Question 1

Prestige pricing:

Accepted Answer

A)  equalizes supply and demand 
B)  uses high prices to promote a high-quality product 
C)  is the practice of marking up prices by 100 percent 
D)  is also called leader pricing 
E)  emphasizes the monetary nature of price 
A)  equalizes supply and demand 
B)  uses high prices to promote a high-quality product 
C)  is the practice of marking up prices by 100 percent 
D)  is also called leader pricing 
E)  emphasizes the monetary nature of price

Question 2

Target return on investment (ROI)is the most common profit objective used by firms.

Accepted Answer

A) True 
 B)False

Question 3

What is the impact of the Internet on pricing strategies?

Accepted Answer

The Internet is enabling buyers to quick

Question 4

A penetration pricing strategy tends to be most effective:

Accepted Answer

A)  when demand is relatively inelastic 
B)  under unitary conditions 
C)  in price-sensitive markets 
D)  when the company can only perform small production runs 
E)  if unit costs are high 
A)  when demand is relatively inelastic 
B)  under unitary conditions 
C)  in price-sensitive markets 
D)  when the company can only perform small production runs 
E)  if unit costs are high

Question 5

Keystoning is:

Accepted Answer

A)  the practice of marking up prices by 100 percent 
B)  a method used for determining the point of elasticity 
C)  a plan for reducing marginal costs 
D)  the practice of maintaining variable costs at one-half of total fixed costs 
E)  a method of changing consumers' perceptions about price 
A)  the practice of marking up prices by 100 percent 
B)  a method used for determining the point of elasticity 
C)  a plan for reducing marginal costs 
D)  the practice of maintaining variable costs at one-half of total fixed costs 
E)  a method of changing consumers' perceptions about price

Question 6

A situation in which a manufacturer,and its distributors agree that the retailers will sell the manufacturer's products at a certain price,at or above the price floor,is called _____.

Accepted Answer

A)  decoy pricing 
B)  resale price maintenance 
C)  functional pricing 
D)  bait pricing 
E)  price pressuring 
A)  decoy pricing 
B)  resale price maintenance 
C)  functional pricing 
D)  bait pricing 
E)  price pressuring

Question 7

A 16-ounce bottle of Prairie Herb vinegar sells for $4.95,and a 16-ounce bottle of Heinz vinegar costs $1.05.Prairie Herb vinegar is new to the market,perceived to be of higher quality,and provides a unique flavor to foods even though it is used in the same way as Heinz vinegar.Prairie Herb vinegar is most likely using a _____ policy.

Accepted Answer

A)  penetration pricing 
B)  status quo pricing 
C)  price-skimming 
D)  bundling cost pricing 
E)  geodemographic pricing 
A)  penetration pricing 
B)  status quo pricing 
C)  price-skimming 
D)  bundling cost pricing 
E)  geodemographic pricing

Question 8

Smelly Fruit
At first glance there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell,but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price.
-Refer to Smelly Fruit.Over the past two years the price for Kan Yao durian fruit has increased by 50%.If the amount sold has remained almost constant,we would say that demand is _____ :

Accepted Answer

A)  elastic 
B)  inelastic 
C)  unitary 
D)  Highly elastic 
E)  Moderately elastic 
A)  elastic 
B)  inelastic 
C)  unitary 
D)  Highly elastic 
E)  Moderately elastic

Question 9

Which of the following statements describes an advantage of status quo pricing?

Accepted Answer

A)  Status quo pricing is derived from actual costs of manufacturing. 
B)  Status quo pricing maintains the organization's differential advantage. 
C)  Status quo pricing is active,not reactive. 
D)  Status quo pricing causes price wars. 
E)  Status quo pricing requires little planning. 
A)  Status quo pricing is derived from actual costs of manufacturing. 
B)  Status quo pricing maintains the organization's differential advantage. 
C)  Status quo pricing is active,not reactive. 
D)  Status quo pricing causes price wars. 
E)  Status quo pricing requires little planning.

Question 10

Markup pricing,adding an amount to cost to cover expenses and profit,is one of the most common pricing methods used by intermediaries to establish a selling price.

Accepted Answer

A) True 
 B)False

Question 11

Research has shown that products that are perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

Accepted Answer

A) True 
 B)False

Question 12

It makes the most sense to use price skimming as a pricing policy when supply is greater than demand.

Accepted Answer

A) True 
 B)False

Question 13

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The $19.99 is the:

Accepted Answer

A)  revenue 
B)  price 
C)  profit 
D)  liquidity value 
E)  amortized value 
A)  revenue 
B)  price 
C)  profit 
D)  liquidity value 
E)  amortized value

Question 14

Jones Soda Company and Big Sky Brands have introduced Jones Soda Carbonated Candy,a candy that delivers a blast of the most popular Jones Soda flavors along with an oddly enjoyable tongue-tingling sensation.Which pricing strategy would be appropriate if the company wants to convince price-sensitive consumers to try it and not buy some other brand?

Accepted Answer

A)  price-lining 
B)  price-fixing 
C)  status quo pricing 
D)  penetration pricing 
E)  price-skimming 
A)  price-lining 
B)  price-fixing 
C)  status quo pricing 
D)  penetration pricing 
E)  price-skimming

Question 15

When the Mosquito Magnet was introduced,it was designed to rid the immediate area of mosquitoes and other annoying insects.The technology for the Mosquito Magnet had taken years to develop.It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die.What type of pricing policy would you recommend the company use to introduce this product to the market?

Accepted Answer

A)  status quo pricing 
B)  penetration pricing 
C)  price-skimming 
D)  flexible pricing 
E)  leader pricing 
A)  status quo pricing 
B)  penetration pricing 
C)  price-skimming 
D)  flexible pricing 
E)  leader pricing

Question 16

Which pricing method (skimming,penetration,or status quo)would be most appropriate for each of the following products: (1)a new kind of automatic vacuum cleaner; (2)brightly colored wooden blocks to be used as a child's toy; (3)a new,low-cost,no-calorie fat substitute; (4)a home computer; and (5)a designer perfume.Briefly justify your answers.

Accepted Answer

VACUUM CLEANER.Skimming could be used,be

Question 17

Smelly Fruit
At first glance there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell,but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price.
-Refer to Smelly Fruit.The durian fruit is a very unique product.To many Thai's no other fruit taste or smells anything like the durian.It's uniqueness,in the eyes of the customer,would tend to have which of the following

Accepted Answer

A)  It would have little affect. 
B)  It would tend to make the durian more price elastic. 
C)  It would tend to make the durian more price inelastic. 
D)  It would tend to raise the price in comparison to purchasing power. 
E)  It would tend to impact the durian's stage in the PLC. 
A)  It would have little affect. 
B)  It would tend to make the durian more price elastic. 
C)  It would tend to make the durian more price inelastic. 
D)  It would tend to raise the price in comparison to purchasing power. 
E)  It would tend to impact the durian's stage in the PLC.

Question 18

Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in the Cleveland,Ohio area.Last year,it managed to exceed its target ROI for the current fiscal year.The following results were found on its financial statements:
 
What was the actual return on investment (ROI)for Parrish Farms?

Accepted Answer

A)  6.67 percent 
B)  10 percent 
C)  22 percent 
D)  28 percent 
E)  100 
A)  6.67 percent 
B)  10 percent 
C)  22 percent 
D)  28 percent 
E)  100

Question 19

Regency,Inc.makes disposable cap and gown sets for graduations.Each cap and gown set sells for $15.The average variable cost for manufacturing 10 cap and gown sets is $100.Total fixed costs for the year equal $65,000.Calculate the break-even point in units.

Accepted Answer

A)  650 
B)  765 
C)  1,300 
D)  4,334 
E)  13,000 
A)  650 
B)  765 
C)  1,300 
D)  4,334 
E)  13,000

Question 20

The dimensions of quality that are important to consumers include:

Accepted Answer

A)  versatility 
B)  serviceability 
C)  performance 
D)  ease of use 
E)  all of the choices 
A)  versatility 
B)  serviceability 
C)  performance 
D)  ease of use 
E)  all of the choices

Prestige pricing:

Target return on investment (ROI)is the most common profit objective used by firms.

What is the impact of the Internet on pricing strategies?

A penetration pricing strategy tends to be most effective:

Keystoning is:

A situation in which a manufacturer,and its distributors agree that the retailers will sell the manufacturer's products at a certain price,at or above the price floor,is called _____.

Which of the following statements describes an advantage of status quo pricing?

Markup pricing,adding an amount to cost to cover expenses and profit,is one of the most common pricing methods used by intermediaries to establish a selling price.

Research has shown that products that are perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

It makes the most sense to use price skimming as a pricing policy when supply is greater than demand.

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The $19.99 is the:

Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in the Cleveland,Ohio area.Last year,it managed to exceed its target ROI for the current fiscal year.The following results were found on its financial statements: What was the actual return on investment (ROI)for Parrish Farms?

Regency,Inc.makes disposable cap and gown sets for graduations.Each cap and gown set sells for $15.The average variable cost for manufacturing 10 cap and gown sets is $100.Total fixed costs for the year equal $65,000.Calculate the break-even point in units.

The dimensions of quality that are important to consumers include:

An Overview of Marketing

Strategic Planning for Competitive Advantage

Ethics & Social Responsibility

The Marketing Environment

Developing a Global Vision

Consumer Decision Making

Business Marketing

Segmenting and Targeting Markets

Decision Support Systems and Marketing Research

Product Concepts

Developing and Managing Products

Marketing Channels and Supply Chain Management

Retailing

Marketing Communications and Advertising

Public Relations, Sales Promotion, and Personal Selling

Filters

Exam 16: Pricing Concepts

Prestige pricing:

Target return on investment (ROI)is the most common profit objective used by firms.

What is the impact of the Internet on pricing strategies?

A penetration pricing strategy tends to be most effective:

Keystoning is:

A situation in which a manufacturer,and its distributors agree that the retailers will sell the manufacturer's products at a certain price,at or above the price floor,is called _____.

Which of the following statements describes an advantage of status quo pricing?

Markup pricing,adding an amount to cost to cover expenses and profit,is one of the most common pricing methods used by intermediaries to establish a selling price.

Research has shown that products that are perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

It makes the most sense to use price skimming as a pricing policy when supply is greater than demand.

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The $19.99 is the:

Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in the Cleveland,Ohio area.Last year,it managed to exceed its target ROI for the current fiscal year.The following results were found on its financial statements: What was the actual return on investment (ROI)for Parrish Farms?

Regency,Inc.makes disposable cap and gown sets for graduations.Each cap and gown set sells for $15.The average variable cost for manufacturing 10 cap and gown sets is $100.Total fixed costs for the year equal $65,000.Calculate the break-even point in units.

The dimensions of quality that are important to consumers include:

An Overview of Marketing

Strategic Planning for Competitive Advantage

Ethics & Social Responsibility

The Marketing Environment

Developing a Global Vision

Consumer Decision Making

Business Marketing

Segmenting and Targeting Markets

Decision Support Systems and Marketing Research

Product Concepts

Developing and Managing Products

Marketing Channels and Supply Chain Management

Retailing

Marketing Communications and Advertising

Public Relations, Sales Promotion, and Personal Selling

Filters