Question 1

The first step in demand-minus pricing is to determine

Accepted Answer

A)  return-on-investment requirements. 
B)  production and marketing costs. 
C)  markup requirements for all channel members. 
D)  final selling price. 
A)  return-on-investment requirements. 
B)  production and marketing costs. 
C)  markup requirements for all channel members. 
D)  final selling price.

Question 2

In product-based price discrimination, price differentials for each good or service should be

Accepted Answer

A)  equal to cost differentials. 
B)  greater than cost differentials. 
C)  less than cost differentials. 
D)  based on modified break-even analysis. 
A)  equal to cost differentials. 
B)  greater than cost differentials. 
C)  less than cost differentials. 
D)  based on modified break-even analysis.

Question 3

A firm believes it can reduce costs by increasing its market share (due to high bargaining power and opportunities for mechanization and automation). It should use ___ pricing.

Accepted Answer

A)  flexible 
B)  customary 
C)  skimming 
D)  penetration 
A)  flexible 
B)  customary 
C)  skimming 
D)  penetration

Question 4

A firm's overall pricing strategy is coordinated with its target market, image, and marketing mix through a

Accepted Answer

A)  broad price policy. 
B)  competition-based price strategy. 
C)  demand-based price strategy. 
D)  cost-based price strategy. 
A)  broad price policy. 
B)  competition-based price strategy. 
C)  demand-based price strategy. 
D)  cost-based price strategy.

Question 5

a.	Define price discrimination.
b. Under what circumstances is price discrimination illegal?
c. Develop a price discrimination strategy for a hotel chain, including an example of each form of price discrimination.

Accepted Answer

a. Price discrimination is the practice

Question 6

In modified break-even analysis, a firm's net profit does NOT necessarily rise if sales revenues increase because

Accepted Answer

A)  marginal costs may increase. 
B)  excess capacity may exist. 
C)  demand may be highly elastic at lower price levels. 
D)  fixed costs may be constant. 
A)  marginal costs may increase. 
B)  excess capacity may exist. 
C)  demand may be highly elastic at lower price levels. 
D)  fixed costs may be constant.

Question 7

A firm sets prices by computing merchandise, service, and overhead costs, and then adds an amount to cover its profit goals. This illustrates a

Accepted Answer

A)  demand-based price strategy. 
B)  competition-based price strategy. 
C)  broad price policy. 
D)  cost-based price strategy. 
A)  demand-based price strategy. 
B)  competition-based price strategy. 
C)  broad price policy. 
D)  cost-based price strategy.

Question 8

An unrealistic assumption made in traditional break-even analysis is that

Accepted Answer

A)  a firm will profit at all sales amounts above the break-even point. 
B)  greater quantities can be sold at lower prices. 
C)  excess capacity exists. 
D)  wide variations in quantity can be sold at the same price. 
A)  a firm will profit at all sales amounts above the break-even point. 
B)  greater quantities can be sold at lower prices. 
C)  excess capacity exists. 
D)  wide variations in quantity can be sold at the same price.

Question 9

The price-quality association is most likely to be used as a consumer decision-making guide when consumers

Accepted Answer

A)  are able to negotiate prices. 
B)  are able to perceive small differences in quality among brands. 
C)  have little experience or confidence in judging quality. 
D)  have high knowledge of brand names. 
A)  are able to negotiate prices. 
B)  are able to perceive small differences in quality among brands. 
C)  have little experience or confidence in judging quality. 
D)  have high knowledge of brand names.

Question 10

A regulated utility often cites the need for a minimum return on investment when making rate-increase requests. This illustrates the use of

Accepted Answer

A)  profit-based objectives. 
B)  sales-based objectives. 
C)  status quo-based objectives. 
D)  skimming pricing. 
A)  profit-based objectives. 
B)  sales-based objectives. 
C)  status quo-based objectives. 
D)  skimming pricing.

Question 11

The Following Questions are linked to this scenario: A firm wishes to calculate its maximum acceptable costs under two scenarios: direct or indirect distribution.
-Under the direct distribution option, the firm would sell its shoes directly via the Internet. The firm's selling price cannot exceed $159 for its line of quality men's shoes. If it requires a 40 percent markup (at retail), its maximum acceptable merchandise costs

Accepted Answer

A)  are $63.60. 
B)  are $95.40. 
C)  are $119.00. 
D)  cannot be determined based on the data provided. 
A)  are $63.60. 
B)  are $95.40. 
C)  are $119.00. 
D)  cannot be determined based on the data provided.

Question 12

The use of price adjustments such as surcharges, additional markups, and markdowns illustrates

Accepted Answer

A)  price lining 
B)  leader pricing. 
C)  odd pricing 
D)  variable pricing. 
A)  price lining 
B)  leader pricing. 
C)  odd pricing 
D)  variable pricing.

Question 13

A firm utilizing an odd-pricing strategy assumes that consumers have inelastic demand between odd prices and even-dollar values.

Accepted Answer

A) True 
 B)False

Question 14

A heating-oil dealer decides to charge prices 10 percent above the market because it offers 24-hour service, has scheduled deliveries, and has a superior oil-burner maintenance program. This illustrates a competition-based price strategy.

Accepted Answer

A) True 
 B)False

Question 15

The objective of yield management pricing is to maximize company revenues during a given time period.

Accepted Answer

A) True 
 B)False

Question 16

A firm is contractually able to raise an item's price to reflect its rising costs in those items' essential ingredients without changing printed list prices with a(n) ___ clause.

Accepted Answer

A)  surcharge 
B)  escalator 
C)  markup 
D)  price-ceiling 
A)  surcharge 
B)  escalator 
C)  markup 
D)  price-ceiling

Question 17

In bundled pricing, consumers are able to choose the services they desire (such as delivery and installation) and pay only for those services selected.

Accepted Answer

A) True 
 B)False

Question 18

A publisher charges the same prices to all its wholesale customers, including applicable quantity and cash discounts. This policy illustrates

Accepted Answer

A)  price lining. 
B)  a one-price policy. 
C)  customary pricing. 
D)  price guarantees. 
A)  price lining. 
B)  a one-price policy. 
C)  customary pricing. 
D)  price guarantees.

Question 19

Which of these pricing techniques is most appropriate for a firm with a differentiated product, inelastic demand, and strong patent protection?

Accepted Answer

A)  A one-price policy 
B)  A competition-based price strategy 
C)  A cost-based price strategy 
D)  A demand-based price strategy 
A)  A one-price policy 
B)  A competition-based price strategy 
C)  A cost-based price strategy 
D)  A demand-based price strategy

Question 20

A product is sold from manufacturer to wholesaler to retailer to final consumer. If the latter is willing to pay $800 for the product and each channel member requires a 20 percent markup, the maximum merchandise costs to the manufacturer are $512.

Accepted Answer

A) True 
 B)False

Exam 21: Developing and Applying a Pricing Strategy

The first step in demand-minus pricing is to determine

In product-based price discrimination, price differentials for each good or service should be

A firm believes it can reduce costs by increasing its market share (due to high bargaining power and opportunities for mechanization and automation). It should use ___ pricing.

A firm's overall pricing strategy is coordinated with its target market, image, and marketing mix through a

a. Define price discrimination. b. Under what circumstances is price discrimination illegal? c. Develop a price discrimination strategy for a hotel chain, including an example of each form of price discrimination.

In modified break-even analysis, a firm's net profit does NOT necessarily rise if sales revenues increase because

A firm sets prices by computing merchandise, service, and overhead costs, and then adds an amount to cover its profit goals. This illustrates a

An unrealistic assumption made in traditional break-even analysis is that

The price-quality association is most likely to be used as a consumer decision-making guide when consumers

A regulated utility often cites the need for a minimum return on investment when making rate-increase requests. This illustrates the use of

The use of price adjustments such as surcharges, additional markups, and markdowns illustrates

A firm utilizing an odd-pricing strategy assumes that consumers have inelastic demand between odd prices and even-dollar values.

A heating-oil dealer decides to charge prices 10 percent above the market because it offers 24-hour service, has scheduled deliveries, and has a superior oil-burner maintenance program. This illustrates a competition-based price strategy.

The objective of yield management pricing is to maximize company revenues during a given time period.

A firm is contractually able to raise an item's price to reflect its rising costs in those items' essential ingredients without changing printed list prices with a(n) ___ clause.

In bundled pricing, consumers are able to choose the services they desire (such as delivery and installation) and pay only for those services selected.

A publisher charges the same prices to all its wholesale customers, including applicable quantity and cash discounts. This policy illustrates

Which of these pricing techniques is most appropriate for a firm with a differentiated product, inelastic demand, and strong patent protection?

A product is sold from manufacturer to wholesaler to retailer to final consumer. If the latter is willing to pay $800 for the product and each channel member requires a 20 percent markup, the maximum merchandise costs to the manufacturer are $512.

Marketing Today

The Environment in Which Marketing Operates

Developing and Enacting Strategic Marketing Plans

Information for Marketing Decisions

Societal, Ethical, and Consumer Issues

Global Aspects of Marketing

Marketing and the Internet

Final Consumers

Organizational Consumers

Developing a Target Market Strategy

Basic Concepts in Product Planning

Goods Versus Services Marketing

Conceiving, Developing, and Managing Products

Value Chain Management and Logistics

Wholesaling

Retailing

Integrated Marketing Communications

Advertising and Public Relations

Personal Selling and Sales Promotion

Considerations in Price Planning

Pulling It All Together: Integrating and Analyzing the Marketing Plan

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