Question 1

La Belle released a a cut glass bottle of perfume at $299 per item, even though its major competitor prices its signature scent at $99 per item. La Belle reasons that customers in search of luxury goods will prefer its product because they are likelier to believe that high price indicates superior quality. What price adjustment strategy is evident in its reasoning?

Accepted Answer

A)  seasonal pricing 
B)  time-based pricing 
C)  captive product pricing 
D)  psychological pricing 
E)  location-based pricing

Question 2

In return for participating in Honda advertising and sales support programs, Honda dealerships are rewarded with payments or price reductions, which are known as ________.

Accepted Answer

A)  seasonal discounts 
B)  functional allowances 
C)  cash discounts 
D)  promotional allowances 
E)  trade-in allowances

Question 3

Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.

Accepted Answer

A) True 
 B)False

Question 4

Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process of production, the company generates a great deal of scrap hardwood. How can using by-product pricing benefit the company?

Accepted Answer

The answer of Sensenig Propeller manufactures replica antique wooden airplane...

Question 5

Why is predatory pricing considered illegal?

Accepted Answer

The answer of Why is predatory pricing considered illegal?...

Question 6

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.

Accepted Answer

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

Question 7

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

Accepted Answer

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

Question 8

Which of the following product mix pricing strategies involves pricing products that must or can only be used with the main product?

Accepted Answer

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

Question 9

Give two examples of product bundle pricing.

Accepted Answer

The answer of Give two examples of product bundle pricing....

Question 10

Shoe Trends, a company that manufactures formal shoes for men and women, offers to give its customers $10 for an old pair of shoes when they buy a new pair. In essence, they're reducing the price of the new shoes by $10. What is this type of price adjustment called?

Accepted Answer

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

Question 11

________ occurs when a seller states price savings that are not actually available to consumers.

Accepted Answer

A)  Comparative pricing 
B)  Scanner fraud 
C)  Deceptive pricing 
D)  Market skimming 
E)  Price collusion

Question 12

Price discrimination is permissible if if the seller manufactures different qualities of the same product for different retailers and can prove that the price difference is proportional.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following companies uses product line pricing?

Accepted Answer

A)  Photo Genie, which sells inexpensive cameras that run only on their own expensive batteries 
B)  Mobile Point, which launched a range of cell phone models, each priced according to its features 
C)  Penguin's Parlor, which offers customers a 20% discount on their birthdays and certain holidays 
D)  Green Thumb, which gives away free watering cans with the purchase of certain potted plants 
E)  Panizza, whose combo meals are priced lower than the individual components sold together

Question 14

When theaters vary their seat prices because of audience preferences for seats in coveted rows, they use ________.

Accepted Answer

A)  customer-segment pricing 
B)  location-based pricing 
C)  time-based pricing 
D)  product line pricing 
E)  captive product pricing

Question 15

Tone Zone plans to introduce four mp3 player models over the next year. These models range from basic players at $99 per unit, to more sophisticated players at $399 per unit. The more features a model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of mp3 players?

Accepted Answer

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

Question 16

Why might marketers use market-penetration pricing?

Accepted Answer

The answer of Why might marketers use market-penetration pricing?...

Question 17

For what types of products might marketers use market-skimming pricing?

Accepted Answer

The answer of For what types of products might marketers...

Question 18

Noticing that the themed envelopes aren't selling well, Charles Payton decides to offer customers a special "letter writing" kit, He prices the kit-which comprises letter paper, matching envelopes, and pens-at $5, even though the combined prices of the individual items is $8. Which of the following pricing strategies is he using?

Accepted Answer

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

Question 19

When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.

Accepted Answer

A)  reduce its production costs 
B)  reduce its marketing costs 
C)  maintain its current prices and profit margin 
D)  increase its marketing budget to raise the perceived value of the product 
E)  increase its production costs to improve the quality of the product

Question 20

Which of the following would be considered predatory pricing?

Accepted Answer

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

Exam 11: Pricing Strategies: Additional Considerations