Question 1

Which of the following statements about markup pricing is correct?

Accepted Answer

A) The use of similar markups reduces price competition. 
B) Markup pricing is inconvenient to use. 
C) Markup pricing results in a high price when demand is high and a low price when demand is low. 
D) Markup pricing is a demand-based pricing method. 
E) Using markups makes pricing a time-consuming, difficult process. 
A) The use of similar markups reduces price competition. 
B) Markup pricing is inconvenient to use. 
C) Markup pricing results in a high price when demand is high and a low price when demand is low. 
D) Markup pricing is a demand-based pricing method. 
E) Using markups makes pricing a time-consuming, difficult process.

Question 2

For custom-made equipment or commercial construction projects, which pricing method is most likely used?

Accepted Answer

A) Prestige 
B) Premium 
C) Differential 
D) Return-on-investment 
E) Cost-plus 
A) Prestige 
B) Premium 
C) Differential 
D) Return-on-investment 
E) Cost-plus

Question 3

Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products?

Accepted Answer

A) Status quo 
B) Market share 
C) Survival 
D) Cash flow 
E) Return on investment 
A) Status quo 
B) Market share 
C) Survival 
D) Cash flow 
E) Return on investment

Question 4

If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using

Accepted Answer

A) reference pricing. 
B) a price leader. 
C) special-event pricing. 
D) comparison discounting. 
E) professional pricing. 
A) reference pricing. 
B) a price leader. 
C) special-event pricing. 
D) comparison discounting. 
E) professional pricing.

Question 5

Two types of new-product pricing are price skimming and product-line pricing.

Accepted Answer

A) True 
 B)False

Question 6

Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not

Accepted Answer

A) generate capital to cover research and development costs. 
B) discourage competitors from entering the market. 
C) provide flexibility in the introductory base price. 
D) protect the firm from covering costs if prices are set too low. 
E) reduce the stress that may be placed on the firm's production capabilities. 
A) generate capital to cover research and development costs. 
B) discourage competitors from entering the market. 
C) provide flexibility in the introductory base price. 
D) protect the firm from covering costs if prices are set too low. 
E) reduce the stress that may be placed on the firm's production capabilities.

Question 7

One pitfall of cost-plus pricing for the buyer is that the seller may increase costs to establish a larger profit base.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 21.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands.
-Refer to Scenario 21.1. If Ray-Ban selected the prices for its new sunglasses to be $60, $70, or $80, this would most likely be an example of using ____ pricing to enhance its distinctive positioning strategy.

Accepted Answer

A) product-line 
B) odd-even 
C) professional 
D) promotional 
E) penetration 
A) product-line 
B) odd-even 
C) professional 
D) promotional 
E) penetration

Question 9

What type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client?

Accepted Answer

A) Price lining 
B) Prestige pricing 
C) Professional pricing 
D) Customary pricing 
E) Price skimming 
A) Price lining 
B) Prestige pricing 
C) Professional pricing 
D) Customary pricing 
E) Price skimming

Question 10

A marketer uses only one pricing objective to avoid organizational confusion.

Accepted Answer

A) True 
 B)False

Question 11

When establishing prices, a marketer's first step is to

Accepted Answer

A) determine demand. 
B) develop pricing objectives. 
C) select a pricing policy. 
D) evaluate competitors' prices. 
E) determine a pricing method. 
A) determine demand. 
B) develop pricing objectives. 
C) select a pricing policy. 
D) evaluate competitors' prices. 
E) determine a pricing method.

Question 12

Bundle pricing may be perceived to be of value by customers because

Accepted Answer

A) they always pay a lower price per item than they would have if they bought each item separately. 
B) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money. 
C) the companies selling the products can sell them at a lower price because their costs of packaging are lower. 
D) they are purchasing complementary products, which is convenient for them. 
E) they can purchase items that are consumed frequently in larger quantities. 
A) they always pay a lower price per item than they would have if they bought each item separately. 
B) they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and perhaps money. 
C) the companies selling the products can sell them at a lower price because their costs of packaging are lower. 
D) they are purchasing complementary products, which is convenient for them. 
E) they can purchase items that are consumed frequently in larger quantities.

Question 13

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is using ________

Accepted Answer

A) price fixing; which considers competition to be less important than costs. 
B) price fixing; which considers costs to be less important than competitor's prices. 
C) market share pricing; which considers competition to be the ultimate pricing goal. 
D) competition-based pricing, which considers profit to be the ultimate pricing goal. 
E) competition-based pricing, which considers costs to be less important than competitor's prices. 
A) price fixing; which considers competition to be less important than costs. 
B) price fixing; which considers costs to be less important than competitor's prices. 
C) market share pricing; which considers competition to be the ultimate pricing goal. 
D) competition-based pricing, which considers profit to be the ultimate pricing goal. 
E) competition-based pricing, which considers costs to be less important than competitor's prices.

Question 14

A product is a price leader when

Accepted Answer

A) it is sold at the highest price. 
B) its price maximizes profits. 
C) an increase or decrease in price leads to increased revenue or lower costs. 
D) it is sold at less than cost in the hope that sales of other products will increase. 
E) its price leads the industry in sales. 
A) it is sold at the highest price. 
B) its price maximizes profits. 
C) an increase or decrease in price leads to increased revenue or lower costs. 
D) it is sold at less than cost in the hope that sales of other products will increase. 
E) its price leads the industry in sales.

Question 15

Explain the ethical implications of professional pricing.

Accepted Answer

Professional pricing has several ethical

Question 16

An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-market pricing strategy.

Accepted Answer

A) True 
 B)False

Question 17

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy?

Accepted Answer

A) Custom pricing 
B) Special-event pricing 
C) Premium pricing 
D) Price lining 
E) Bait pricing 
A) Custom pricing 
B) Special-event pricing 
C) Premium pricing 
D) Price lining 
E) Bait pricing

Question 18

What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?

Accepted Answer

A) Return on investment 
B) Cash flow 
C) Profit 
D) Status quo 
E) Survival 
A) Return on investment 
B) Cash flow 
C) Profit 
D) Status quo 
E) Survival

Question 19

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?

Accepted Answer

A) Everyday low prices strategy 
B) Odd-even pricing strategy 
C) Prestige pricing strategy 
D) Special-event pricing strategy 
E) Reference pricing strategy 
A) Everyday low prices strategy 
B) Odd-even pricing strategy 
C) Prestige pricing strategy 
D) Special-event pricing strategy 
E) Reference pricing strategy

Question 20

Penetration pricing is one new-product pricing approach that provides the most flexible introductory price.

Accepted Answer

A) True 
 B)False

Which of the following statements about markup pricing is correct?

For custom-made equipment or commercial construction projects, which pricing method is most likely used?

Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products?

If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using

Two types of new-product pricing are price skimming and product-line pricing.

Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not

One pitfall of cost-plus pricing for the buyer is that the seller may increase costs to establish a larger profit base.

What type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client?

A marketer uses only one pricing objective to avoid organizational confusion.

When establishing prices, a marketer's first step is to

Bundle pricing may be perceived to be of value by customers because

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is using ________

A product is a price leader when

Explain the ethical implications of professional pricing.

An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-market pricing strategy.

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy?

What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?

Penetration pricing is one new-product pricing approach that provides the most flexible introductory price.

An Overview of Strategic Marketing

Planning Implementing and Evaluating Marketing Strategies

The Marketing Environment

Social Responsibility and Ethics in Marketing

Marketing Research and Information Systems

Target Markets: Segmentation and Evaluation

Consumer Buying Behavior

Business Markets and Buying Behavior

Reaching Global Markets

Digital Marketing and Social Networking

Product Concepts

Developing and Managing Products

Services Marketing

Branding and Packaging

Marketing Channels and Supply Chain Management

Retailing, Direct Marketing, and Wholesaling

Integrated Marketing Communications

Advertising and Public Relations

Personal Selling and Sales Promotion

Pricing Concepts

Filters

Exam 21: Setting Prices

Which of the following statements about markup pricing is correct?

For custom-made equipment or commercial construction projects, which pricing method is most likely used?

Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its products?

If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other items at regular prices, the grocer is using

Two types of new-product pricing are price skimming and product-line pricing.

Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not

One pitfall of cost-plus pricing for the buyer is that the seller may increase costs to establish a larger profit base.

What type of pricing strategy is used in a situation where demand for a product is price inelastic and the seller has an ethical responsibility not to overcharge the client?

A marketer uses only one pricing objective to avoid organizational confusion.

When establishing prices, a marketer's first step is to

Bundle pricing may be perceived to be of value by customers because

If local Shell gasoline stations look at BP stations' prices as the primary method of determining its own prices, Shell is using ________

A product is a price leader when

Explain the ethical implications of professional pricing.

An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-market pricing strategy.

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy?

What type of pricing objective would an organization use if it were in a favorable position and desired nothing more?

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?

Penetration pricing is one new-product pricing approach that provides the most flexible introductory price.

An Overview of Strategic Marketing

Planning Implementing and Evaluating Marketing Strategies

The Marketing Environment

Social Responsibility and Ethics in Marketing

Marketing Research and Information Systems

Target Markets: Segmentation and Evaluation

Consumer Buying Behavior

Business Markets and Buying Behavior

Reaching Global Markets

Digital Marketing and Social Networking

Product Concepts

Developing and Managing Products

Services Marketing

Branding and Packaging

Marketing Channels and Supply Chain Management

Retailing, Direct Marketing, and Wholesaling

Integrated Marketing Communications

Advertising and Public Relations

Personal Selling and Sales Promotion

Pricing Concepts

Filters