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Exam 11: Pricing Products and Services

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Question 121

Multiple Choice

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The pricing strategy that is almost the exact opposite of skimming pricing is

A) target pricing.
B) penetration pricing.
C) price lining.
D) odd-even pricing.
E) prestige pricing.

F) C) and D)
G) A) and E)

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Question 122

Multiple Choice

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Which of the following statements regarding pricing constraints is most accurate?

A) Generally,the greater the demand for a product,the higher the price that can be set.
B) At the corporate level,when setting pricing constraints,a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.
C) Pricing constraints are often set,but they are rarely enforced.
D) It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.
E) Even if a firm is trying to satisfy its obligations to its customers and society in general,it should ignore setting pricing constraints.

F) B) and E)
G) A) and B)

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Question 123

Multiple Choice

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Which of the following companies would be most likely to use target return-on-investment pricing?

Skimming pricing is considered to be a __________ approach to pricing.

Explain predatory pricing.

Tesla Roadster Sport Photo -Suppose you want to get "plugged in" and buy a Tesla Roadster Sport (see the photo above) ,the world's leading all-electric,zero-emission car that has a 245-mile range and can be recharged in three hours.The Tesla Roadster Sport has a list price of $110,000,but you want several options (leather interior,carbon fiber hard top,electronics upgrade,metallic paint,performance wheels,and others) that will cost $20,000.An extended warranty will add an additional $5,000.However,if you put $50,000 down now and finance the balance over the next year,you will receive a dealer rebate of $3,500 off the list price.The dealer will give you a $4,000 trade-in allowance for your 2005 Honda Civic DX four-door sedan.In addition,you will have to pay a state sales tax of $10,000,an auto registration fee of $500 to the state,and a $500 destination charge to ship the car.But because the Tesla Roadster Sport is an alternative energy vehicle,you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally,your total finance charge is $2,500.Applying the price equation,what is your final price for the Tesla Roadster Sport?

Washburn Guitars markets its guitars to four distinct market segments.The firm's mass customization instruments are targeted at

The manager of a small gasoline station observes that while gasoline sales have been steady,the service side of the business has fallen off,and mechanics are often idle.He decides to offer a promotion-a $20 off coupon for an oil change that is to be mailed to 800 households within a two-mile radius from the gas station.The cost of printing and mailing is $1,000.The normal cost of an oil change is $40.Materials and labor per oil change costs $15.If 200 customers use the coupon,what will be the total profit of the promotion based on the profit equation?

One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery.There is a website where independent interstate truckers can look for loads to carry on their return trips,known as backhauls.Because the trucks would normally return empty,truckers who use this website to generate business they would not have had otherwise,receive a reduced shipping rate.This reduced rate for a backhaul is an example of

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and __________.

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its batteries at a low initial price to attract the mass market.In this case,Energizer used

Larry's Lawn Care allows customers to use a credit card for purchases.Larry pays 4 percent of the sale to the credit card company.To promote more business,Larry decides to offer a lower price to customers paying cash-that price being 3 percent less than the standard list price.Larry is giving his customers a(n)

The most commonly used pricing method for business products is __________.

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as __________,occurs when a firm sets a profit goal,usually determined by its board of directors.

Washburn Guitars markets its guitars to four distinct market segments.The firm's one-of-kind custom instruments are targeted at

The sum of the expenses of the firm that vary directly with the quantity of the product that is produced and sold is referred to as

Companies use a "__________" to assess whether its products and brands are above,at,or below the market.

The Sherman Act,the Federal Trade Commission Act,and the Robinson-Patman Act all address different aspects of pricing,making one or more practices illegal.Provide one illegal practice under each act.

Describe a profit objective used by many Japanese firms.