Question 1

Discuss the conditions under which a company might consider using price cuts or price increases.

Accepted Answer

The answer of Discuss the conditions under which a company...

Question 2

A market-penetration pricing policy should LEAST likely be used for a new product when ________.

Accepted Answer

A)  the market is highly price sensitive 
B)  production and distribution costs fall as sales volume increases 
C)  the product's quality and image support a high price 
D)  a high price helps keep out the competition 
E)  there are few or no competitors in the market

Question 3

If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ________.

Accepted Answer

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

Question 4

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 5

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Accepted Answer

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

Question 6

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 7

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

Accepted Answer

A)  product-segmented pricing 
B)  by-product pricing 
C)  customer-segmented pricing 
D)  captive product pricing 
E)  product bundling pricing

Question 8

Which of the following product mix pricing strategies involves pricing products that 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

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?

Accepted Answer

A)  segmented pricing 
B)  international pricing 
C)  reference pricing 
D)  promotional pricing 
E)  basing-point pricing

Question 10

In what way does the government regulate pricing?

Accepted Answer

The answer of In what way does the government regulate...

Question 11

Compare the practices of price fixing and predatory pricing. Explain why each is prohibited by law.

Accepted Answer

The answer of Compare the practices of price fixing and...

Question 12

When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

Accepted Answer

A) True 
 B)False

Question 13

Differentiate between market-skimming and market-penetration pricing strategies. Explain the conditions within which they are effective.

Accepted Answer

The answer of Differentiate between market-skimming and market-penetration pricing strategies....

Question 14

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

Accepted Answer

A)  real estate 
B)  automobile 
C)  dairy products 
D)  financial services 
E)  health care

Question 15

Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?

Accepted Answer

A)  captive product pricing 
B)  psychological pricing 
C)  by-product pricing 
D)  promotional pricing 
E)  international pricing

Question 16

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 17

Sellers cannot influence or use consumers' reference prices when setting their product prices.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true of price changes?

Accepted Answer

A)  Over-demand leads to companies initiating price cuts. 
B)  Changes in price do not affect a brand's image. 
C)  Customer reaction to price changes is not as important as competitor reaction. 
D)  A drop in price can adversely affect how consumers view the brand. 
E)  Excess capacity is a factor that causes increases in price.

Question 19

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

Accepted Answer

A)  have never tried the product before 
B)  have little knowledge of the brand 
C)  have experience with the product 
D)  are shopping for luxury items 
E)  cannot physically examine the product

Question 20

Which of the following companies uses product bundle pricing?

Accepted Answer

A)  Photo Genie, which sells inexpensive cameras that run only on their own, expensive, batteries 
B)  Tune Zone, which launched a range of mp3 player models, each priced according to its features 
C)  Penguin's Parlor, which offers customers a 20 percent discount on their birthdays 
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 its individual components sold together

Exam 11: Pricing Strategies: Additional Considerations

Discuss the conditions under which a company might consider using price cuts or price increases.

A market-penetration pricing policy should LEAST likely be used for a new product when ________.

If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ________.

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

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

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

Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

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

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?

In what way does the government regulate pricing?

Compare the practices of price fixing and predatory pricing. Explain why each is prohibited by law.

When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

Differentiate between market-skimming and market-penetration pricing strategies. Explain the conditions within which they are effective.

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

Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?

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?

Sellers cannot influence or use consumers' reference prices when setting their product prices.

Which of the following is true of price changes?

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

Which of the following companies uses product bundle pricing?