Question 1

Some pricing decisions are subject to government regulation. Name and define three pricing practices that are illegal.

Accepted Answer

Price fixing is an agreement between two or more firms on the price they will charge for a product or service. Several laws govern price fixing practices.
Price discrimination occurs when a firm sells to two or more different buyers at different prices, and the result reduces competition. Price discrimination can also occur if the seller discriminates between buyers in terms of supplementary services provided, or if the buyers use their power to force sellers into discriminatory practices.
Predatory pricing is the practice of charging a very low price with the intent of driving competitors out of business or out of the market. This practice is illegal.

Question 2

For just $59.00, a customer can buy the Grand Slam Ticket Pack, giving them access to four Toronto Blue Jays baseball games, four hotdogs, four Coca-Colas, four Jays bucket caps, and one game program. This price is significantly lower than if the items could be purchased individually. What are the Jays using?

Accepted Answer

A)  price lining
B)  two-part pricing
C)  price maintenance
D)  price bundling D

Question 3

Which of the following phrases accurately describes psychological pricing?

Accepted Answer

A)  It is banned in most jurisdictions.
B)  It is equally effective on all types of products.
C)  It is also called odd-even pricing.
D)  It is essentially the same as price shading. C

Question 4

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

Accepted Answer

The answer of What activities occur once the marketing manager...

Question 5

Which of the following best describes single-price selling?

Accepted Answer

A)  removes price comparisons from the buyer's decision-making process
B)  does not benefit the retailer
C)  is most effective when used during an inflationary period
D)  encourages clerical errors

Question 6

What is FOB an acronym for?

Accepted Answer

A)  free on board
B)  fee on buyer
C)  first buyer
D)  freight on board

Question 7

Which of the following pricing methods can be used to build market share during a recession?

Accepted Answer

A)  unbundling
B)  psychological pricing
C)  bundling
D)  variable pricing

Question 8

The owner of a neighbourhood hardware store has decided to sell a set of three padlocks for $5. He hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items. The owner is encouraging store patronage through which of the following?

Accepted Answer

A)  variable maintenance
B)  psychological pricing
C)  price maintenance
D)  loss leader pricing

Question 9

Manjeet was interested in purchasing a Barbour jacket from J.Crew in the United States. However, once Manjeet was informed that she would be required to absorb the freight costs from the shipping point, she changed her mind. What is this price tactic called?

Accepted Answer

A)  zone pricing
B)  uniform delivered pricing
C)  freight absorption pricing
D)  FOB origin pricing

Question 10

Ahmad Jing operates a wedding consultant service. He will often provide essentially the same service to different customers at distinctly different prices depending on how much he likes the customer and how much he thinks the customer needs his services. What does Jing use?

Accepted Answer

A)  two-part pricing
B)  flexible pricing
C)  bait-and-switch practices
D)  zoning (or basing)  pricing

Question 11

Best Buy sells their televisions at or just above cost in the hope that when customers come to purchase televisions, they shall also purchase other peripheral items such as cables. What would these televisions also be known as?

Accepted Answer

A)  product bundles
B)  loss leaders
C)  price liners
D)  price penetrators

Question 12

Evergreen Lighting, a manufacturer of decorative, energy-efficient lighting products, requires its buyers to pay for the cost of transportation from the manufacturing site to their place of businesses. Evergreen Lighting uses FOB origin pricing.

Accepted Answer

A) True 
 B)False

Question 13

Eustis Lee is a lawyer who handles only drinking and driving cases. No matter how quickly he resolves the case, he charges each customer $5,000. Lee justifies the fee because of his lengthy education and the years he has spent learning how the judicial system operates. Which pricing policy is the lawyer using?

Accepted Answer

A)  professional services pricing
B)  potential (or base)  pricing
C)  price maintenance
D)  flexible (or variable)  pricing

Question 14

A catalogue retailer offers three styles of khaki pants at three price levels. Customers can buy khaki pants for $26, $32, or $38 and at no other prices but these. The special pricing tactic used by the catalogue retailer is best described as variable psychological pricing.

Accepted Answer

A) True 
 B)False

Question 15

Two reasons are given to explain why some companies price their products too low, thereby reducing company profits. What are they?

Accepted Answer

The answer of Two reasons are given to explain why...

Question 16

What is uniform delivered pricing also known as?

Accepted Answer

A)  one pricing
B)  postage stamp pricing
C)  calculated pricing
D)  regional pricing

Question 17

What is the basic assumption behind value-based pricing?

Accepted Answer

A)  The firm is sales driven.
B)  The firm is both customer driven and competitor driven.
C)  Increased profitability for wholesalers will increase the number of services they are willing to perform.
D)  Consumers are more concerned about price than quality.

Question 18

What is the main reason for establishing pricing objectives?

Accepted Answer

A)  to give direction for price movements over the product life cycle
B)  to define the initial price
C)  to establish a good understanding of the market and the needs of the consumer
D)  to interact with the other elements of the marketing mix

Question 19

Penetration pricing is sometimes referred to as a "market-plus" approach to pricing.

Accepted Answer

A) True 
 B)False

Question 20

List in order the four steps used to set the right price for a product.

Accepted Answer

The answer of List in order the four steps used...

Exam 13: Setting the Right Price

Some pricing decisions are subject to government regulation. Name and define three pricing practices that are illegal.

Which of the following phrases accurately describes psychological pricing?

What activities occur once the marketing manager has established pricing goals? Why are these activities important?

Which of the following best describes single-price selling?

What is FOB an acronym for?

Which of the following pricing methods can be used to build market share during a recession?

The owner of a neighbourhood hardware store has decided to sell a set of three padlocks for $5. He hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items. The owner is encouraging store patronage through which of the following?

Manjeet was interested in purchasing a Barbour jacket from J.Crew in the United States. However, once Manjeet was informed that she would be required to absorb the freight costs from the shipping point, she changed her mind. What is this price tactic called?

Ahmad Jing operates a wedding consultant service. He will often provide essentially the same service to different customers at distinctly different prices depending on how much he likes the customer and how much he thinks the customer needs his services. What does Jing use?

Best Buy sells their televisions at or just above cost in the hope that when customers come to purchase televisions, they shall also purchase other peripheral items such as cables. What would these televisions also be known as?

Evergreen Lighting, a manufacturer of decorative, energy-efficient lighting products, requires its buyers to pay for the cost of transportation from the manufacturing site to their place of businesses. Evergreen Lighting uses FOB origin pricing.

A catalogue retailer offers three styles of khaki pants at three price levels. Customers can buy khaki pants for $26, $32, or $38 and at no other prices but these. The special pricing tactic used by the catalogue retailer is best described as variable psychological pricing.

Two reasons are given to explain why some companies price their products too low, thereby reducing company profits. What are they?

What is uniform delivered pricing also known as?

What is the basic assumption behind value-based pricing?

What is the main reason for establishing pricing objectives?

Penetration pricing is sometimes referred to as a "market-plus" approach to pricing.

List in order the four steps used to set the right price for a product.