Question 1

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Accepted Answer

A)   There will be a large potential market, even if the product is sold at a high price.
B)   Technological problems still exist for competitors; their products are not equivalent.
C)   Increasing the volume sold reduces production costs substantially.
D)   Consumers perceive a strong price-quality relationship for this product.
E)   Many consumers in the target market are innovators.F) D) and E)
G) B) and C)

Question 2

Figure 11-6
-A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

Accepted Answer

A)   Gantt chart.
B)   demand curve.
C)   ROI analysis.
D)   cross-tabulation.
E)   break-even chart.F) B) and D)
G) A) and B)

Question 3

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

Accepted Answer

A)   customary price
B)   prestige price
C)   price premium
D)   price lining
E)   cost benchmarkF) C) and D)
G) B) and E)

Question 4

According to the price equation, a product's or service's final price equals its list price minus allowances plus

Accepted Answer

A)   profits.
B)   commissions.
C)   trade-ins.
D)   extra fees.
E)   taxes.F) A) and B)
G) All of the above

Question 5

From a marketing viewpoint, ________ is the money or other considerations (including other products and services)  exchanged for the ownership or use of a product or service.

Accepted Answer

A)   value
B)   price
C)   barter
D)   currency
E)   a tariffF) B) and D)
G) A) and E)

Question 6

Everyday low pricing refers to

Accepted Answer

A)   the pricing strategy of "extreme value" stores to maintain high price-quality images for the products they sell.
B)   the pricing strategy of starting a product at standard list price and then lowering the price by a certain percentage until it is sold.
C)   short-term price reductions when consumer demand takes a significant and unexpected dip.
D)   the practice of replacing promotional allowances with lower manufacturer list prices.
E)   a form of predatory pricing used solely for the purpose of undercutting competitors' prices.F) A) and D)
G) A) and C)

Question 7

Quantity discounts are

Accepted Answer

A)   price reductions in unit costs for placing a larger order.
B)   price reductions for placing long-term prescheduled orders.
C)   price reductions to encourage retailers to stock inventory earlier than their normal demand would require.
D)   BOGOs.
E)   reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.F) D) and E)
G) B) and D)

Question 8

What pricing strategy did the National Aeronautics and Space Administration (NASA)  use to pay Lockheed Martin for the Orion lunar spacecraft?

Accepted Answer

A)   cost-plus-percentage-of-cost pricing
B)   experience curve pricing
C)   standard markup pricing
D)   yield management pricing
E)   cost-plus-fixed-fee pricingF) B) and C)
G) D) and E)

Question 9

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

Accepted Answer

A)   Pricing objectives are similar to core values in that there is little to no change in them over time.
B)   Pricing objectives may change depending on the segments in which a company is doing business.
C)   Pricing objectives may change depending upon the cost of advertising.
D)   Pricing objectives are established exclusively by the marketing department.
E)   Pricing objectives are extremely sensitive to even the slightest change in the local economy.F) A) and E)
G) A) and D)

Question 10

A hardware store advertises a 3/8" Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the sale drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?

Accepted Answer

A)   predatory pricing
B)   price discrimination
C)   price fixing
D)   bait and switch
E)   conditional bargainsF) B) and C)
G) None of the above

Question 11

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

Accepted Answer

A)   overhead cost.
B)   total cost.
C)   unit cost.
D)   average cost.
E)   marginal cost.F) A) and C)
G) A) and B)

Question 12

Cost-plus pricing refers to

Accepted Answer

A)   summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.
B)   setting the price of a line of products at a number of different price points.
C)   adding a fixed percentage to the cost of all items in a specific product class.
D)   setting prices to achieve a profit that is a specified percentage of the sales volume.
E)   increasing the price slightly to protect against undue profit losses from unforeseen environmental forces.F) A) and B)
G) B) and E)

Question 13

Figure 11-6a
-Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC)  total $32,000 (real estate taxes, interest on a bank loan, etc.)  and unit variable cost (UVC)  for a picture frame is $40 (labor, glass, frame, and matting) . What is the quantity of picture frames you will need to sell to break-even?

Accepted Answer

A)   200 picture frames
B)   400 picture frames
C)   800 picture frames
D)   1,600 picture frames
E)   2,000 picture framesF) C) and E)
G) A) and B)

Question 14

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.

Accepted Answer

A)   maximizing current profit
B)   managing for long-run profits
C)   target return
D)   break-even strategy
E)   minimizing riskF) B) and D)
G) A) and C)

Question 15

There are a lot of skateboards on the market, but when it was launched the BMW Streetcarver was the only one with stabilizers and wheel design based on BMW's automobiles. This technology gave the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard was priced at $495, which left many consumers (especially young males)  who might have wanted to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the effect of ________ on sales.

Accepted Answer

A)   demand factors
B)   macroeconomic environmental factors
C)   barter factors
D)   supply factors
E)   exchange parametersF) A) and C)
G) All of the above

Question 16

How do consumers use price in their assessments of value?

Accepted Answer

From a consumer's standpoint, price is o...

Question 17

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Accepted Answer

A)   there is a large number of products and estimating the demand for each would be difficult and time consuming.
B)   there is a large number of product lines, all with basically the same product attributes.
C)   there is a specific profit goal that needs to be achieved.
D)   there is a policy of selling every item in a product line at the same price regardless of the product class.
E)   the products are perishable or seasonal.F) All of the above
G) A) and D)

Question 18

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

Accepted Answer

A)   The ice cream market is highly conservative.
B)   Economies of scale in production would be substantial.
C)   Retailers are not willing to carry new brands of ice cream in the already overcrowded category.
D)   Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
E)   The ice cream market exhibits inelastic demand over a fairly broad range of prices.F) A) and B)
G) B) and E)

Question 19

Skimming pricing is a strategy that introduces a new or innovative product by

Accepted Answer

A)   following a price elastic strategy.
B)   creating multiple price points.
C)   setting a high initial price.
D)   setting a low initial price.
E)   setting the price at the average of competitors' prices.F) D) and E)
G) All of the above

Question 20

Distinguish between elastic demand and inelastic demand.

Accepted Answer

Elastic demand exists when a 1 percent d...

Exam 11: Pricing Products and Services

Skimming pricing is a strategy that introduces a new or innovative product by

Correct Answer
verified

Quantity discounts are

Correct Answer
verified

Cost-plus pricing refers to

Correct Answer
verified

Figure 11-6 -A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

Correct Answer
verified

Correct Answer
verified

According to the price equation, a product's or service's final price equals its list price minus allowances plus

Correct Answer
verified

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Correct Answer
verified

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

Correct Answer
verified

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

Correct Answer
verified

Distinguish between elastic demand and inelastic demand.

Correct Answer
verified
Elastic demand exists when a 1 percent d...
View Answer

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Correct Answer
verified

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.

Correct Answer
verified

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Correct Answer
verified

Correct Answer
verified

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Correct Answer
verified

Everyday low pricing refers to

Correct Answer
verified

How do consumers use price in their assessments of value?

Correct Answer
verified
From a consumer's standpoint, price is o...
View Answer

Exam 11: Pricing Products and Services

Skimming pricing is a strategy that introduces a new or innovative product by

Correct AnswerverifiedShow Answer

Quantity discounts are

Correct AnswerverifiedShow Answer

Cost-plus pricing refers to

Correct AnswerverifiedShow Answer

Figure 11-6 -A graphic presentation of the break-even analysis that shows the intersection of total revenue and total cost to identify profit or loss for a given quantity sold is referred to as a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to the price equation, a product's or service's final price equals its list price minus allowances plus

Correct AnswerverifiedShow Answer

Supermarket managers use standard markup pricing because it is particularly suited to situations when

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the dessert?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

Correct AnswerverifiedShow Answer

Distinguish between elastic demand and inelastic demand.

Correct AnswerverifiedElastic demand exists when a 1 percent d...View AnswerShow Answer

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A manufacturer of a portable digital HD camera is considering a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?

Correct AnswerverifiedShow Answer

Everyday low pricing refers to

Correct AnswerverifiedShow Answer

How do consumers use price in their assessments of value?

Correct AnswerverifiedFrom a consumer's standpoint, price is o...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Elastic demand exists when a 1 percent d...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
From a consumer's standpoint, price is o...
View Answer