Exam 16: Pricing Concepts and Strategies

All exporters use cost-plus pricing methods to establish dual prices that fully allocate their true domestic and foreign costs to their products.

What is a major problem facing company decision makers when setting transfer prices?

A trade discount is a payment to channel members for performing marketing functions.

Even when artificially low prices are maintained for a period of time, it is rare for customers to expect that such prices are customary features of the product.

What occurs when a company offers two or more complementary products and sells them for a single price?

Customary prices are prices set on the basis of detailed calculations of product costs and contribution to profit margin.

Nonrecurring government and organizational purchases are generally characterized by a system of set prices to which the appropriate purchasing organizations have agreed.

Cumulative quantity discounts are price reductions based on the volume of product purchased during a stated period of time.

What is an attempt to integrate promotional strategies within the marketing channel called?

What type of pricing is "Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, an example of?

Which of the following presents a major obstacle to using traditional price theory?

The amount by which the average transportation charge exceeds the actual cost of shipping to a particular destination under postage-stamp pricing is called phantom freight.

If foreign marketing costs are high and variable unit costs are used as the basis for pricing, a standard worldwide price may successfully be used.

What is the price elasticity of demand for eggs if a 10 percent increase in the price of eggs results in a 5 percent decrease in the quantity of eggs demanded?

What must demand curves be estimated based on?

A loss leader is a product priced below cost by a retailer that hopes the price will attract customers who will then buy other, regularly priced merchandise.

What objectives are short-run or long-run profitability goals, usually stated as percentages of sales or investment?

A fitness club that advertises a special rate for customers who sign up during the first two weeks of January is using a promotional pricing strategy.

What makes up a product's market price?

How would the terms be stated if a business was offering a cash discount of 5 percent if consumers pay the invoice within 30 days with the full face amount of the invoice due 30 days after that?