Question 1

A 5% price decrease would require a _______ volume increase to simply maintain profit level.

Accepted Answer

A)  5% 
B)  10% 
C)  15% 
D)  17.5% 
E)  20% 
A)  5% 
B)  10% 
C)  15% 
D)  17.5% 
E)  20% D

Question 2

Volume discounts, discounts for early payment, and order size discounts are all price leakages that can affect the

Accepted Answer

A)  initial price. 
B)  pocket price. 
C)  advertised price. 
D)  acquisition costs. 
E)  usage costs. 
A)  initial price. 
B)  pocket price. 
C)  advertised price. 
D)  acquisition costs. 
E)  usage costs. B

Question 3

Provide an example of how a company might attempt to reduce the total cost of ownership to make its products more attractive to customers.

Accepted Answer

(Students can select any of the examples in the textbook.) Catalogue retailers like Land's End reduce customers' shopping costs by letting them shop online or over the telephone.

Question 4

It is important that a firm calculates _____________, where it neither makes a profit nor a loss but recovers its total costs.

Accepted Answer

A)  its average costs 
B)  its break-even point 
C)  its transaction costs 
D)  its shipping costs 
E)  its incremental costs 
A)  its average costs 
B)  its break-even point 
C)  its transaction costs 
D)  its shipping costs 
E)  its incremental costs

Question 5

Firms that put their customers last by following a narrow product focus do not capture the full benefit of optimal prices.

Accepted Answer

A) True 
 B)False

Question 6

Relationship customers primarily want the basic product at the basic price.

Accepted Answer

A) True 
 B)False

Question 7

Using the total cost of ownership framework, statistical software manufacturer SPSS offers online training programs to reduce its customers'

Accepted Answer

A)  acquisition costs. 
B)  possession costs. 
C)  usage costs. 
D)  disposal costs. 
E)  vendor costs. 
A)  acquisition costs. 
B)  possession costs. 
C)  usage costs. 
D)  disposal costs. 
E)  vendor costs.

Question 8

The final price has to be set based on knowledge of potential competitors that could enter the marketplace.

Accepted Answer

A) True 
 B)False

Question 9

An example of a fixed cost would be

Accepted Answer

A)  shipping. 
B)  raw materials. 
C)  labour. 
D)  monthly rent on office space. 
E)  overtime. 
A)  shipping. 
B)  raw materials. 
C)  labour. 
D)  monthly rent on office space. 
E)  overtime.

Question 10

Setting a high initial price for a product to recoup investment in product development is a technique called price penetration.

Accepted Answer

A) True 
 B)False

Question 11

It is impossible to simultaneously cut costs and maintain (or increase) customer value.

Accepted Answer

A) True 
 B)False

Question 12

There is a strong possibility that your brand image could be hurt if you drop your price.

Accepted Answer

A) True 
 B)False

Question 13

What is cost-plus pricing? Why is it an inferior way to make pricing decisions?

Accepted Answer

In cost-plus pricing, the firm takes its

Question 14

Since tract home builders are price-sensitive because they cannot charge price premiums over their competitors, Arbol Industries charged this segment prices based on

Accepted Answer

A)  a commodity index. 
B)  a premium pricing strategy. 
C)  a bundled offering. 
D)  competitors' prices. 
E)  cost-plus pricing. 
A)  a commodity index. 
B)  a premium pricing strategy. 
C)  a bundled offering. 
D)  competitors' prices. 
E)  cost-plus pricing.

Question 15

A variable cost such as raw materials or labour has to be incurred regardless of volume.

Accepted Answer

A) True 
 B)False

Question 16

Price, costs, and volume influence a company's

Accepted Answer

A)  profits. 
B)  distribution. 
C)  advertising spending. 
D)  brand image. 
E)  media planning. 
A)  profits. 
B)  distribution. 
C)  advertising spending. 
D)  brand image. 
E)  media planning.

Question 17

Order size discounts, competitive discounts, and annual volume bonuses are all examples of price waterfalls that impact the actual pocket price.

Accepted Answer

A) True 
 B)False

Question 18

Contrary to popular practice, costs should play a relatively minor role in the pricing decision.

Accepted Answer

A) True 
 B)False

Question 19

Since custom home builders are price-insensitive and are willing to pay for customization, Arbol Industries charged this segment prices based on

Accepted Answer

A)  a commodity index. 
B)  competitor prices. 
C)  a bundled offering. 
D)  a premium pricing strategy. 
E)  cost-plus pricing. 
A)  a commodity index. 
B)  competitor prices. 
C)  a bundled offering. 
D)  a premium pricing strategy. 
E)  cost-plus pricing.

Question 20

What risks are associated with a company dropping its prices?

Accepted Answer

First, the competition will likely retal

Exam 34: Pricing Strategies

A 5% price decrease would require a _______ volume increase to simply maintain profit level.

Volume discounts, discounts for early payment, and order size discounts are all price leakages that can affect the

Provide an example of how a company might attempt to reduce the total cost of ownership to make its products more attractive to customers.

It is important that a firm calculates _____________, where it neither makes a profit nor a loss but recovers its total costs.

Firms that put their customers last by following a narrow product focus do not capture the full benefit of optimal prices.

Relationship customers primarily want the basic product at the basic price.

Using the total cost of ownership framework, statistical software manufacturer SPSS offers online training programs to reduce its customers'

The final price has to be set based on knowledge of potential competitors that could enter the marketplace.

An example of a fixed cost would be

Setting a high initial price for a product to recoup investment in product development is a technique called price penetration.

It is impossible to simultaneously cut costs and maintain (or increase) customer value.

There is a strong possibility that your brand image could be hurt if you drop your price.

What is cost-plus pricing? Why is it an inferior way to make pricing decisions?

Since tract home builders are price-sensitive because they cannot charge price premiums over their competitors, Arbol Industries charged this segment prices based on

A variable cost such as raw materials or labour has to be incurred regardless of volume.

Price, costs, and volume influence a company's

Order size discounts, competitive discounts, and annual volume bonuses are all examples of price waterfalls that impact the actual pocket price.

Contrary to popular practice, costs should play a relatively minor role in the pricing decision.

Since custom home builders are price-insensitive and are willing to pay for customization, Arbol Industries charged this segment prices based on

What risks are associated with a company dropping its prices?

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Environmental Influences and Control of Microbial Growth

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Electron Flow in Organotrophy, Lithotrophy, and Phototrophy

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