Deck 11: Additional Pricing Considerations

Question 1

By definition,is used when a firm sells a product or service at two or more prices,even though the difference in price is not based on differences in cost.

A)variable pricing
B)flexible pricing
C)reference pricing
D)cost- plus pricing
E)segmented pricing

Answer 1

E

Question 2

Federal legislation on price fixing requires that sellers set their prices .

A)based on their fixed and variable costs
B)to achieve a specific profit margin
C)without the intention of cutting into competitors' profits
D)without communication from competitors
E)consistently throughout a region

Answer 2

D

Question 3

Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product?

A)launch a low- price "fighter brand"
B)raise perceived value
C)improve quality and increase price
D)reduce price
E)improve quality and decrease price

Answer 3

E

Question 4

Mach 3 razor blades must be used in the Mach 3 razor.Which type of pricing is being used?

A)captive product pricing
B)product bundle pricing
C)by- product pricing
D)product line pricing
E)optional product pricing

Question 5

Most companies that conduct international business to .

A)use promotional pricing;create excitement in new markets
B)set a uniform price;maintain a consistent product image
C)use geographical pricing;reduce delivery costs
D)adjust their prices;take local market conditions into consideration
E)initiate price cuts;compensate for import tariffs and taxes

Question 6

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in pricing.

A)captive product
B)by- product
C)optional product
D)skimming
E)product bundle

Question 7

Which of the following is an example of a cash discount?

A)when you pay cash and take the product with you
B)$5.00 with a two- pack
C)2/10,net 30
D)a free case when you buy 12
E)none of the above

Question 8

When Circuit Town Electronics sets its televisions at three price levels of $699,$899,and $1,099,it is using _ .

A)product line pricing
B)break- even pricing
C)market- penetration pricing
D)market- skimming pricing
E)target return pricing

Question 9

A car maker's strategy of advertising a basic vehicle model with few conveniences and comforts at a low price to entice buyers and then convincing customers to buy higher- priced models with more amenities is an example of which of the following?

A)captive product pricing
B)allowance pricing
C)optional product pricing
D)product line pricing
E)segmented pricing

Question 10

Which of the following is the opposite of FOB- origin pricing?

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

Question 11

When faced with a competitor who has cut its product's price,which of the following is typically the most cost- effective way for a company to maintain its own price but raise the perceived value of its offer?

A)distributing the product through less costly channels
B)bundling the offer with add- ons
C)improving the quality of the product
D)introducing a higher- priced premium brand
E)altering the company's marketing communications

Question 12

results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.

A)Skimming pricing
B)Comparison pricing
C)Price confusion
D)Predatory pricing
E)Price collusion

Question 13

Price escalation in international markets may result from four of these five marketing conditions.Which one will have the LEAST effect?

A)market instability
B)exchange- rate fluctuations
C)language barriers
D)the additional cost of physical distribution
E)higher costs of selling

Question 14

Consumers are less likely to use price to judge the quality of a product when they .

A)cannot physically examine the product
B)have experience with the product
C)lack information
D)lack skills to use the product
E)are shopping for a specialty item

Question 15

Companies usually develop rather than .

A)product families;product lines
B)product lines;single products
C)single products;product families
D)product brands;product images
E)product images;product brands

Question 16

Price discrimination may be used to match competition as long as the strategy is temporary,localized,and .

A)defensive
B)offensive
C)private
D)published
E)used in all channels

Question 17

Some companies are reversing the fixed pricing trend and using _.

A)captive pricing
B)promotional pricing
C)segmented pricing
D)dynamic pricing
E)geographical pricing

Question 18

When sellers set prices after talking to competitors and engaging in collusion,they are involved in .

A)price fixing
B)skimming pricing
C)penetration pricing
D)discriminatory pricing
E)predatory pricing

Question 19

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market- penetration pricing and .

A)market- price filling
B)market- skimming pricing
C)market- price lining
D)market- level pricing
E)market- competitive pricing

Question 20

Which of the following is a major factor that influences price increases?

A)cost inflation
B)government intervention
C)foreign competition
D)surplus of raw materials
E)excess capacity

Question 21

There are many reasons why a firm might consider cutting its price.All of the following are among them EXCEPT .

A)a drive to gain market share and cut costs through volume
B)a drive to dominate the market through lower costs
C)a drive to reduce market share
D)excess capacity
E)falling demand in the face of strong price competition

Question 22

A company would most likely consider launching a low- price "fighter brand" in response to a competitor reducing prices if .

A)the market segment being lost responds to arguments of higher quality
B)the market segment being lost is not price sensitive
C)the market segment being lost is price sensitive
D)the market segment being lost has shifted culturally
E)the market segment being lost no longer demands the product

Question 23

When Whallans Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas,Whallans is giving a(n)discount.

A)seasonal
B)allowance
C)credit
D)functional
E)annual

Question 24

Failure to enter the current price into a retailer's system may result in charges of .

A)predatory pricing
B)scanner fraud
C)price fixing
D)retail maintenance pricing
E)discriminatory pricing

Question 25

Promotional pricing can have all of the following adverse effects EXCEPT .

A)delaying the company's focus on long- term strategies
B)creating deal- prone customers
C)eroding the brand's value in the eyes of customers
D)becoming addictive to both the customer and business
E)giving pricing secrets away to competitors

Question 26

Service Industries,Inc.plans to offer a price- adjustment strategy in the near future.It could consider each of the following EXCEPT .

A)discount and allowance pricing
B)location pricing
C)segmented pricing
D)promotional pricing
E)physiological pricing

Question 27

Bose prices its most expensive noise reduction earphones at $399.95,which is a full $100.00 more than its next most expensive earphones.It costs Bose only a few dollars more to make the most expensive earphones.Bose is using pricing.

A)captive product
B)customer- segment
C)promotional
D)penetration
E)product- form

Question 28

What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency?

A)psychological pricing
B)basing- point pricing
C)promotional pricing
D)segmented pricing
E)referent pricing

Question 29

Which of the following is NOT a price adjustment strategy?

A)seasonal pricing
B)promotional pricing
C)segmented pricing
D)geographical pricing
E)free samples

Question 30

Which of the following is a reason that a marketer would choose a penetration pricing strategy?

A)to discourage competition from entering the market
B)to ensure the company has the ability to increase prices once demand decreases
C)to focus on the rapid achievement of profit objectives
D)to appeal to different consumer segments with different levels of price sensitivity
E)to create markets for highly technical products

Question 31

Market- skimming pricing would likely be most effective in selling .

A)most items at EDLP retailers such as Walmart
B)any convenience item
C)an electronic device for which research and development must be recouped
D)shampoo and bath soap
E)anything easily copied by competitors

Question 32

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long- run profits by putting those competitors out of business,the retailer would be guilty of .

A)price fixing
B)penetration pricing
C)discriminatory pricing
D)price collusion
E)predatory pricing

Question 33

A quantity discount is a price reduction to buyers who purchase .

A)inferior merchandise
B)large volumes
C)close outs
D)frequently
E)superior merchandise

Question 34

Competitors are most likely to react to a price change when .

A)the product is uniform
B)buyers are not well informed about price differences
C)a large number of competitors are involved
D)the market has a pure monopoly
E)the buyers are not well informed about product features

Question 35

A company sets not a single price,but rather a that covers different items in its line that change over time as products move through their life cycles.

A)pricing loop
B)pricing by- product
C)pricing bundle
D)pricing structure
E)pricing cycle

Question 36

Which of the following is NOT a geographical pricing strategy?

A)basing- point pricing
B)uniform- delivered pricing
C)zone pricing
D)FOB- origin pricing
E)dynamic pricing

Question 37

Lancaster Recycling has a history of problems with customers who do not pay their bills on time. Lancaster Recycling wants to improve its cash situation,reduce bad debts,and reduce
Credit- collection costs.The company might consider which of the following forms of pricing?

A)cash discounts
B)captive- product
C)inflation- adjusted
D)penetration
E)by- product

Question 38

Comparison pricing claims are legal if they are truthful.However,sellers should not advertise a price reduction unless .

A)it is a saving from the usual retail price
B)a "factory" price,if listed,is what it is claimed to be
C)"comparable value items" are not actually imperfect goods
D)a "wholesale" price,if listed,is what it is claimed to be
E)all of the above

Question 39

Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product?

A)geographical prices
B)dynamic prices
C)promotional prices
D)reference prices
E)target prices

Question 40

When Polaroid set the general price range of its cameras low and the markup on its film high,it was practicing .

A)captive product pricing
B)product line pricing
C)market- skimming pricing
D)market- penetration pricing
E)price bundling

Question 41

Secret Sneaker will give anyone $10 for an old pair of sneakers,regardless of condition,when that person purchases a new pair of sneakers.The end result is essentially reducing the price of the new sneakers by $10.What is this type of price adjustment called?

A)functional discount
B)by- product
C)captive product
D)seasonal discount
E)trade- in allowance

Question 42

Savings for You,a discount retail chain,is highly competitive.When entering a new market,Savings for You often cuts prices so deeply that it sells below costs,effectively pushing smaller companies with less purchasing power out of the market.Savings for You is most at risk of being accused of _.

A)price confusion
B)price fixing
C)deceptive pricing
D)predatory pricing
E)market skimming

Question 43

The Sherman,Clayton,and Robinson- Patman Acts are all federal laws that were enacted to curb the formation of .

A)international markets
B)monopolies
C)oligopolies
D)limited partnerships
E)competitive markets

Question 44

Of the following,which statement(s)would NOT support a market- skimming policy for a new product?

A)Competitors can enter the market easily.
B)The product's quality and image support its higher price.
C)Enough buyers want the products at that price.
D)Competitors are not able to undercut the high price.
E)C and D

Question 45

In a form of promotion pricing,customers buy products from manufacturers' dealers within a specified time period,and then the manufacturer sends the customer a check called a _ .

A)cash rebate
B)dealer reduction
C)discount
D)promotional pricing reward
E)discount allowance

Question 46

When a firm varies its price by the season,month,day,or even hour,it is using pricing.

A)time- based
B)value- added
C)penetration
D)variable
E)revenue management

Question 47

Using this pricing strategy,the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.

A)FOB origin
B)zone
C)loss leader
D)basing- point
E)freight- absorption

Question 48

The Internet offers ,where the price can easily be adjusted to meet changes in demand.

A)captive pricing
B)cost- plus pricing
C)dynamic pricing
D)price bundling
E)basing- point pricing

Question 49

If Northwest Awnings charges the same price for delivery of its product to any customer that is located within the Great Lakes states,but a different price to customers outside of the Great Lakes states,the company is using _ .

A)reference pricing
B)uniform- delivered pricing
C)zone pricing
D)psychological pricing
E)promotional pricing

Question 50

Which of the following is LEAST likely to cause price escalation in foreign markets?

A)the additional costs of import tariffs and taxes
B)the additional costs of improving a country's infrastructure
C)exchange rate fluctuations
D)the additional costs of shipping and insurance
E)the additional costs of product modifications

Question 51

In response to price cuts from competitors,a cereal company with several more expensive and higher quality cereals introduced a lower- priced option to its product line.This is an example of which of the following responses to a competitor's price cut?

A)using high- low pricing
B)launching a "fighter brand"
C)raising the perceived value of a product
D)improving product quality
E)accepting a reduced market share

Question 52

HiPoint Telephone Company uses two- part pricing for its long- distance call charges.Because this is a service,the price is broken into a fixed fee plus a(n).

A)market usage rate
B)variable usage rate
C)fixed usage rate
D)optional usage rate
E)standard usage rate

Question 53

The Chicago Bears organization charges different prices for seats in different areas of Soldier Field,even though the costs are the same.This form of pricing is called _.

A)flexible pricing
B)location- based pricing
C)product- form pricing
D)customer- segment
E)penetration pricing

Question 54

In the case of services,captive product pricing is called pricing.

A)two- part
B)by- product
C)optional product
D)bundle
E)segmented

Question 55

Mark's Markers,a manufacturer of color markers,has required its dealers to charge a specified retail price for its markers.Mark's is most likely guilty of .

A)price collusion
B)price fixing
C)price discrimination
D)unfair price skimming
E)retail price maintenance

Question 56

Price escalation in international markets may result from differences in market conditions or .

A)regional tastes
B)customer perceptions
C)cultural preferences
D)language barriers
E)selling strategies

Question 57

Under which type of geographic pricing strategy does each customer pay the exact freight for the product from the factory to its destination?

A)uniform- delivered pricing
B)basing- point pricing
C)zone pricing
D)FOB- origin pricing
E)dynamic pricing

Question 58

What is a major advantage of product bundle pricing?

A)It combines the benefits of the other pricing strategies.
B)It offers consumers less value for the money.
C)It creates a brand experience for consumers.
D)It can promote the sales of products consumers might not otherwise buy.
E)It allows a company to offset the costs of disposing of by- products.

Question 59

The Robinson- Patman Act seeks to prevent unfair by ensuring that sellers offer the same price terms to customers at a given price level.

A)price collusion
B)dynamic pricing
C)treatment of small retailers
D)marketing
E)price discrimination

Question 60

Trade- in allowances are most commonly used in the industry.

A)real estate
B)packaged goods
C)financial services
D)automobile
E)health care

Question 61

When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs,it is granting a .

A)trade discount
B)functional discount
C)promotional allowance
D)trade credit
E)cash discount

Question 62

The JC Whitney Company of Chicago offers replacement parts for older Volkswagen Beetles.Parts are often shipped from other locations throughout the United States.However,the company charges for shipping as if every part was shipped from its Chicago headquarters.The company practices _ .

A)basing- point pricing
B)uniform- delivered pricing
C)FOB- origin pricing
D)zone pricing
E)none of the above

Question 63

Freight- absorption pricing is used for _ and .

A)generating temporary higher profits;discouraging competitors
B)market penetration;holding on to increasingly competitive markets
C)holding on to increasingly competitive markets;higher profit margins
D)market penetration;higher profit margins
E)services;installations

Question 64

When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction,the firm is .

A)moving its brand into a higher price- value position
B)moving its brand into a less competitive position
C)negatively positioning its product
D)narrowing its target market
E)creating a "fighter brand"

Question 65

A number of top fashion- modeling agencies would most likely be charged with for jointly determining what commissions they would charge for models.

A)price fixing
B)predatory pricing
C)prestige pricing
D)price bundling
E)dynamic pricing

Question 66

When a company charges the same rate to ship a product anywhere in the United States,it is using which form of geographic pricing?

A)FOB origin
B)uniform- delivered
C)FOB delivered
D)FOB factory
E)basing- point

Question 67

Durango China Company charges all customers within different identified geographical areas a single total price.The more distant the area,the higher the price.This is .

A)uniform- delivered pricing
B)freight- absorption pricing
C)bulk rate pricing
D)FOB- origin pricing
E)zone pricing

Question 68

Price discrimination is legal under which of the following conditions?

A)when a manufacturer sells to retailers in different markets
B)when a seller advertises prices that are not actually available to consumers
C)when a seller has not communicated with competitors before announcing prices
D)when a manufacturer and reseller have agreed upon a specified retail price for a product
E)when a seller can prove its costs are different when selling to different retailers

Question 69

Using product bundle pricing,sellers combine several products and offer the bundle .

A)as a reward to loyal customers
B)as a functional unit
C)at a premium price
D)at a reduced price
E)as a complete self- service package

Question 70

Which of the following conditions would NOT support the use of a market- penetration pricing strategy?

A)Production and distribution costs will fall as sales volume increases.
B)The product's quality and image support a high price.
C)The market is highly price sensitive.
D)A low price would help keep out the competition.
E)A and C

Question 71

When consumers cannot judge quality because they lack the information or skill,price becomes .

A)insignificant
B)an important quality signal
C)negotiable
D)the only driver of the purchase
E)less important

Question 72

A company that raises its prices is most at risk of being accused of which of the following?

A)price discrimination
B)high- low pricing
C)retail price maintenance
D)price gouging
E)predatory pricing

Question 73

Which of the following would most likely be considered predatory pricing?

A)pricing below cost to drive out competitors
B)offering a volume discount
C)offering real- time pricing online
D)offering a suggested retail price on the manufacturer's package
E)pricing below cost to get rid of a surplus

Question 74

Among the following,a market- penetration strategy will likely be most effective with .

A)convenience items for which there is much competition
B)any specialty item
C)pharmaceuticals
D)an electronic device for which R&D must be recouped
E)a product manufactured in small quantities and distributed in limited areas

Question 75

A manufacturer offers 3/10,net 30 terms to a wholesaler for a recent purchase.The wholesaler may deduct percent if the bill is paid within days.

A)3;10
B)10;3
C)3;30
D)7;10
E)10;30

Question 76

A challenge for management in product line pricing is to decide on the price steps between the .

A)various products in a line
B)product groupings
C)channel partners
D)product mixes
E)product lines

Question 77

Under product- form pricing,different versions of a product are priced differently,but not according to differences in its _ .

A)distribution channels
B)retail outlets
C)marketing budgets
D)costs
E)reference prices

Question 78

Using _ _,companies are able to turn their trash into cash,allowing them to make the price of their main product more competitive.

A)captive product pricing
B)skimming
C)product bundle pricing
D)optional product pricing
E)by- product pricing

Question 79

Price fixing,predatory pricing,retail price maintenance,and deceptive pricing are examples of .

A)ethical pricing strategies
B)major public policy issues in pricing
C)pricing policies used mostly in the wholesale sector
D)common pricing policies
E)pricing used mostly in the retail sector

Question 80

When amusement parks and movie theaters charge admission plus fees for food and other attractions,they are following a(n)_ pricing strategy.

A)skimming
B)optional- product
C)penetration
D)by- product
E)two- part