Deck 11: Pricing Products: Pricing Strategies

Question 1

Using ________,companies are able to turn their by-products into cash,allowing them to make the price of their main product more competitive.

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

Answer 1

by-product pricing

Question 2

Of the following,which statement(s)would NOT support a market-skimming policy for a new product?

A) The product's quality and image support its higher price.
B) Enough buyers want the products at that price.
C) Competitors are not able to undercut the high price.
D) Competitors can enter the market easily.
E) C and D

Answer 2

Competitors can enter the market easily.

Question 3

A challenge for management in product line pricing is to decide on the price steps between the ________.

A) various products in a line
B) product mixes
C) product groupings
D) product lines
E) channel partners

Answer 3

various products in a line

Question 4

A company sets not a single price,but rather a ________ that covers different items in its line that change over time as products move through their life cycles.

A) pricing by-product
B) pricing structure
C) pricing loop
D) pricing cycle
E) pricing bundle

Question 5

Southeast Telephone Company uses two-part pricing for its long-distance call charges.Because this is a service,the price is broken into a fixed fee plus a(n)________.

A) fixed usage rate
B) variable usage rate
C) standard usage rate
D) market usage rate
E) optional usage rate

Question 6

A firm is using ________ when it charges a high,premium price for a new product with the intention of reducing the price in the future.

A) price skimming
B) trial pricing
C) value pricing
D) market-penetration pricing
E) prestige pricing

Question 7

Which of the following conditions would NOT support the use of a market-penetration pricing strategy?

A) The market is highly price sensitive.
B) Production and distribution costs will fall as sales volume increases.
C) The product's quality and image support a high price.
D) A low price would help keep out the competition.
E) A and C

Question 8

Using product bundle pricing,sellers combine several products and offer the bundle ________.

A) as a functional unit
B) at a reduced price
C) as a complete self-service package
D) as a reward to loyal customers
E) at a premium price

Question 9

Companies usually develop ________ rather than ________.

A) single products; product families
B) product lines; single products
C) product families; product lines
D) product brands; product images
E) product images; product brands

Question 10

Which of the following is a reason that a marketer would choose a penetration pricing strategy?

A) to ensure the company has the ability to increase prices once demand decreases
B) to focus on the rapid achievement of profit objectives
C) to appeal to different consumer segments with different levels of price sensitivity
D) to create markets for highly technical products
E) to help keep out the competition

Question 11

Mach 3 razor blades must be used in the Mach 3 razor.Which type of pricing is being used?

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

Question 12

A marketer must be familiar with the five major product mix pricing situations.Which of the following is NOT one of them?

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

Question 13

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

A) market-level pricing
B) market-competitive pricing
C) market-skimming pricing
D) market-price lining
E) market-price filling

Question 14

Which of the following is NOT a price adjustment strategy?

A) segmented pricing
B) promotional pricing
C) free samples
D) geographical pricing
E) seasonal pricing

Question 15

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.

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

Question 16

What is a major advantage of product bundle pricing?

A) It can promote the sales of products consumers might not otherwise buy.
B) It allows a company to offset the costs of disposing of by-products.
C) It combines the benefits of the other pricing strategies.
D) It creates a brand experience for consumers.
E) It offers consumers less value for the money.

Question 17

When amusement parks and movie theaters charge admission plus fees for food and other attractions,they are following a(n)________ pricing strategy.

A) by-product
B) optional-product
C) two-part
D) skimming
E) penetration

Question 18

________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.

A) Market-skimming
B) Market-penetration
C) Below-market
D) Value-based
E) Leader

Question 19

In the case of services,captive product pricing is called ________ pricing.

A) by-product
B) optional product
C) two-part
D) bundle
E) segmented

Question 20

Typically,producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product.

A) low; low markups
B) high; low markups
C) low; high markups
D) high; high markups
E) moderately; moderate markups

Question 21

Promotional pricing can have all of the following adverse effects EXCEPT ________.

A) creating deal-prone customers
B) eroding the brand's value in the eyes of customers
C) giving pricing secrets away to competitors
D) becoming addictive to both the customer and business
E) delaying the company's focus on long-term strategies

Question 22

When consumers cannot judge quality because they lack the information or skill,price becomes ________.

A) less important
B) insignificant
C) an important quality signal
D) the only driver of the purchase
E) negotiable

Question 23

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

A) lack information
B) lack skills to use the product
C) have experience with the product
D) are shopping for a specialty item
E) cannot physically examine the product

Question 24

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.

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

Question 25

When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs,it is granting a ________.

A) trade discount
B) functional discount
C) cash discount
D) promotional allowance
E) trade credit

Question 26

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

A) real estate
B) automobile
C) packaged goods
D) financial services
E) health care

Question 27

All of the following are typical ways a buyer might form a reference price EXCEPT ________.

A) noting current prices
B) remembering past prices
C) assessing the buying situation
D) identifying perceived value
E) being influenced by sellers

Question 28

Which of the following is an example of a cash discount?

A) 2/10, net 30
B) $5.00 with a two-pack
C) a free case when you buy 12
D) when you pay cash and take the product with you
E) none of the above

Question 29

Under product-form pricing,different versions of a product are priced differently,but not according to differences in its ________.

A) costs
B) distribution channels
C) marketing budgets
D) reference prices
E) retail outlets

Question 30

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?

A) segmented pricing
B) psychological pricing
C) referent pricing
D) promotional pricing
E) basing-point pricing

Question 31

Which of the following is NOT a geographical pricing strategy?

A) FOB-origin pricing
B) zone pricing
C) dynamic pricing
D) uniform-delivered pricing
E) basing-point pricing

Question 32

The New Age Gallery has three admission prices for students,adults,and seniors.All three groups are entitled to the same services.This form of pricing is called ________.

A) time pricing
B) location pricing
C) customer-segmented pricing
D) revenue management pricing
E) generational pricing

Question 33

Low-interest financing and longer warranties are both examples of ________.

A) segmented pricing
B) promotional pricing
C) allowances
D) discounts
E) product-form pricing

Question 34

A quantity discount is a price reduction to buyers who purchase ________.

A) frequently
B) large volumes
C) close outs
D) inferior merchandise
E) superior merchandise

Question 35

When a firm varies its price by the season,month,day,or even hour,it is using ________ pricing.

A) revenue management
B) penetration
C) variable
D) time
E) value-added

Question 36

Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product?

A) target prices
B) reference prices
C) promotional prices
D) geographical prices
E) dynamic prices

Question 37

Consumers usually perceive higher-priced products as ________.

A) being in the maturity stage of the product life cycle
B) having a higher quality
C) having low profit margins
D) popular brands
E) being in the introductory stage of the product life cycle

Question 38

Service Industries Pte Ltd plans to offer a price-adjustment strategy in the near future.It could consider each of the following EXCEPT ________.

A) discount and allowance pricing
B) segmented pricing
C) physiological pricing
D) promotional pricing
E) location pricing

Question 39

In a form of promotion pricing,customers buy products from manufacturers' dealers within a specified time period,and then the manufacturer sends the customer a check called a ________.

A) cash rebate
B) discount
C) dealer reduction
D) promotional pricing reward
E) discount allowance

Question 40

Trade or functional discounts are offered by manufacturers to ________.

A) channel members who perform tasks that the manufacturer would otherwise have to perform
B) consumers who earn a price reduction for buying in bulk
C) intermediaries such as financing institutions as a cost of doing business with them
D) other channel members that agree to exclusive distribution contracts
E) the government market and other organizations that require bid proposals

Question 41

When a company charges the same rate to ship a product anywhere in Asia,it is using which form of geographic pricing?

A) FOB delivered
B) FOB factory
C) FOB origin
D) uniform-delivered
E) basing-point

Question 42

Most companies that conduct international business ________ to ________.

A) adjust their prices; take local market conditions into consideration
B) use promotional pricing; create excitement in new markets
C) use geographical pricing; reduce delivery costs
D) set a uniform price; maintain a consistent product image
E) initiate price cuts; compensate for import tariffs and taxes

Question 43

Which of the following is the opposite of FOB-origin pricing?

A) basing-point pricing
B) freight-absorption pricing
C) uniform-delivered pricing
D) zone pricing

Question 44

Freight-absorption pricing is used for ________ and ________.

A) market penetration; higher profit margins
B) holding on to increasingly competitive markets; higher profit margins
C) market penetration; holding on to increasingly competitive markets
D) generating temporary higher profits; discouraging competitors
E) services; installations

Question 45

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

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 market has a pure monopoly

Question 46

A company that raises its prices is most at risk of being accused of which of the following?

A) high-low pricing
B) price gouging
C) predatory pricing
D) price discrimination
E) retail price maintenance

Question 47

Under which type of geographic pricing strategy does each customer pay the freight for the product from the factory to its destination?

A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) dynamic pricing

Question 48

Which of the following is a reason for a company to raise its prices?

A) to address the issue of overdemand for a product
B) to win a larger share of the market
C) to use excess capacity
D) to boost sales volume
E) to balance out decreasing costs

Question 49

Which of the following is a major factor that influences price increases?

A) cost inflation
B) surplus of raw materials
C) government intervention
D) foreign competition
E) excess capacity

Question 50

When faced with a competitor who has cut its product's price,which of the following is typically the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer?

A) improving the quality of the product
B) introducing a higher-priced premium brand
C) altering the company's marketing communications
D) bundling the offer with add-ons
E) distributing the product through less costly channels

Question 51

Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product?

A) reduce price
B) raise perceived value
C) improve quality and increase price
D) improve quality and decrease price
E) launch a low-price "fighter brand"

Question 52

There are many reasons why a firm might consider cutting its price.All of the following are among them EXCEPT ________.

A) excess capacity
B) falling demand in the face of strong price competition
C) a drive to dominate the market through lower costs
D) a drive to reduce market share
E) a drive to gain market share and cut costs through volume

Question 53

Sawasdee Paper Company charges all customers within different identified geographical areas a single total price.The more distant the area,the higher the price.This is ________.

A) freight-absorption pricing
B) zone pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) bulk rate pricing

Question 54

Price escalation in international markets may result from four of these five marketing conditions.Which one will have the LEAST effect?

A) the additional cost of physical distribution
B) exchange-rate fluctuations
C) market instability
D) higher costs of selling
E) language barriers

Question 55

Which of the following is LEAST likely to cause price escalation in foreign markets?

A) the additional costs of product modifications
B) the additional costs of shipping and insurance
C) the additional costs of import tariffs and taxes
D) the additional costs of improving a country's infrastructure
E) exchange rate fluctuations

Question 56

Using this pricing strategy,the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.

A) FOB origin
B) freight-absorption
C) basing-point
D) loss leader
E) zone

Question 57

When a competitor cuts its price,a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.

A) stabilize its production costs
B) reduce its marketing costs
C) hold 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 58

Price escalation in international markets may result from differences in market conditions or ________.

A) cultural preferences
B) selling strategies
C) regional tastes
D) customer perceptions
E) language barriers

Question 59

The Internet offers ________,where the price can easily be adjusted to meet changes in demand.

A) captive pricing
B) dynamic pricing
C) basing-point pricing
D) price bundling
E) cost-plus pricing

Question 60

The flexibility of the Internet allows companies to use ________.

A) captive pricing
B) segmented pricing
C) promotional pricing
D) dynamic pricing
E) geographical pricing

Question 61

When sellers set prices after talking to competitors and engaging in collusion,they are involved in ________.

A) predatory pricing
B) discriminatory pricing
C) price fixing
D) skimming pricing
E) penetration pricing

Question 62

When Asia Electronics sets its televisions at three price levels of $699,$899,and $1,099,it is using ________.

A) product line pricing
B) market-skimming pricing
C) market-penetration pricing
D) break-even pricing
E) target return pricing

Question 63

Laws exist to prevent unfair ________ by ensuring that sellers offer the same price terms to customers at a given price level.

A) marketing
B) price discrimination
C) dynamic pricing
D) price collusion
E) treatment of small retailers

Question 64

Mark's Markers,a manufacturer of color markers,has required its dealers to charge a specified retail price for its markers.Mark's is most likely guilty of ________.

A) price fixing
B) retail price maintenance
C) price discrimination
D) price collusion
E) unfair price skimming

Question 65

When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction,the firm is ________.

A) moving its brand into a less competitive position
B) negatively positioning its product
C) moving its brand into a higher price-value position
D) creating a "fighter brand"
E) narrowing its target market

Question 66

A company would most likely consider launching a low-price "fighting brand" in response to a competitor reducing prices if ________.

A) the market segment being lost is price sensitive
B) the market segment being lost is not price sensitive
C) the market segment being lost responds to arguments of higher quality
D) the market segment being lost no longer demands the product
E) the market segment being lost has shifted culturally

Question 67

_____________ is a core element of a free-market economy.

A) Predatory pricing
B) Price competition
C) Price fixing
D) Skimming pricing
E) Penetration pricing

Question 68

When Polaroid set the general price range of its cameras low and the markup on its film high,it was practicing ________.

A) market-penetration pricing
B) market-skimming pricing
C) product line pricing
D) captive product pricing
E) price bundling

Question 69

________ results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.

A) Comparison pricing
B) Skimming pricing
C) Price confusion
D) Predatory pricing
E) Price collusion

Question 70

Price fixing,predatory pricing,retail price maintenance,and deceptive pricing are examples of ________.

A) common pricing policies
B) major public policy issues in pricing
C) ethical pricing strategies
D) pricing policies used mostly in the wholesale sector
E) pricing used mostly in the retail sector

Question 71

If a large retailer sold numerous items below cost with the intention of punishing competitors and gaining higher long-run profits by putting those competitors out of business,the retailer would be guilty of ________.

A) price collusion
B) price fixing
C) predatory pricing
D) discriminatory pricing
E) penetration pricing

Question 72

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

A) defensive
B) offensive
C) published
D) private
E) used in all channels

Question 73

Valeo Fashions has just introduced a new line of fashion dresses for teens.It will initially enter the market at high prices in a ________ pricing strategy.

A) market-penetration
B) market-skimming
C) competitive market
D) psychological
E) demographic

Question 74

Boeing sells its jetliners at about the same price everywhere.This is an example of ________.

A) predatory pricing
B) price competition
C) price fixing
D) skimming pricing
E) international pricing

Question 75

___________ is illegal.

A) Price-fixing
B) Price matching
C) Price sensitivity
D) Price elasticity
E) Price changing

Question 76

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

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

Question 77

IKEA slashed its prices in China to the lowest in the world.This is an example of a _____________.

A) market-skimming pricing
B) market-penetration pricing
C) new-product pricing
D) discount pricing
E) value-added pricing

Question 78

Which of the following would most likely be considered predatory pricing?

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

Question 79

Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share.As a consultant,you should recommend a ________ pricing strategy.

A) market-skimming
B) market-penetration
C) zone
D) loss-leader
E) captive-product

Question 80

Price discrimination is legal under which of the following conditions?

A) when a manufacturer and reseller have agreed upon a specified retail price for a product
B) when a manufacturer sells to retailers in different markets
C) when a seller manufactures different qualities of the same product for different retailers.
D) when a seller advertises prices that are not actually available to consumers
E) when a seller has not communicated with competitors before announcing prices