Question 1

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

Accepted Answer

A)  comparative 
B)  competitive 
C)  market-skimming 
D)  market-segmentation 
E)  cost-plus

Question 2

________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.

Accepted Answer

A)  Promotional 
B)  Trade-in 
C)  Segmented 
D)  Functional 
E)  Dynamic

Question 3

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

Accepted Answer

A)  defensive 
B)  offensive 
C)  publicized 
D)  private 
E)  uniform across channels

Question 4

Refer to the scenario below to answer the following question(s).
Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market quickly.
-Noticing that 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 5

Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.

Accepted Answer

A)  time-based pricing 
B)  seasonal pricing 
C)  dynamic pricing 
D)  promotional pricing 
E)  penetration pricing

Question 6

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

Accepted Answer

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

Question 7

After entering a market by using market-penetration pricing, a company can easily raise its price and maintain its market share.

Accepted Answer

A) True 
 B)False

Question 8

Freight-absorption pricing is used for ________.

Accepted Answer

A)  penetrating international markets 
B)  generating customer buzz about new products 
C)  holding on to increasingly competitive markets 
D)  generating quick profits to offset input costs 
E)  maintaining quality service records

Question 9

Companies that set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

Accepted Answer

A)  market-skimming pricing 
B)  market-penetration pricing 
C)  cost-plus pricing 
D)  inclusive pricing 
E)  exclusive pricing

Question 10

Go Zone plans to introduce four tablet models over the next year. These models range from basic readers at $99 per unit, to more sophisticated tablets 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 tablets?

Accepted Answer

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

Question 11

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 12

Which of the following is true of price skimming?

Accepted Answer

A)  It is effective in situations in which competitors are able to undercut prices easily. 
B)  It can be profitably used when the product's quality and image support its price. 
C)  It involves underpricing products so that companies make larger sales. 
D)  It is ineffective in situations in which competitors are unable to enter the market easily. 
E)  It leads to a situation in which the company completes more, though less profitable, sales.

Question 13

Segmented pricing is only effective when ________.

Accepted Answer

A)  the segments show similar degrees of demand 
B)  the cost of segmenting does not exceed the revenue obtained from the price difference 
C)  the segmented prices do not reflect real differences in customers' perceived value 
D)  the customers of different socio-economic classes are treated according to their rank 
E)  companies make their services and products accessible exclusively to wealthy patrons

Question 14

Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and services offered are identical in every other aspect. This form of pricing is called ________ pricing.

Accepted Answer

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

Question 15

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?

Accepted Answer

A)  uniform-delivered pricing 
B)  zone pricing 
C)  FOB-origin pricing 
D)  location-based pricing 
E)  reference pricing

Question 16

Why might marketers use market-penetration pricing?

Accepted Answer

The answer of Why might marketers use market-penetration 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 NOT true of public policies and pricing?

Accepted Answer

A)  Companies are free to charge whatever prices they wish. 
B)  Federal, state, and local laws govern the rules of fair play in pricing. 
C)  Deceptive pricing is not permitted. 
D)  Companies must consider broader societal pricing concerns. 
E)  Regulations exist to control predatory pricing.

Question 19

Explain the factors involved in setting international pricing.

Accepted Answer

The answer of Explain the factors involved in setting international...

Question 20

Give two examples of products for which captive product pricing might be used.

Accepted Answer

The answer of Give two examples of products for which...

Exam 11: Pricing Strategies: Additional Considerations

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

________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.

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

Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.

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

After entering a market by using market-penetration pricing, a company can easily raise its price and maintain its market share.

Freight-absorption pricing is used for ________.

Companies that set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

Go Zone plans to introduce four tablet models over the next year. These models range from basic readers at $99 per unit, to more sophisticated tablets 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 tablets?

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 ________.

Which of the following is true of price skimming?

Segmented pricing is only effective when ________.

Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and services offered are identical in every other aspect. This form of pricing is called ________ pricing.

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?

Why might marketers use market-penetration pricing?

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

Which of the following is NOT true of public policies and pricing?

Explain the factors involved in setting international pricing.

Give two examples of products for which captive product pricing might be used.