Question 1

Figure 14-2
-Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box B represents which approach?

Accepted Answer

A)  cost-oriented 
B)  profit-oriented 
C)  competition-oriented 
D)  demand-oriented 
E)  results-oriented 
A)  cost-oriented 
B)  profit-oriented 
C)  competition-oriented 
D)  demand-oriented 
E)  results-oriented

Question 2

A claim that a price is below a manufacturer's suggested or list price may be deceptive if

Accepted Answer

A)  the items for sale had been purchased from another retailer. 
B)  the items for sale were part of a manufacturer's promotional allowance. 
C)  the items were part of a bulk order. 
D)  few or no sales occur at that price in a retailer's market area. 
E)  the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion. 
A)  the items for sale had been purchased from another retailer. 
B)  the items for sale were part of a manufacturer's promotional allowance. 
C)  the items were part of a bulk order. 
D)  few or no sales occur at that price in a retailer's market area. 
E)  the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

Question 3

Target pricing is considered to be a ________ approach to pricing.

Accepted Answer

A)  cost-oriented 
B)  profit-oriented 
C)  demand-oriented 
D)  competition-oriented 
E)  service-oriented 
A)  cost-oriented 
B)  profit-oriented 
C)  demand-oriented 
D)  competition-oriented 
E)  service-oriented

Question 4

The latest in appliance technology allows your refrigerator to send messages to your smartphone and even photos of the interior to remind you of what you need to pick up at the store. Taking advantage of strong consumer demand for technology-enabled products, marketers set prices for these refrigerators at thousands above other models. These marketers are using a ________ pricing strategy.

Accepted Answer

A)  skimming 
B)  penetration 
C)  prestige 
D)  price lining 
E)  bundle 
A)  skimming 
B)  penetration 
C)  prestige 
D)  price lining 
E)  bundle

Question 5

Figure 14-5
-Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI). What is the ROI for Scenario B?

Accepted Answer

A)  2% 
B)  5% 
C)  10% 
D)  14% 
E)  17% 
A)  2% 
B)  5% 
C)  10% 
D)  14% 
E)  17%

Question 6

A fixed-price policy refers to

Accepted Answer

A)  setting different prices for products and services in real time in response to supply and demand conditions. 
B)  setting the price of an entire line of products at a single specific pricing point. 
C)  simultaneously setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. 
D)  adding a fixed percentage to the cost of all items in a specific product class. 
E)  setting one price for all buyers of a product or service. 
A)  setting different prices for products and services in real time in response to supply and demand conditions. 
B)  setting the price of an entire line of products at a single specific pricing point. 
C)  simultaneously setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. 
D)  adding a fixed percentage to the cost of all items in a specific product class. 
E)  setting one price for all buyers of a product or service.

Question 7

Trade discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

Accepted Answer

A)  the size of the order. 
B)  the frequency of the order. 
C)  when orders are placed during the year. 
D)  the length of the relationship with the manufacturer. 
E)  the marketing activities they are expected to perform in the future. 
A)  the size of the order. 
B)  the frequency of the order. 
C)  when orders are placed during the year. 
D)  the length of the relationship with the manufacturer. 
E)  the marketing activities they are expected to perform in the future.

Question 8

Figure 14-7
-Figure 14-7 above shows the three major types of special adjustments to the list or quoted price. Box A represents

Accepted Answer

A)  demand-oriented price adjustments. 
B)  allowances. 
C)  geographical adjustments. 
D)  discounts. 
E)  customary pricing adjustments. 
A)  demand-oriented price adjustments. 
B)  allowances. 
C)  geographical adjustments. 
D)  discounts. 
E)  customary pricing adjustments.

Question 9

Instead of everyday low prices (EDLP), supermarkets prefer a(n) ________ approach, which is based on frequent specials where prices are temporarily lowered for a brief period of time and then raised again.

Accepted Answer

A)  a fixed-price 
B)  an alternative pricing 
C)  a Hi-Lo pricing 
D)  a bundle-pricing 
E)  a dynamic pricing policy 
A)  a fixed-price 
B)  an alternative pricing 
C)  a Hi-Lo pricing 
D)  a bundle-pricing 
E)  a dynamic pricing policy

Question 10

A new car dealer can reduce the price you pay without cutting the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2009 Nissan Altima.

Accepted Answer

A)  cash discount 
B)  functional discount 
C)  seasonal discount 
D)  trade-in allowance 
E)  promotional allowance 
A)  cash discount 
B)  functional discount 
C)  seasonal discount 
D)  trade-in allowance 
E)  promotional allowance

Question 11

Experience-curve pricing refers to

Accepted Answer

A)  the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product. 
B)  the point at which profits double, then double again, as more consumers buy the product. 
C)  a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry based on the diffusion of innovation. 
D)  a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 to 30 percent each time a firm's experience at producing and selling them doubles. 
E)  a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team. 
A)  the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product. 
B)  the point at which profits double, then double again, as more consumers buy the product. 
C)  a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry based on the diffusion of innovation. 
D)  a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 to 30 percent each time a firm's experience at producing and selling them doubles. 
E)  a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team.

Question 12

A promotional allowance is

Accepted Answer

A)  a onetime discount to promote the product that must be used within a certain time frame. 
B)  the cash payments or an extra amount of "free goods" awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote the product. 
C)  the return of money to promote the product based on proof of purchase. 
D)  a short-term price reduction when consumer demand takes a significant and unexpected dip. 
E)  an incentive, such as trips, cruises, jewelry, etc., presented to brand-loyal customers. 
A)  a onetime discount to promote the product that must be used within a certain time frame. 
B)  the cash payments or an extra amount of "free goods" awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote the product. 
C)  the return of money to promote the product based on proof of purchase. 
D)  a short-term price reduction when consumer demand takes a significant and unexpected dip. 
E)  an incentive, such as trips, cruises, jewelry, etc., presented to brand-loyal customers.

Question 13

Which of these statements regarding odd-even pricing is most accurate?

Accepted Answer

A)  Odd-even pricing is designed to give the consumer a better set of pricing alternatives. 
B)  Odd-even pricing can be used in conjunction with a skimming pricing strategy, but should not be used with a penetration pricing strategy. 
C)  Odd-even pricing does not work if the product is health care-related. 
D)  Overuse of odd-ending prices tends to mute its effect on demand. 
E)  Odd-ending prices are best used with large ticket items; it loses its effectiveness with moderate- to low-ticket items. 
A)  Odd-even pricing is designed to give the consumer a better set of pricing alternatives. 
B)  Odd-even pricing can be used in conjunction with a skimming pricing strategy, but should not be used with a penetration pricing strategy. 
C)  Odd-even pricing does not work if the product is health care-related. 
D)  Overuse of odd-ending prices tends to mute its effect on demand. 
E)  Odd-ending prices are best used with large ticket items; it loses its effectiveness with moderate- to low-ticket items.

Question 14

Wrigley introduced a new flavor of Orbit brand sugar-free chewing gum, mint mojito, and its introductory price was low so that it quickly created loyal customers for the flavor. In this example, Wrigley used

Accepted Answer

A)  skimming pricing. 
B)  price lining. 
C)  odd-even pricing. 
D)  penetration pricing. 
E)  loss-leader pricing. 
A)  skimming pricing. 
B)  price lining. 
C)  odd-even pricing. 
D)  penetration pricing. 
E)  loss-leader pricing.

Question 15

Loss-leader pricing refers to

Accepted Answer

A)  a pricing method where the price the seller charges is below the actual cost to make the product. 
B)  setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer. 
C)  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. 
D)  a method of pricing based on a product's tradition, standardized channel of distribution, or other competitive factors. 
E)  pricing a product between 8 and 10% lower than nationally branded competitive products. 
A)  a pricing method where the price the seller charges is below the actual cost to make the product. 
B)  setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer. 
C)  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. 
D)  a method of pricing based on a product's tradition, standardized channel of distribution, or other competitive factors. 
E)  pricing a product between 8 and 10% lower than nationally branded competitive products.

Question 16

Which of these is a cost-oriented approach to pricing?

Accepted Answer

A)  cost-plus pricing 
B)  skimming pricing 
C)  prestige pricing 
D)  loss-leader pricing 
E)  bundle pricing 
A)  cost-plus pricing 
B)  skimming pricing 
C)  prestige pricing 
D)  loss-leader pricing 
E)  bundle pricing

Question 17

Which of these is a profit-oriented approach to pricing?

Accepted Answer

A)  skimming pricing 
B)  target pricing 
C)  loss-leader pricing 
D)  target return-on-investment pricing 
E)  standard markup pricing 
A)  skimming pricing 
B)  target pricing 
C)  loss-leader pricing 
D)  target return-on-investment pricing 
E)  standard markup pricing

Question 18

The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?

Accepted Answer

A)  penetration pricing 
B)  experience-curve pricing 
C)  customary pricing 
D)  skimming pricing 
E)  target pricing 
A)  penetration pricing 
B)  experience-curve pricing 
C)  customary pricing 
D)  skimming pricing 
E)  target pricing

Question 19

Mark Johnson, the manager of a discount consumer electronics store, was approached by the manufacturer's representative on behalf of a marketer of a popular and profitable line of storage racks. The manufacturer's representative implied that if Johnson didn't raise the retail prices for the storage racks to those paid by the marketer's nondiscount customers, Johnson's supply of racks would be severely curtailed. The manufacturer's representative is guilty of attempting

Accepted Answer

A)  horizontal price fixing. 
B)  resale price maintenance. 
C)  price discrimination. 
D)  predatory pricing. 
E)  bait and switch pricing. 
A)  horizontal price fixing. 
B)  resale price maintenance. 
C)  price discrimination. 
D)  predatory pricing. 
E)  bait and switch pricing.

Question 20

Which of these businesses is most likely to use cost-plus-percentage-of-cost pricing?

Accepted Answer

A)  real estate agency 
B)  insurance company 
C)  power company 
D)  space shuttle contractor 
E)  architect 
A)  real estate agency 
B)  insurance company 
C)  power company 
D)  space shuttle contractor 
E)  architect

Exam 14: Arriving at the Final Price

Figure 14-2 -Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box B represents which approach?

A claim that a price is below a manufacturer's suggested or list price may be deceptive if

Target pricing is considered to be a ________ approach to pricing.

Figure 14-5 -Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI). What is the ROI for Scenario B?

A fixed-price policy refers to

Trade discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

Figure 14-7 -Figure 14-7 above shows the three major types of special adjustments to the list or quoted price. Box A represents

Instead of everyday low prices (EDLP), supermarkets prefer a(n) ________ approach, which is based on frequent specials where prices are temporarily lowered for a brief period of time and then raised again.

A new car dealer can reduce the price you pay without cutting the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2009 Nissan Altima.

Experience-curve pricing refers to

A promotional allowance is

Which of these statements regarding odd-even pricing is most accurate?

Wrigley introduced a new flavor of Orbit brand sugar-free chewing gum, mint mojito, and its introductory price was low so that it quickly created loyal customers for the flavor. In this example, Wrigley used

Loss-leader pricing refers to

Which of these is a cost-oriented approach to pricing?

Which of these is a profit-oriented approach to pricing?

The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?

Which of these businesses is most likely to use cost-plus-percentage-of-cost pricing?

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Services Marketing

Building the Price Foundation

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Implementing Interactive and Multi-Channel Marketing

Pulling It All Together: the Strategic Marketing Proces

Building an Effective Marketing Plan

Financial Aspects of Marketing

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