Question 1

A skimming pricing policy is likely to be most effective when

Accepted Answer

A)  consumers perceive one product to be similar to other products on the market.
B)  a lower price will significantly lower fixed costs.
C)  competitors will be attracted to the market due to the potential for high sales revenues.
D)  consumers tend to be price-sensitive.
E)  the high initial price will not attract competitors.F) D) and E)
G) A) and E)

Question 2

Estimating demand and revenue occurs during __________ of the price-setting process.

Accepted Answer

A)  Step 1
B)  Step 2
C)  Step 3
D)  Step 4
E)  Step 5F) B) and C)
G) A) and E)

Question 3

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

Accepted Answer

A)  FOB factory pricing.
B)  FOB absorption pricing.
C)  FOB origin pricing.
D)  basing-point pricing.
E)  FOB with freight-allowed pricing.F) B) and D)
G) A) and D)

Question 4

Which of the following is a demand-oriented approach to pricing?

Accepted Answer

A)  customary pricing
B)  target profit pricing
C)  standard markup pricing
D)  bundle pricing
E)  service-oriented pricingF) C) and E)
G) B) and C)

Question 5

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) B) and D)
G) C) and E)

Question 6

A dynamic pricing policy gives marketers __________ in setting the final price in light of demand, cost, and competitive factors.

Accepted Answer

A)  no leeway
B)  total freedom
C)  little discretion
D)  considerable discretion
E)  limited competitive authorityF) D) and E)
G) A) and E)

Question 7

A penetration pricing policy is most likely to be effective when (1)  __________; (2)  a low initial price discourages competitors from entering the market; and (3)  unit production and marketing costs fall dramatically as production volumes increase.

Accepted Answer

A)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
B)  the high initial price will not attract competitors
C)  customers interpret the high price as signifying high quality
D)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
E)  many segments of the market are price-sensitiveF) B) and C)
G) A) and B)

Question 8

According to the textbook, which industry typically adopts an experience curve pricing approach?

Accepted Answer

A)  logging
B)  space exploration
C)  ready-to-eat cereal
D)  electronics
E)  miningF) D) and E)
G) B) and E)

Question 9

After extensive analysis, a mail order company has decided to embark on a policy of multiple-zone pricing. In which step of the price-setting process would the mail order firm have made this decision?

Accepted Answer

A)  Step 6: Make special adjustments to the list or quoted price.
B)  Step 4: Select an approximate price level.
C)  Step 2: Estimate demand and revenue.
D)  Step 1: Identify price constraints and objectives.
E)  Step 5: Set list or quoted price.F) None of the above
G) A) and D)

Question 10

With uniform delivered pricing, the price the seller quotes

Accepted Answer

A)  includes all transportation costs.
B)  excludes all transportation costs.
C)  includes a fixed allowance whereby the buyer pays any costs above that allowance.
D)  includes a fixed percentage of transportation costs for which the seller will be responsible.
E)  will guarantee that a retailer will be charged the same transportation fee for all its outlets regardless of where they are located.F) A) and E)
G) B) and D)

Question 11

Talbots sells women's clothes. A long-sleeved scoopneck T-shirt with the Talbots label costs $45. By comparison, you can buy a T-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbots label or quality. What kind of demand-oriented approach to pricing does Talbots use?

Accepted Answer

A)  experience curve pricing
B)  skimming pricing
C)  demand-backward pricing
D)  prestige pricing
E)  flexible pricingF) A) and B)
G) D) and E)

Question 12

Five common forms of misleading pricing are bait and switch, bargains conditional on other purchases, comparable value comparisons, comparisons with suggested prices, and former price comparisons. All these practices are

Accepted Answer

A)  most effective in the growth stage of the product life cycle.
B)  popular techniques preferred by online businesses.
C)  illegal and often difficult to prosecute.
D)  most effective in business-to-business marketing.
E)  effective pricing practices that professional marketers use.F) A) and B)
G) B) and D)

Question 13

A skimming pricing policy is likely to be most effective when (1)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable; (2)  the high initial price will not attract competitors; (3)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost; and (4)  __________.

Accepted Answer

A)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
B)  consumers tend to be price-sensitive
C)  customers interpret the high price as signifying high quality
D)  lowering the price has a major effect on increasing the sales volume
E)  consumers perceive your product to be similar to other products on the marketF) A) and B)
G) All of the above

Question 14

A manufacturer does marketing research and estimates that consumers will accept a manufacturer's suggested retail price of $50 for a jacket. The manufacturer expects to offer trade discount terms of 40/10/5 to retailers, wholesalers, and agents in its marketing channel. What price will the manufacturer receive for the jacket?

Accepted Answer

A)  $47.50
B)  $45.00
C)  $30.00
D)  $27.50
E)  $25.65F) B) and E)
G) A) and B)

Question 15

Which of the following is a cost-oriented pricing method?

Accepted Answer

A)  loss-leader pricing
B)  standard markup pricing
C)  at-, above-, or below-market pricing
D)  price lining
E)  penetration pricingF) C) and D)
G) B) and E)

Question 16

Standard markup pricing is considered to be a __________ approach to pricing.

Accepted Answer

A)  demand-oriented
B)  profit-oriented
C)  cost-oriented
D)  competition-oriented
E)  service-orientedF) B) and D)
G) All of the above

Question 17

Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as

Accepted Answer

A)  loss-leader pricing.
B)  bundle pricing.
C)  magnet pricing.
D)  predatory pricing.
E)  below-market pricing.F) C) and D)
G) A) and B)

Question 18

When establishing product-line pricing, the price differentials between items in the line should make sense to customers and reflect differences in terms of the

Accepted Answer

A)  perceived value of the products offered.
B)  actual costs of the features offered.
C)  perceived risk.
D)  quantity discounts and price allowances offered.
E)  market segments targeted.F) C) and D)
G) All of the above

Question 19

When introducing a new or innovative product, setting the highest initial price that customers who really desire the product are willing to pay is referred to as a(n)

Accepted Answer

A)  skimming strategy.
B)  penetration strategy.
C)  price-lining strategy.
D)  experience-curve pricing strategy.
E)  prestige pricing strategy.F) C) and D)
G) A) and E)

Question 20

Airlines, hotels, and car rental firms all engage in __________ by varying prices based on time, day, week, or season to match supply and demand.

Accepted Answer

A)  skimming pricing
B)  yield management pricing
C)  bundle pricing
D)  target pricing
E)  prestige pricingF) C) and D)
G) B) and D)

Exam 14: Arriving at the Final Price

Five common forms of misleading pricing are bait and switch, bargains conditional on other purchases, comparable value comparisons, comparisons with suggested prices, and former price comparisons. All these practices are

Correct Answer
verified

Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as

Correct Answer
verified

Which of the following is a demand-oriented approach to pricing?

Correct Answer
verified

A penetration pricing policy is most likely to be effective when (1) __________; (2) a low initial price discourages competitors from entering the market; and (3) unit production and marketing costs fall dramatically as production volumes increase.

Correct Answer
verified

When introducing a new or innovative product, setting the highest initial price that customers who really desire the product are willing to pay is referred to as a(n)

Correct Answer
verified

According to the textbook, which industry typically adopts an experience curve pricing approach?

Correct Answer
verified

Standard markup pricing is considered to be a __________ approach to pricing.

Correct Answer
verified

Talbots sells women's clothes. A long-sleeved scoopneck T-shirt with the Talbots label costs $45. By comparison, you can buy a T-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbots label or quality. What kind of demand-oriented approach to pricing does Talbots use?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

With uniform delivered pricing, the price the seller quotes

Correct Answer
verified

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

Correct Answer
verified

Estimating demand and revenue occurs during __________ of the price-setting process.

Correct Answer
verified

Airlines, hotels, and car rental firms all engage in __________ by varying prices based on time, day, week, or season to match supply and demand.

Correct Answer
verified

Which of the following is a cost-oriented pricing method?

Correct Answer
verified

Correct Answer
verified

After extensive analysis, a mail order company has decided to embark on a policy of multiple-zone pricing. In which step of the price-setting process would the mail order firm have made this decision?

Correct Answer
verified

When establishing product-line pricing, the price differentials between items in the line should make sense to customers and reflect differences in terms of the

Correct Answer
verified

A dynamic pricing policy gives marketers __________ in setting the final price in light of demand, cost, and competitive factors.

Correct Answer
verified

A skimming pricing policy is likely to be most effective when

Correct Answer
verified

Exam 14: Arriving at the Final Price

Five common forms of misleading pricing are bait and switch, bargains conditional on other purchases, comparable value comparisons, comparisons with suggested prices, and former price comparisons. All these practices are

Correct AnswerverifiedShow Answer

Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as

Correct AnswerverifiedShow Answer

Which of the following is a demand-oriented approach to pricing?

Correct AnswerverifiedShow Answer

A penetration pricing policy is most likely to be effective when (1) __________; (2) a low initial price discourages competitors from entering the market; and (3) unit production and marketing costs fall dramatically as production volumes increase.

Correct AnswerverifiedShow Answer

When introducing a new or innovative product, setting the highest initial price that customers who really desire the product are willing to pay is referred to as a(n)

Correct AnswerverifiedShow Answer

According to the textbook, which industry typically adopts an experience curve pricing approach?

Correct AnswerverifiedShow Answer

Standard markup pricing is considered to be a __________ approach to pricing.

Correct AnswerverifiedShow Answer

Talbots sells women's clothes. A long-sleeved scoopneck T-shirt with the Talbots label costs $45. By comparison, you can buy a T-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbots label or quality. What kind of demand-oriented approach to pricing does Talbots use?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

With uniform delivered pricing, the price the seller quotes

Correct AnswerverifiedShow Answer

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

Correct AnswerverifiedShow Answer

Estimating demand and revenue occurs during __________ of the price-setting process.

Correct AnswerverifiedShow Answer

Airlines, hotels, and car rental firms all engage in __________ by varying prices based on time, day, week, or season to match supply and demand.

Correct AnswerverifiedShow Answer

Which of the following is a cost-oriented pricing method?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

After extensive analysis, a mail order company has decided to embark on a policy of multiple-zone pricing. In which step of the price-setting process would the mail order firm have made this decision?

Correct AnswerverifiedShow Answer

When establishing product-line pricing, the price differentials between items in the line should make sense to customers and reflect differences in terms of the

Correct AnswerverifiedShow Answer

A dynamic pricing policy gives marketers __________ in setting the final price in light of demand, cost, and competitive factors.

Correct AnswerverifiedShow Answer

A skimming pricing policy is likely to be most effective when

Correct AnswerverifiedShow Answer

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