Question 1

In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help ________ and the penetration pricing would help ________.

Accepted Answer

A)  increase market share; attract price-insensitive customers 
B)  attract price-sensitive customers; increase market share 
C)  recoup initial research and development costs; increase market share 
D)  recoup initial research and development costs; improve firm reputation 
E)  increase market share; attract price insensitive customers 
A)  increase market share; attract price-insensitive customers 
B)  attract price-sensitive customers; increase market share 
C)  recoup initial research and development costs; increase market share 
D)  recoup initial research and development costs; improve firm reputation 
E)  increase market share; attract price insensitive customers

Question 2

According to the textbook, Revlon cosmetics uses ________ pricing.

Accepted Answer

A)  above-market 
B)  at-market 
C)  below-market 
D)  prestige 
E)  everyday low 
A)  above-market 
B)  at-market 
C)  below-market 
D)  prestige 
E)  everyday low

Question 3

Which of the following is a typical example of a variable cost?

Accepted Answer

A)  shipping costs 
B)  rent on a building 
C)  executive salaries 
D)  insurance premiums 
E)  leases on delivery trucks 
A)  shipping costs 
B)  rent on a building 
C)  executive salaries 
D)  insurance premiums 
E)  leases on delivery trucks

Question 4

Pricing constraints are

Accepted Answer

A)  barriers that must be overcome in order to set pricing objectives. 
B)  competitive pricing advantages one firm has over another. 
C)  different pricing strategies for each of the firm's products. 
D)  factors that limit the range of prices a firm may set. 
E)  barriers to entry a firm faces when launching a new product. 
A)  barriers that must be overcome in order to set pricing objectives. 
B)  competitive pricing advantages one firm has over another. 
C)  different pricing strategies for each of the firm's products. 
D)  factors that limit the range of prices a firm may set. 
E)  barriers to entry a firm faces when launching a new product.

Question 5

In order to deliver a product that the average consumer can afford, VIZIO

Accepted Answer

A)  handles product design and marketing in the United States and relies on contract manufacturers in other countries to build the product. 
B)  uses mass customization in other countries and then ships the HDTVs to the United States. 
C)  purchased a small company in China to distribute its products under the VIZIO name. 
D)  purchased a small company in Japan to distribute its products under the VIZIO name. 
E)  relies solely on recycled materials to build high-quality, no-frills products. 
A)  handles product design and marketing in the United States and relies on contract manufacturers in other countries to build the product. 
B)  uses mass customization in other countries and then ships the HDTVs to the United States. 
C)  purchased a small company in China to distribute its products under the VIZIO name. 
D)  purchased a small company in Japan to distribute its products under the VIZIO name. 
E)  relies solely on recycled materials to build high-quality, no-frills products.

Question 6

The break-even point (BEP) = [________ ÷ (Unit price − Unit variable cost)].

Accepted Answer

A)  Total cost 
B)  Total expense 
C)  Fixed cost 
D)  Unit variable cost 
E)  Total number of units produced or quantity 
A)  Total cost 
B)  Total expense 
C)  Fixed cost 
D)  Unit variable cost 
E)  Total number of units produced or quantity

Question 7

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Accepted Answer

A)  price elasticity of demand. 
B)  demand derivative of price. 
C)  average demand. 
D)  marginal revenue. 
E)  derived demand. 
A)  price elasticity of demand. 
B)  demand derivative of price. 
C)  average demand. 
D)  marginal revenue. 
E)  derived demand.

Question 8

Setting an annual target of a specific dollar volume of profit is referred to as

Accepted Answer

A)  target profit pricing. 
B)  target return-on-investment pricing. 
C)  loss-leader pricing. 
D)  at-, above-, or below-market pricing. 
E)  yield management pricing. 
A)  target profit pricing. 
B)  target return-on-investment pricing. 
C)  loss-leader pricing. 
D)  at-, above-, or below-market pricing. 
E)  yield management pricing.

Question 9

What is the difference between fixed costs and variable costs?

Accepted Answer

Fixed cost is the sum of the expenses of

Question 10

Using ________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

Accepted Answer

A)  customary pricing 
B)  below-market pricing 
C)  prestige pricing 
D)  penetration pricing 
E)  loss-leader pricing 
A)  customary pricing 
B)  below-market pricing 
C)  prestige pricing 
D)  penetration pricing 
E)  loss-leader pricing

Question 11

Southern gardeners normally pay $5 for a two-cubic-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions-newspaper, grass clippings, or some other kind of covering. When pricing pine bark mulch, a garden-supply or home-improvement retailer should use

Accepted Answer

A)  customary pricing. 
B)  at-market pricing. 
C)  loss-leader pricing. 
D)  penetration pricing. 
E)  bundle pricing. 
A)  customary pricing. 
B)  at-market pricing. 
C)  loss-leader pricing. 
D)  penetration pricing. 
E)  bundle pricing.

Question 12

Value-pricing is

Accepted Answer

A)  the ratio of perceived benefits to price. 
B)  the money or other considerations exchanged for the ownership or use of a product or service. 
C)  the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. 
D)  the ratio of price to perceived benefits. 
E)  the list price minus incentives and allowances plus extra fees. 
A)  the ratio of perceived benefits to price. 
B)  the money or other considerations exchanged for the ownership or use of a product or service. 
C)  the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. 
D)  the ratio of price to perceived benefits. 
E)  the list price minus incentives and allowances plus extra fees.

Question 13

Factors that limit the range of prices a firm may set are referred to as

Accepted Answer

A)  pricing restraints. 
B)  pricing constraints. 
C)  demand factors. 
D)  pricing barriers. 
E)  pricing restrictions. 
A)  pricing restraints. 
B)  pricing constraints. 
C)  demand factors. 
D)  pricing barriers. 
E)  pricing restrictions.

Question 14

For the sake of simplicity and by convention, price elasticity figures are shown as

Accepted Answer

A)  positive numbers (0.64, 1.25, etc.). 
B)  negative numbers (−0.64, −1.25, etc.). 
C)  Greek letters (∑, ∏, etc.). 
D)  Roman numerals (I, V, X, etc.). 
E)  English consonants (P, Q, R, etc.). 
A)  positive numbers (0.64, 1.25, etc.). 
B)  negative numbers (−0.64, −1.25, etc.). 
C)  Greek letters (∑, ∏, etc.). 
D)  Roman numerals (I, V, X, etc.). 
E)  English consonants (P, Q, R, etc.).

Question 15

According to the price equation, final price equals ________ minus allowances plus extra fees.

Accepted Answer

A)  salaries 
B)  the list price 
C)  profits 
D)  trade-ins 
E)  taxes 
A)  salaries 
B)  the list price 
C)  profits 
D)  trade-ins 
E)  taxes

Question 16

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the tasty, fat-free ice cream?

Accepted Answer

A)  The ice cream market is highly elastic. 
B)  A large portion of the market has inelastic demand for ice cream over a broad range of prices. 
C)  Economies of scale in production would be substantial. 
D)  Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category. 
E)  Once the initial price is set, it is nearly impossible to lower prices without alienating buyers. 
A)  The ice cream market is highly elastic. 
B)  A large portion of the market has inelastic demand for ice cream over a broad range of prices. 
C)  Economies of scale in production would be substantial. 
D)  Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category. 
E)  Once the initial price is set, it is nearly impossible to lower prices without alienating buyers.

Question 17

All of the following statements about standard markup pricing are true except which?

Accepted Answer

A)  High-volume products usually have smaller markups than do low-volume products. 
B)  The percentage markup depends on the type of retail store and the product involved. 
C)  Markups must cover all expenses of the store, pay for overhead costs, and contribute something to profits. 
D)  The method involves summing the total unit cost of providing a product or service and adding a specific amount. 
E)  Supermarket managers use this method since they have such a large number of products that estimating the demand for each product as a means of setting price is impossible. 
A)  High-volume products usually have smaller markups than do low-volume products. 
B)  The percentage markup depends on the type of retail store and the product involved. 
C)  Markups must cover all expenses of the store, pay for overhead costs, and contribute something to profits. 
D)  The method involves summing the total unit cost of providing a product or service and adding a specific amount. 
E)  Supermarket managers use this method since they have such a large number of products that estimating the demand for each product as a means of setting price is impossible.

Question 18

The purpose of a cash discount is to

Accepted Answer

A)  reward retailers for making large quantity purchases. 
B)  encourage purchasing items during periods of low demand. 
C)  prevent competitors from obtaining shelf space. 
D)  counteract the introduction of a new product by a competitor. 
E)  encourage retailers to pay their bills promptly. 
A)  reward retailers for making large quantity purchases. 
B)  encourage purchasing items during periods of low demand. 
C)  prevent competitors from obtaining shelf space. 
D)  counteract the introduction of a new product by a competitor. 
E)  encourage retailers to pay their bills promptly.

Question 19

Bundle pricing is considered to be a ________ pricing practice.

Accepted Answer

A)  demand-oriented 
B)  cost-oriented 
C)  profit-oriented 
D)  competition-oriented 
E)  product line-oriented 
A)  demand-oriented 
B)  cost-oriented 
C)  profit-oriented 
D)  competition-oriented 
E)  product line-oriented

Question 20

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price-sensitive. Hallmark was using a(n) ________ pricing strategy.

Accepted Answer

A)  prestige 
B)  skimming 
C)  target ROI 
D)  penetration 
E)  experience-curve 
A)  prestige 
B)  skimming 
C)  target ROI 
D)  penetration 
E)  experience-curve

In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help and the penetration pricing would help .

According to the textbook, Revlon cosmetics uses ________ pricing.

Which of the following is a typical example of a variable cost?

Pricing constraints are

In order to deliver a product that the average consumer can afford, VIZIO

The break-even point (BEP) = [________ ÷ (Unit price − Unit variable cost)].

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Setting an annual target of a specific dollar volume of profit is referred to as

What is the difference between fixed costs and variable costs?

Using ________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

Value-pricing is

Factors that limit the range of prices a firm may set are referred to as

For the sake of simplicity and by convention, price elasticity figures are shown as

According to the price equation, final price equals ________ minus allowances plus extra fees.

All of the following statements about standard markup pricing are true except which?

The purpose of a cash discount is to

Bundle pricing is considered to be a ________ pricing practice.

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price-sensitive. Hallmark was using a(n) ________ pricing strategy.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Filters

Exam 11: Pricing Products and Services

In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help ________ and the penetration pricing would help ________.

According to the textbook, Revlon cosmetics uses ________ pricing.

Which of the following is a typical example of a variable cost?

Pricing constraints are

In order to deliver a product that the average consumer can afford, VIZIO

The break-even point (BEP) = [________ ÷ (Unit price − Unit variable cost)].

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Setting an annual target of a specific dollar volume of profit is referred to as

What is the difference between fixed costs and variable costs?

Using ________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

Value-pricing is

Factors that limit the range of prices a firm may set are referred to as

For the sake of simplicity and by convention, price elasticity figures are shown as

According to the price equation, final price equals ________ minus allowances plus extra fees.

All of the following statements about standard markup pricing are true except which?

The purpose of a cash discount is to

Bundle pricing is considered to be a ________ pricing practice.

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price-sensitive. Hallmark was using a(n) ________ pricing strategy.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Filters

In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help and the penetration pricing would help .