Question 1

Quantity discounts are most often used to:

Accepted Answer

A)  reward the buyer who pays in cash. 
B)  encourage buying in multiple units. 
C)  increase supply for a specific raw material. 
D)  reward a channel intermediary for performing some service. 
E)  shift the storage function backward to the supplier. 
A)  reward the buyer who pays in cash. 
B)  encourage buying in multiple units. 
C)  increase supply for a specific raw material. 
D)  reward a channel intermediary for performing some service. 
E)  shift the storage function backward to the supplier.

Question 2

A winery that makes a huge profit on merlot wines may lower its price on pinot noir wines to cause damage to wineries that only produce pinot noir.This is an example of predatory pricing.

Accepted Answer

A) True 
 B)False

Question 3

_____ are cash refunds given for the purchase of a product during a specific period.

Accepted Answer

A)  Rebates 
B)  Loss leaders 
C)  Reciprocal allowances 
D)  Demand discounts 
E)  Promotional allowances 
A)  Rebates 
B)  Loss leaders 
C)  Reciprocal allowances 
D)  Demand discounts 
E)  Promotional allowances

Question 4

Sometimes managers price their products too low,resulting in a loss of company profits.One reason this happens is that:

Accepted Answer

A)  managers attempt to buy market share through aggressive pricing, but the cuts are quickly met by competitors, which wipe out any gain in market share. 
B)  consumers tend to equate lower prices with low-quality goods, and they are never able to regain that lost market share. 
C)  price-skimming strategies only work in the short-term, and always eventually result in lower profits. 
D)  most managers simply lack good business sense, especially in regard to finances. 
E)  all of the above are reasons. 
A)  managers attempt to buy market share through aggressive pricing, but the cuts are quickly met by competitors, which wipe out any gain in market share. 
B)  consumers tend to equate lower prices with low-quality goods, and they are never able to regain that lost market share. 
C)  price-skimming strategies only work in the short-term, and always eventually result in lower profits. 
D)  most managers simply lack good business sense, especially in regard to finances. 
E)  all of the above are reasons.

Question 5

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

Accepted Answer

The marketing manager must first estimat

Question 6

All of the following are strategies to make the demand for a good or service more inelastic EXCEPT:

Accepted Answer

A)  reducing consumer awareness. 
B)  cultivating selected demand. 
C)  changing the package design. 
D)  creating a unique offering. 
E)  heightening buyer dependence. 
A)  reducing consumer awareness. 
B)  cultivating selected demand. 
C)  changing the package design. 
D)  creating a unique offering. 
E)  heightening buyer dependence.

Question 7

Jones Soda Company and Big Sky Brands have introduced Jones Soda Carbonated Candy,a candy that delivers a blast of the most popular Jones Soda flavors along with an oddly enjoyable tongue-tingling sensation.Which pricing strategy would be appropriate if the company wants to convince price-sensitive consumers to try it and not buy some other brand?

Accepted Answer

A)  Price lining 
B)  Price fixing 
C)  Status quo pricing 
D)  Penetration pricing 
E)  Price skimming 
A)  Price lining 
B)  Price fixing 
C)  Status quo pricing 
D)  Penetration pricing 
E)  Price skimming

Question 8

Escalator pricing is:

Accepted Answer

A)  a demand-oriented pricing tactic. 
B)  similar to delayed-quotation pricing. 
C)  similar to price shading. 
D)  a form of market penetration pricing. 
E)  also called "postage stamp" pricing. 
A)  a demand-oriented pricing tactic. 
B)  similar to delayed-quotation pricing. 
C)  similar to price shading. 
D)  a form of market penetration pricing. 
E)  also called "postage stamp" pricing.

Question 9

More and more businesses are adopting consumer penalties-extra fees paid by consumers for violating the terms of a purchase agreement.

Accepted Answer

A) True 
 B)False

Question 10

When a firm introduces a new product at a relatively low price because it hopes to reach the mass market,it is following a _____ strategy.The low price is designed to capture a large share of a substantial market and produce lower production costs.

Accepted Answer

A)  penetration pricing 
B)  price-insensitive demand 
C)  price skimming 
D)  price elasticity 
E)  cost bundling 
A)  penetration pricing 
B)  price-insensitive demand 
C)  price skimming 
D)  price elasticity 
E)  cost bundling

Question 11

When the Mosquito Magnet was introduced,it was designed to rid the immediate area of mosquitoes and other annoying insects.The technology for the Mosquito Magnet had taken years to develop.It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die.What type of pricing policy would you recommend the company use to introduce this product to the market?

Accepted Answer

A)  Status quo pricing 
B)  Penetration pricing 
C)  Price skimming 
D)  Flexible pricing 
E)  Leader pricing 
A)  Status quo pricing 
B)  Penetration pricing 
C)  Price skimming 
D)  Flexible pricing 
E)  Leader pricing

Question 12

Which of the following prohibits any firm from selling to two or more different buyers,within a reasonably short time,commodities (not services)of like grade and quality at different prices where the result would be to substantially lessen competition?

Accepted Answer

A)  Sherman Act 
B)  Federal Trade Commission Act 
C)  Food and Drug Administration Act 
D)  Anti-Discrimination Act 
E)  Robinson-Patman Act 
A)  Sherman Act 
B)  Federal Trade Commission Act 
C)  Food and Drug Administration Act 
D)  Anti-Discrimination Act 
E)  Robinson-Patman Act

Question 13

The Comcast Triple Play package includes cable television,Internet,and telephone service for a price significantly lower than the cost of the three services priced separately.This is an example of:

Accepted Answer

A)  multiple unit pricing. 
B)  professional services pricing. 
C)  price lining. 
D)  price bundling. 
E)  two-part pricing. 
A)  multiple unit pricing. 
B)  professional services pricing. 
C)  price lining. 
D)  price bundling. 
E)  two-part pricing.

Question 14

The Used Car Mall lets salespeople charge different customers different prices for essentially the same automobile depending on how good the customer is at negotiating price.It uses:

Accepted Answer

A)  two-part pricing. 
B)  an illegal pricing policy. 
C)  flexible pricing. 
D)  bait and switch practices. 
E)  price maintenance. 
A)  two-part pricing. 
B)  an illegal pricing policy. 
C)  flexible pricing. 
D)  bait and switch practices. 
E)  price maintenance.

Question 15

The marketing manager of Icruise.com (a travel Web site targeted to consumers who want a luxury vacation)finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during the month of December.However,the VP of finance is committed to reporting a 25 percent return on investment at all times.This conflict illustrates:

Accepted Answer

A)  a need to eliminate low-profit products. 
B)  a lack of corporate concentration on the marketing concept. 
C)  how pricing operates in a mature marketplace. 
D)  the need for trade-offs in pricing objectives. 
E)  how target markets can be ignored. 
A)  a need to eliminate low-profit products. 
B)  a lack of corporate concentration on the marketing concept. 
C)  how pricing operates in a mature marketplace. 
D)  the need for trade-offs in pricing objectives. 
E)  how target markets can be ignored.

Question 16

L.L.Bean charges all customers the same flat freight rate.It uses:

Accepted Answer

A)  FOB origin pricing. 
B)  zone pricing. 
C)  freight absorption pricing. 
D)  basing-point pricing. 
E)  uniform delivered pricing. 
A)  FOB origin pricing. 
B)  zone pricing. 
C)  freight absorption pricing. 
D)  basing-point pricing. 
E)  uniform delivered pricing.

Question 17

Most companies do a very good job of doing research to create a price strategy.

Accepted Answer

A) True 
 B)False

Question 18

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

Accepted Answer

A)  tends to be more effective in a less price-sensitive market. 
B)  tempts competitors to enter the market. 
C)  provides a large profit per unit sold. 
D)  recoups product development costs quickly. 
E)  tends to lower production costs. 
A)  tends to be more effective in a less price-sensitive market. 
B)  tempts competitors to enter the market. 
C)  provides a large profit per unit sold. 
D)  recoups product development costs quickly. 
E)  tends to lower production costs.

Question 19

Distinguish between a cumulative and a noncumulative discount.

Accepted Answer

A cumulative quantity discount is a dedu

Question 20

Which of the following statements is NOT true with regard to trade-ins?

Accepted Answer

A)  Flexible pricing and trade-ins often go hand in hand. 
B)  If a trade-in is involved, the consumer must negotiate two prices, one for the new product and one for the existing product. 
C)  Research found that trade-in customers tend to care more about the trade-in value they receive than the price they pay for the new product. 
D)  About 95 percent of all new car sales involve a trade-in. 
E)  On average, customers who trade-in an automobile when purchasing a new one end up paying more than customers who simply buy a new car from a dealer. 
A)  Flexible pricing and trade-ins often go hand in hand. 
B)  If a trade-in is involved, the consumer must negotiate two prices, one for the new product and one for the existing product. 
C)  Research found that trade-in customers tend to care more about the trade-in value they receive than the price they pay for the new product. 
D)  About 95 percent of all new car sales involve a trade-in. 
E)  On average, customers who trade-in an automobile when purchasing a new one end up paying more than customers who simply buy a new car from a dealer.

Exam 39: Setting the Right Price

Quantity discounts are most often used to:

A winery that makes a huge profit on merlot wines may lower its price on pinot noir wines to cause damage to wineries that only produce pinot noir.This is an example of predatory pricing.

_____ are cash refunds given for the purchase of a product during a specific period.

Sometimes managers price their products too low,resulting in a loss of company profits.One reason this happens is that:

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

All of the following are strategies to make the demand for a good or service more inelastic EXCEPT:

Escalator pricing is:

More and more businesses are adopting consumer penalties-extra fees paid by consumers for violating the terms of a purchase agreement.

When a firm introduces a new product at a relatively low price because it hopes to reach the mass market,it is following a _____ strategy.The low price is designed to capture a large share of a substantial market and produce lower production costs.

Which of the following prohibits any firm from selling to two or more different buyers,within a reasonably short time,commodities (not services)of like grade and quality at different prices where the result would be to substantially lessen competition?

The Comcast Triple Play package includes cable television,Internet,and telephone service for a price significantly lower than the cost of the three services priced separately.This is an example of:

The Used Car Mall lets salespeople charge different customers different prices for essentially the same automobile depending on how good the customer is at negotiating price.It uses:

L.L.Bean charges all customers the same flat freight rate.It uses:

Most companies do a very good job of doing research to create a price strategy.

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

Distinguish between a cumulative and a noncumulative discount.

Which of the following statements is NOT true with regard to trade-ins?

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Strategic Planning for Competitive Advantage

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Ethics and Social Responsibility

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The Marketing Environment

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Developing a Global Vision

Case Study P&G Unilever Panasonic: The $2-a-Day Initiative

Consumer Decision Making

Case Study eBay: Creating Customers on the Move

Business Marketing

Case Study Pantone: This Year’s Color: Honeysuckle

Segmenting and Targeting Markets

Coke Zero

Marketing Research

Case Study Marriott International: A Marriott Site for Those on the Move

Product Concepts

Case Study Ford Motor Co.: One Ford; One Big Turnaround

Developing and Managing Products

Case Study Harmonix: Embrace Your Inner Rock Star

Services and Nonprofit Organization Marketing

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Supply Chain Management

The U.S.Transportation Industry: Planning for a Potential Post-Recession Capacity Crunch

Marketing Channels and Retailing

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Marketing Communications

HBO's True Blood

Advertising Public Relations and Sales Promotion

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Personal Selling and Sales Management

Ron Popeil

Social Media and Marketing

Facebook: Advertising’s Troubling Future

Pricing Concepts

Groupon vs.LivingSocial: Coupon Wars

Black Friday Sales: Deal…or No Deal?

Telekom Austria Group: Sustainability to Increase Value

Mary Kay Inc: Taps into a Changing Demographic

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Will a New Reservation System Translate to Higher Prices for Travelers?

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Microsoft Implies Distribution of Angry Birds on Windows Phone 7

Yellow Tail’s Tails-for-Tails Campaign

Concerns over Sustainability Result in Social Media Disaster for Nestlé

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