding and Capturing Customer Value

Marketing Channels: Delivering Customer Value

Retailing and Wholesaling

Communicating Customer Value: Integrated Marketing Communications Strategy

Advertising and Public Relations

Personal Selling and Sales Promotion

Direct and Online Marketing: Building Direct Customer Relationships

Creating Competitive Advantage

The Global Marketplace

Sustainable Marketing: Social Responsibility and Ethics

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Exam 11: Pricing Strategies: Additional Considerations

Differentiate between dynamic and fixed pricing.

Which of the following is true of the bottom of the pyramid?

When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Constantly reduced prices can erode a brand's value in the eyes of customers.

Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

________ allowances are price reductions given for turning in an old item when buying a new one.

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

Discuss the conditions under which a company might consider using price cuts or price increases.

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

Which of the following is true of public policies and pricing?

Sellers cannot influence or use consumers' reference prices when setting prices.

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

A quantity discount is a price reduction for buyers who ________.

Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________.

For market skimming to be successful, the cost of producing a smaller quantity of goods should not be higher than the prices charged.

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

When a firm varies its price by the season, it is using ________.

Differentiate between market skimming and market penetration pricing strategies. Explain the conditions within which they are effective.

Marketing: Creating and Capturing Customer Value

Company and Marketing Strategy: Partnering to Build Customer Relationships

Analyzing the Marketing Environment

Managing Marketing Information to Gain Customer Insights

Consumer Markets and Consumer Buyer Behavior

Business Markets and Business Buyer Behavior

Customer-Driven Marketing Strategy: Creating Value for Target Customers

Products, Services, and Brands: Building Customer Value

New-Product Development and Product Life Cycle Strategies

Pricing: Understanding and Capturing Customer Value

Marketing Channels: Delivering Customer Value

Retailing and Wholesaling

Communicating Customer Value: Integrated Marketing Communications Strategy

Advertising and Public Relations

Personal Selling and Sales Promotion

Direct and Online Marketing: Building Direct Customer Relationships

Creating Competitive Advantage

The Global Marketplace

Sustainable Marketing: Social Responsibility and Ethics

Filters