Question 1

What are the different types of promotional pricing?

Accepted Answer

Companies can use any of the following pricing techniques to stimulate early purchase:
∙ Loss-leader pricing - Supermarkets and department stores often drop the price on well-known brands to stimulate additional store traffic. This pays if the revenue on the additional sales compensates for the lower margins on the loss-leader items.
∙ Special event pricing - Sellers can establish special prices in certain seasons to draw in more customers.
∙ Special customer pricing - Sellers can offer special prices exclusively to certain customers.
∙ Cash rebates - Auto companies and other consumer-goods companies offer cash rebates to encourage purchase of the manufacturers' products within a specified time period. Rebates can help clear inventories without cutting the stated list price.
∙ Low-interest financing - Instead of cutting its price, the company can offer customers low-interest financing.
∙ Longer payment terms - Sellers stretch loans over longer periods and thus lower the monthly payments. Consumers often worry less about the interest rate of a loan, and more about whether they can afford the monthly payment.
∙ Warranties and service contracts - Companies can promote sales by adding a free or low-cost warranty or service contract.
∙ Psychological discounting - This strategy sets an artificially high price and then offers the product at substantial savings.

Question 2

How do consumers use reference prices?

Accepted Answer

Although consumers have fairly good knowledge of price ranges, surprisingly few can accurately recall specific prices. When examining prices, consumers often employ reference prices, comparing an observed price to an internal reference price they remember or an external frame of reference such as a posted "regular retail price."

Question 3

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Accepted Answer

A) True 
 B)False  False

Question 4

Loss leader pricing dilutes a company's brand image.

Accepted Answer

A) True 
 B)False

Question 5

A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

Accepted Answer

A) True 
 B)False

Question 6

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

Accepted Answer

A)  It should analyze its competitors' costs, prices, and offers. 
B)  It should select its pricing method. 
C)  It should select its final price. 
D)  It should determine the demand for its product. 
E)  It should estimate the cost of its product. 
A)  It should analyze its competitors' costs, prices, and offers. 
B)  It should select its pricing method. 
C)  It should select its final price. 
D)  It should determine the demand for its product. 
E)  It should estimate the cost of its product.

Question 7

A Japanese firm is ready to sell its recent technological innovation to the U.S. government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the U.S. government.

Accepted Answer

A)  functional discount 
B)  compensation deal 
C)  buyback arrangement 
D)  offset agreement 
E)  barter deal 
A)  functional discount 
B)  compensation deal 
C)  buyback arrangement 
D)  offset agreement 
E)  barter deal

Question 8

Prices that end in 9 are most appropriate when ________.

Accepted Answer

A)  customers have substantial knowledge about quality 
B)  customers process prices right to left 
C)  there is a mental price break at the lower, rounded price 
D)  the marketer wants to suggest a discount or bargain 
E)  the marketer wants to convey a high-price image 
A)  customers have substantial knowledge about quality 
B)  customers process prices right to left 
C)  there is a mental price break at the lower, rounded price 
D)  the marketer wants to suggest a discount or bargain 
E)  the marketer wants to convey a high-price image

Question 9

In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

Accepted Answer

A) True 
 B)False

Question 10

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

Accepted Answer

A)  shrink the amount of the product available 
B)  substitute expensive materials or ingredients 
C)  reduce product features 
D)  reduce product services 
E)  augment the product 
A)  shrink the amount of the product available 
B)  substitute expensive materials or ingredients 
C)  reduce product features 
D)  reduce product services 
E)  augment the product

Question 11

What are the seven price-setting methods? Briefly describe each of them.

Accepted Answer

The seven major price-setting methods ar

Question 12

Which of the following is the most elementary pricing method?

Accepted Answer

A)  value pricing 
B)  going-rate pricing 
C)  markup pricing 
D)  target-return pricing 
E)  perceived-value pricing 
A)  value pricing 
B)  going-rate pricing 
C)  markup pricing 
D)  target-return pricing 
E)  perceived-value pricing

Question 13

In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?

Accepted Answer

A)  a Dutch auction with one buyer and many sellers 
B)  an English auction with one seller and many buyers 
C)  an ascending bid auction 
D)  a sealed-bid auction 
E)  a Dutch auction with one seller and many buyers 
A)  a Dutch auction with one buyer and many sellers 
B)  an English auction with one seller and many buyers 
C)  an ascending bid auction 
D)  a sealed-bid auction 
E)  a Dutch auction with one seller and many buyers

Question 14

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Accepted Answer

A)  auction-type 
B)  target-plus 
C)  everyday low 
D)  high-low 
E)  going-rate 
A)  auction-type 
B)  target-plus 
C)  everyday low 
D)  high-low 
E)  going-rate

Question 15

Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs.

Accepted Answer

A) True 
 B)False

Question 16

ConAgra Foods decided its prices had risen too high, so it determined to set a lower price for its products. To make the new price level profitable, ConAgra cut $250 million in costs. What application of cost estimation did this represent?

Accepted Answer

A)  target costing 
B)  experience-curve pricing 
C)  ceiling pricing 
D)  the learning curve 
E)  promotional price elasticities 
A)  target costing 
B)  experience-curve pricing 
C)  ceiling pricing 
D)  the learning curve 
E)  promotional price elasticities

Question 17

Which of the following is a possible trap of a price-cutting strategy?

Accepted Answer

A)  Low prices usually achieve increases in both market share and market loyalty when customers switch. 
B)  The company might need additional business because it has excess plant capacity. 
C)  The company can initiate price cuts to dominate the market through lower costs. 
D)  Consumers might not demand price concessions in the future. 
E)  Competitors that match low prices might have longer staying power because of deep cash reserves. 
A)  Low prices usually achieve increases in both market share and market loyalty when customers switch. 
B)  The company might need additional business because it has excess plant capacity. 
C)  The company can initiate price cuts to dominate the market through lower costs. 
D)  Consumers might not demand price concessions in the future. 
E)  Competitors that match low prices might have longer staying power because of deep cash reserves.

Question 18

What are some ways to respond to overdemand?

Accepted Answer

When a company cannot supply all its cus

Question 19

What pricing decision should a company make if its competitor's product contains features that are not available in its own product?

Accepted Answer

In such a situation, the compa

Question 20

When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

Accepted Answer

The airlin

What are the different types of promotional pricing?

How do consumers use reference prices?

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Loss leader pricing dilutes a company's brand image.

A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

A Japanese firm is ready to sell its recent technological innovation to the U.S. government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the U.S. government.

Prices that end in 9 are most appropriate when ________.

In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

What are the seven price-setting methods? Briefly describe each of them.

Which of the following is the most elementary pricing method?

In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs.

ConAgra Foods decided its prices had risen too high, so it determined to set a lower price for its products. To make the new price level profitable, ConAgra cut $250 million in costs. What application of cost estimation did this represent?

Which of the following is a possible trap of a price-cutting strategy?

What are some ways to respond to overdemand?

What pricing decision should a company make if its competitor's product contains features that are not available in its own product?

When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

Defining Marketing for the New Realities

Developing and Implementing Marketing Strategies and Plans

Capturing Marketing Insights and Forecasting Demand

Creating Long-Term Loyalty Relationships

Analyzing Consumer and Business Markets

Identifying Market Segments and Targets

Crafting the Brand Positioning and Competing Effectively

Creating Brand Equity and Driving Growth

Setting Product Strategy and Introducing New Offerings

Designing and Managing Services

Designing and Managing Integrated Marketing Channels

Managing Retailing, Wholesaling, and Logistics

Designing and Managing Integrated Marketing Communications

Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations

Managing Digital Communications: Online, Social Media, and Mobile

Managing Personal Communications: Direct and Database Marketing and Personal Selling

Tapping Into Global Markets

Filters

Exam 11: Developing Pricing Strategies and Programs

What are the different types of promotional pricing?

How do consumers use reference prices?

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Loss leader pricing dilutes a company's brand image.

A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

A Japanese firm is ready to sell its recent technological innovation to the U.S. government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the U.S. government.

Prices that end in 9 are most appropriate when ________.

In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

What are the seven price-setting methods? Briefly describe each of them.

Which of the following is the most elementary pricing method?

In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs.

ConAgra Foods decided its prices had risen too high, so it determined to set a lower price for its products. To make the new price level profitable, ConAgra cut $250 million in costs. What application of cost estimation did this represent?

Which of the following is a possible trap of a price-cutting strategy?

What are some ways to respond to overdemand?

What pricing decision should a company make if its competitor's product contains features that are not available in its own product?

When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

Defining Marketing for the New Realities

Developing and Implementing Marketing Strategies and Plans

Capturing Marketing Insights and Forecasting Demand

Creating Long-Term Loyalty Relationships

Analyzing Consumer and Business Markets

Identifying Market Segments and Targets

Crafting the Brand Positioning and Competing Effectively

Creating Brand Equity and Driving Growth

Setting Product Strategy and Introducing New Offerings

Designing and Managing Services

Designing and Managing Integrated Marketing Channels

Managing Retailing, Wholesaling, and Logistics

Designing and Managing Integrated Marketing Communications

Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations

Managing Digital Communications: Online, Social Media, and Mobile

Managing Personal Communications: Direct and Database Marketing and Personal Selling

Tapping Into Global Markets

Filters