Deck 12: Pricing Products and Services

Question 1

Vizio, Inc.'s long term goal for the next 20 to 30 years is to

A)have at least one of their products in every single home in the United States.
B)have production facilities in every state, not only to generate profits for themselves, but to help the local economy.
C)be the next Sony.
D)to have every aspect of the product from design to component parts, made or manufactured in the United States.
E)create the first completely wireless HDTVs and multi-media systems.

Answer 1

C

Question 2

The practice of exchanging products and services for other products and services rather than for money is referred to as _________.

A)barter
B)value-pricing
C)reciprocal pricing
D)pricing substitution
E)debt restructuring

Answer 2

A

Question 3

Patty O'Rourke hired an attorney to represent her in a court case involving an auto accident.The attorney charged O'Rourke a fee for his services.Terry Thomas needed a haircut--the local stylist charged him $12 for her services.Aaron Mathison mowed his neighbor's lawn; in exchange, the neighbor roto-tilled Mathison's garden.The attorney fees paid by O'Rourke, the $12 charged by the hair stylist, and exchange of lawn mowing for garden tilling are examples of

A)price.
B)barter.
C)fee setting.
D)unfair market exchanges.
E)product fares.

Answer 3

A

Question 4

Price refers to

A)the financial consequence of doing business.
B)value judgments made by both the buyer and seller regarding an item's worth.
C)the money or other considerations (including other goods and services) exchanged for the ownership or use of a good or service.
D)tangible or intangible remuneration for the use of a product or service.
E)the highest monetary value a customer is willing to pay for a product or service.

Question 5

Barter refers to

A)a reciprocity agreement stipulating that if company "A" purchase services from company "B," then company "B" must purchase similar services from company "A."
B)a tying agreement stipulating that if company "A" purchases a product from company "B," they must also purchase its services.
C)the practice of exchanging products and services for other products and services rather than for money.
D)the practice of exchanging services for products of equal or greater value.
E)the practice of exchanging products and services for other services rather than for money.

Question 6

According to Vizio, "The whole goal is to ensure that we have the right product, at the right time and the right price and ________."

A)forever rid the world of plugs and wires
B)create customer value unparalleled anywhere in the industry
C)deliver it to the right people
D)truly make it available to anyone
E)drive a seamless end-to-end value chain

Question 7

Barter is the practice of exchanging products and services for other products and services rather than for __________.

A)perceptions
B)promises
C)money
D)tariffs
E)value

Question 8

Vizio, Inc.is an up and coming contender in the __________ market.

A)designer eyewear
B)virtual media
C)3D video game
D)exotic locale travel
E)HDTV

Question 9

Attorneys' fees, entrance fees, train fares, and organization dues are all

A)premiums.
B)bartering tools.
C)mediums of exchange.
D)synonyms for price.
E)examples of liquidity.

Question 10

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service is referred to as _________.

A)fixed fee
B)value
C)remuneration
D)price
E)exchange rate

Question 11

The price equation formula is final price equals [__________] minus [(incentives) plus (allowances)] plus [extra fees].

A)salaries
B)commissions
C)trade-ins
D)list price
E)taxes

Question 12

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and _________.

A)anonymity that is provide by Internet sales
B)the idea of getting "more" for their money
C)a dislike of haggling or negotiating
D)the need for extra accessories
E)the ease of making price comparisons on the Internet

Question 13

The price equation formula is final price equals [list price] minus [(incentives) plus (allowances)] plus [__________]

A)commissions.
B)extra fees.
C)trade-ins.
D)salaries.
E)taxes.

Question 14

From a marketing viewpoint, _________ is money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

A)value
B)price
C)barter
D)a contract
E)a tariff

Question 15

The price a buyer pays can take different names, depending on what is purchased, and can change depending on _________.

A)the price equation
B)the equity factor
C)the barter formula
D)price alignment
E)confluence of pricing factors

Question 16

North America's fastest-growing HDTV and consumer electronics company is

A)Samsung.
B)Phillips.
C)LG.
D)Sony.
E)Vizio.

Question 17

Which of the following is a particular type of price?

A)operating costs
B)liquidity
C)equitable medium
D)college tuition
E)stockholders' equity

Question 18

The use of "special fees" and "surcharges" is driven by consumers' zeal for __________ and the ease of making price comparisons on the Internet.

A)high prices
B)low prices
C)warranties
D)extra accessories
E)service contracts

Question 19

In order to deliver a product that the average consumer could afford, Vizio used the strategy of

A)having the product design and marketing done in the United States and having contract manufacturers in Taiwan, build the product.
B)using mass customization in Taiwan and making individual product changes in the United States.
C)purchasing a small company in China and distributing their product under the Vizio name.
D)purchasing a small company in Japan and distributing their product under the Vizio name.
E)relying solely on local talent and recycled materials to build high quality but no frills.

Question 20

The price equation formula is final price equals [list price] minus [(__________) plus (allowances) plus [extra fees].

A)salaries
B)commissions
C)trade-ins
D)incentives
E)taxes

Question 21

The ratio of __________ to price is referred to as value.

A)value-added pricing
B)perceived benefits
C)perceived revenue
D)perceived costs
E)prestige value

Question 22

competition-oriented approaches.

A)cost-oriented
B)cause-oriented
C)revenue-oriented
D)reduced risk-oriented
E)multi-pricing oriented

Question 23

"Value" involves the judgment by a consumer of the worth and desirability of a product or service __________

A)relative to the amount of time and energy a consumer puts into the purchase process.
B)based upon the value assigned to similar items owned by the consumer's peers.
C)that results from performing a careful break-even analysis.
D)relative to substitutes that satisfy the same need.
E)based upon the differential between the customer's "needs" and the customer's "wants."

Question 24

A buying situation can involve comparing the costs and benefits of substitute items-such as real sugar to the sugar substitute Equal which, although more expensive than sugar, is purchased by many consumers because it contains no calories.This situation involves the consumer considering

A)a marginal analysis.
B)a profit equation.
C)a break-even analysis.
D)price elasticity of demand.
E)a reference value.

Question 25

The ratio of perceived benefits to __________ is referred to as value.

A)price
B)prestige value
C)value-added pricing
D)value analysis
E)perceived costs

Question 26

To calculate _________, you would compute: (Perceived benefits / Price).

A)value
B)total revenue
C)marginal revenue
D)average revenue
E)break-even point

Question 27

To calculate _________, you would compute: (Unit price x Quantity sold) - (Fixed cost + Variable cost).

A)profit
B)total revenue
C)marginal revenue
D)average revenue
E)break-even point

Question 28

The formula, Total revenue-Total cost, or (Unit price x Quantity sold)-(Fixed cost + Variable cost) represents _________.

A)the profit equation
B)marginal revenue
C)total revenue
D)average revenue
E)break-even point

Question 29

competition-oriented approaches.

A)cost-oriented
B)cause-oriented
C)revenue-oriented
D)reduced risk-oriented
E)profit-oriented

Question 30

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns.Because the company is buying more than 10 dishwashers, it is eligible for a $150 per unit quantity discount.Financing charges total $20 per unit.The company gets $10 per dishwasher for the 15 dishwashers traded in.What is the actual price the company will pay for each dishwasher?

A)$390
B)$400
C)$410
D)$530
E)$560

Question 31

Reference value involves comparing the costs and benefits of _________.

A)substitute items
B)intangible items
C)items of equal or greater value
D)products with which a consumer is familiar and items the consumer has not seen or used before
E)items from one particular distributor

Question 32

Which of the following statements is most accurate?

A)For some products, price influences the perception of overall quality, and ultimately value, to consumers.
B)A consumer's view of a product's value is always tied to quality.
C)A consumer's view of value is a function of their education and upbringing.
D)Price plays only a small part in a consumer's value of a product or service.
E)Price plays a large role in assessing value but plays a very minor role in assessing quality.

Question 33

Tara is enrolled for spring semester at college.The tuition is $6,000 but she has a scholarship for $1,000 as well as a work study grant of $1,500.The health fees and student activity fees are $150 for the semester.What is the actual price Tara is paying for the spring semester?

A)$2,500
B)$2,650
C)$3,650
D)$5,150
E)$6,150

Question 34

To increase value, marketers have the option of

A)decreasing benefits.
B)decreasing benefits and increasing price.
C)decreasing price and increasing benefits.
D)decreasing price and decreasing benefits.
E)do nothing and let the perceived value of the item increase as it matures in the life cycle.

Question 35

The ratio of perceived benefits to price is referred to as

A)the price-quality relationship.
B)value-added pricing.
C)prestige pricing.
D)value-analysis.
E)value.

Question 36

To increase value marketers may _________, decrease price, or both increase benefits and decrease price.

A)decrease benefits and increase price
B)decrease both price and benefits
C)decrease benefits
D)increase benefits
E)do nothing and let the perceived value of the item increase as it matures in the life cycle

Question 37

Most consumers realize the quality of diamonds varies, and most believe the higher the price of the diamond the higher its quality.This is an example of price influencing the perception of overall quality, and __________ to consumers.

A)acceptable cost
B)perceptual investment
C)barter potential
D)return on investment
E)value

Question 38

A firm's profit equation demonstrates that profit equals _________, or _________.

A)Total cost + Total revenue; (Unit price x Quantity sold)-(Fixed cost + Variable cost)
B)Total revenue-Total cost; (Unit price x Quantity sold)-(Fixed cost + Variable cost)
C)Total cost-Marginal cost; (Fixed cost + Variable cost) /(Unit price x Quantity sold)
D)Total cost-Variable cost; (Fixed cost + Variable cost) + (Unit price x Quantity sold)
E)Total revenue + Total cost; (Unit price x Quantity sold)-(Fixed cost + Variable cost)

Question 39

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's Line of pizzas without increasing the price, what consumer motivation was it appealing to?

A)cost
B)appearance
C)tangibles
D)value
E)prestige

Question 40

To increase value marketers may increase benefits, decrease price, or _________.

A)decrease benefits and increase price
B)decrease both price and benefits
C)both increase benefits and decrease price
D)decrease price and decrease benefits
E)do nothing and let the perceived value of the item increase as it matures in the life cycle

Question 41

When introducing a new or innovative product, setting the highest initial price that customers really desiring the product are willing to pay is referred to as a

A)skimming strategy.
B)penetration strategy.
C)price-linking strategy.
D)experience-curve pricing strategy.
E)prestige pricing strategy.

Question 42

_________.

A)consumers perceive your product to be similar to other products on the market
B)a lower price will significantly reduce unit costs
C)when customers interpret high price as signifying high quality
D)consumers tend to be price sensitive
E)it will be easier to set measureable sale unit goals

Question 43

FIGURE 12-1
Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "A" represents which approach to finding the approximate price level according to the items listed in the cell?

A)demand-oriented approach
B)cost-oriented approach
C)profit-oriented approach
D)competition-oriented approach
E)profit-equation approach

Question 44

In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery, but unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market.Energizer used

A)penetration pricing.
B)prestige pricing.
C)skimming pricing.
D)price lining.
E)cost-plus fixed-fee pricing.

Question 45

A skimming pricing policy is likely to be most effective when

A)consumers perceive your product to be similar to other products on the market.
B)a lower price will have a major effect on reducing unit costs.
C)competitors will be attracted to the market due to the potential for high sales revenues.
D)consumers tend to be price sensitive.
E)a high initial price will not attract competitors.

Question 46

The Apple iPad was recently introduced at an initial price of $650 for the 16 GB version.People waited in line overnight so they could be one of the first to own these unique pieces of electronics.Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

A)price lining
B)experience curve pricing
C)customary pricing
D)skimming pricing
E)target pricing

Question 47

FIGURE 12-1
Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "D" represents which approach to finding the approximate price level according to the items listed in the cell?

A)demand-oriented approach
B)cost-oriented approach
C)profit-oriented approach
D)competition-oriented approach
E)profit-equation approach

Question 48

Hallmark was the official supplier of flowers at the last Winter Olympics.It was the first time that it has participated in the Olympics.Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch.Consumers were able to buy a smaller version of this same bouquet at the Hallmark Web site for $74.95.The Olympic bouquet that consumers could buy contains two dozen yellow roses, yet you can buy two dozen yellow roses for less than $35 at most supermarkets.If Hallmark is treating the Olympic bouquet as an innovative product, then it is using which demand-oriented approach to pricing?

A)bundle pricing
B)skimming pricing
C)penetration pricing
D)yield management pricing
E)target return-on-sales pricing

Question 49

Skimming pricing is a strategy that introduces a new or innovative product by

A)following competitors' leads.
B)creating multiple price points.
C)setting a high initial price.
D)setting a low initial price.
E)setting the price at a pre-determined percentage below its nearest competitor's price.

Question 50

When microwave ovens were in the introduction stage of the product life cycle, some consumers were willing to pay exorbitant prices for the innovative ovens.Taking advantage of this strong customer desire, marketers set the price for microwave ovens at the highest initial price that customers with a strong desire for the product were willing to pay.Marketers of microwave ovens were using a _________ pricing strategy.

A)skimming
B)penetration
C)prestige
D)price lining
E)bundle

Question 51

Skimming pricing refers to

A)setting the lowest initial price when introducing a new or innovative product in order to "skim" sales from competitors.
B)setting the highest initial price that customers really desiring the product are willing to pay, when introducing a new or innovative product.
C)setting the lowest initial price possible, skimming right above the point of profitability, in order to secure a larger market share.
D)purposely setting the highest price possible to repel the mass market and cultivate upper echelon buyers even though the actual value of the item is extremely small.
E)selling off the lowest producing products from a company's product line and turning them over to resellers to skim off any remaining profit potential.

Question 52

Demand-oriented approaches weigh factors that underlie expected __________ more heavily than factors such as cost, profit, and competition when selecting a price level.

A)total sales revenue
B)market volatility
C)prevailing prices
D)product substitutes
E)customer tastes and preferences

Question 53

FIGURE 12-1
Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "B" represents which approach to finding the approximate price level according to the items listed in the cell?

A)demand-oriented approach
B)cost-oriented approach
C)profit-oriented approach
D)competition-oriented approach
E)profit-equation approach

Question 54

The manufacturer of a DVD-R is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue against using a skimming pricing strategy for the DVD-R disks?

A)large potential market, even at a high price
B)technological problems still exist for competitors
C)increasing volume reduces production costs substantially
D)consumers perceive a price-quality relationship
E)consumers are innovators

Question 55

__________ approaches.

A)cost-oriented
B)cause-oriented
C)revenue-oriented
D)competition-oriented
E)reduced-risk oriented

Question 56

__________.

A)customers are willing to buy immediately at the high initial price
B)consumers tend to be price sensitive
C)it will be easier to set measureable sale unit goals
D)a lower price will significantly reduce unit costs
E)consumers perceive your product to be similar to other products on the market

Question 57

FIGURE 12-1
Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "C" represents which approach to finding the approximate price level according to the items listed in the cell?

A)demand-oriented approach
B)cost-oriented approach
C)profit-oriented approach
D)competition-oriented approach
E)profit-equation approach

Question 58

Which of the following process is most accurate?

A)When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it.
B)Sometimes pricing strategies overlap and it is wise to consider several strategies before deciding.
C)Demand-oriented pricing approaches must rely more heavily on competitors' process than they do on customer tastes.
D)Skimming prices which is demand-oriented is similar in strategy to loss leader pricing of the competition-oriented strategy.
E)Penetration pricing is the most prevalent pricing strategy for companies trying to meet the goals of a profit-oriented approach.

Question 59

________

A)consumers perceive your product to be similar to other products on the market.
B)a lower price will significantly reduce unit costs.
C)consumers tend to be price sensitive.
D)it will be easier to set measureable sale unit goals.
E)when the high initial prices do not attract competitors.

Question 60

________

A)consumers tend to be price sensitive.
B)it will be easier to set measureable sales unit goals.
C)a lower price will significantly reduce unit costs.
D)consumers perceive your product to be similar to other products on the market.
E)lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

Question 61

When Hallmark cards introduced a line of $.99 cards (about half the price of the previously less expensive cards sold by Hallmark), the greeting card company was trying to appeal to a mass market that was price sensitive.Hallmark was using a __________ pricing strategy.

A)prestige
B)skimming
C)penetration
D)demand-backward
E)experience-curve

Question 62

_________.

A)unit production and marketing costs fall dramatically as production volumes increase
B)customers are willing to buy immediately at the high initial price
C)lowering the price has only a minor effect on increasing sales volume and reducing unit costs
D)when the high initial prices do not attract competitors
E)when customers interpret high prices as signifying high quality

Question 63

Setting prices a few dollars or cents under an even number is referred to as _________.

A)odd-even pricing
B)prestige pricing
C)price lining
D)bakers dozens
E)price fixing

Question 64

The Wm.Wrigley Jr.Co.recently introduced a new flavor of Orbit brand sugar free chewing gum - mint mojito.The introductory price was low so that it would create loyal customers for the flavor quickly.In this example, Wrigley is using

A)price lining.
B)odd-even pricing.
C)skimming pricing.
D)penetration pricing.
E)demand-backward pricing.

Question 65

Penetration pricing is intended to appeal to which market?

A)highly selective quality-seeking consumers
B)price-insensitive markets
C)the mass market
D)specialty goods markets
E)the same markets as skimming pricing

Question 66

A manufacturer using ________ is setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it.

A)skimming pricing
B)penetration pricing
C)price lining
D)odd-even pricing
E)prestige pricing

Question 67

In some cases, penetration pricing may follow skimming pricing.The skimming pricing would help __________ and the penetration pricing would help _________.

A)increase market share; attract price-insensitive customers
B)attract price sensitive customers; increase market share
C)recoup initial research and development costs; increase market share
D)recoup initial research and development costs; maintain market share
E)increase market share; attract price insensitive customers

Question 68

Odd-even pricing refers to

A)setting prices one way for product lines and another way for individual brands.
B)setting prices of luxury items at even price points and setting the price of necessities at odd price points.
C)setting prices a few dollars or cents under an even number.
D)adding a fixed percentage to the cost of all items in a specific product class.
E)offering retailers "baker's dozens," thirteen items for the price of twelve to encourage larger purchase orders.

Question 69

Setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it is referred to as

A)skimming pricing.
B)status pricing.
C)price lining.
D)value pricing.
E)prestige pricing.

Question 70

_________.

A)lowering the price has only a minor effect on increasing sales volume and reducing unit costs
B)when the high initial prices do not attract competitors
C)many segments of the market are price sensitive
D)when customers interpret high prices as signifying high quality
E)customers are willing to buy immediately at the high initial price

Question 71

Mercedes-Benz cars and a Patek Phillipee's Platinum World Time wrist watch have a common characteristic - they have an element of _________.

A)penetration pricing
B)prestige pricing
C)target pricing
D)bundle pricing
E)yield-management pricing

Question 72

Penetration pricing refers to

A)charging different prices to different buyers for goods of like grade and quality.
B)setting the highest initial price that customers really desiring the product are willing to pay.
C)setting a low initial price on a new product to appeal immediately to the mass market.
D)setting a marketing price for product or product class oriented on a subjective feel for the competitors' price or market price as the benchmark.
E)setting prices a few dollars or cents under an even number.

Question 73

You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989.Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

A)bait and switch
B)standard markup
C)prestige
D)penetration
E)cost plus fixed-fee

Question 74

The pricing strategy Energizer used with its very successful e² high-performance AA alkaline batteries was

A)penetration pricing.
B)prestige pricing.
C)skimming pricing.
D)price lining.
E)cost-plus fixed-fee pricing.

Question 75

Prestige pricing refers to

A)charging different prices to different buyers for goods of like grade and quality.
B)setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it.
C)setting a low initial price on a new product to appeal immediately to the mass market odd-even pricing.
D)setting a market price for product or product class oriented on a subjective feel for the competitors' price or market price as the benchmark.
E)setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

Question 76

The pricing strategy that is almost the exact opposite of skimming prices is

A)price lining.
B)target pricing.
C)prestige pricing.
D)odd-even pricing.
E)penetration pricing.

Question 77

Talbot's sells women's clothes.A simple tee shirt with the Talbot's label costs $25.If you know you simply want a tee shirt, you can buy one for $5 at a Family Dollar Store, but it won't have the Talbot's label or quality.What kind of demand-oriented approach to pricing is being used by this manufacturer?

A)experience curve pricing
B)skimming pricing
C)demand-backward pricing
D)prestige pricing
E)flexible pricing

Question 78

many segments of the market are price sensitive.

A)lowering the price has only a minor effect on increasing sales volume and reducing unit costs
B)the high initial prices do not attract competitors
C)a low initial price discourages competitors from entering the market
D)customers interpret high prices as signifying high quality
E)customers are willing to buy immediately at the high initial price

Question 79

In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery, but unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market.Was Energizer's pricing strategy to take market share from Duracell a success?

A)No, because consumers equate quality of batteries with higher prices.
B)No, because consumers are price-insensitive when it comes to batteries.
C)Yes, because the positive association with the "Energizer Bunny" kept going, and going, and going.
D)Yes, because consumers typically respond positively to cost-plus pricing.
E)Yes, because the demand for batteries has unitary elasticity.

Question 80

Which of the following statements about penetration pricing is most accurate?

A)Penetration pricing is a profit-oriented approach to pricing.
B)Penetration pricing is a cost-oriented pricing method.
C)Penetration pricing encourages competitors to enter a market.
D)A penetration pricing strategy is more effective in a marketplace with price-sensitive consumers.
E)Because penetration pricing is a high initial-price strategy, it will not attract competitors.