Question 1

Why would a manufacturer of snow boots offer a seasonal discount?

Accepted Answer

A)  to encourage off-season orders 
B)  to comply with the Robinson-Patman Act 
C)  to encourage customers to buy in large quantities 
D)  to stimulate customers to pay their bills promptly 
E)  to avoid having to offer costly promotional allowances 
A)  to encourage off-season orders 
B)  to comply with the Robinson-Patman Act 
C)  to encourage customers to buy in large quantities 
D)  to stimulate customers to pay their bills promptly 
E)  to avoid having to offer costly promotional allowances

Question 2

All of the following strategies are examples of nonprice competition EXCEPT:

Accepted Answer

A)  offering charge accounts and free deliveries. 
B)  charging less during an end-of-year sale. 
C)  keeping your store open nights and Sundays. 
D)  product differentiation. 
E)  heavy advertising. 
A)  offering charge accounts and free deliveries. 
B)  charging less during an end-of-year sale. 
C)  keeping your store open nights and Sundays. 
D)  product differentiation. 
E)  heavy advertising.

Question 3

The expected price for sunscreen is in the $3 to $6 price range. The introductory price for Shade UVA Guard by Schering-Plough was $5.99 to recover its research and development costs. Schering-Plough was using a _____ strategy.

Accepted Answer

A)  cost-plus 
B)  marketing-skimming 
C)  market-absorption 
D)  marginal-cost 
E)  market-penetration 
A)  cost-plus 
B)  marketing-skimming 
C)  market-absorption 
D)  marginal-cost 
E)  market-penetration

Question 4

_____ is the term used to describe efforts by manufacturers to control the price at which middlemen resell their products

Accepted Answer

A)  Base-price implementation 
B)  Resale price maintenance 
C)  Price optimization 
D)  regulated pricing 
E)  FOB factory pricing 
A)  Base-price implementation 
B)  Resale price maintenance 
C)  Price optimization 
D)  regulated pricing 
E)  FOB factory pricing

Question 5

Market-skimming pricing is suitable when a large mass market exists for the new product, and the demand for the product is highly elastic.

Accepted Answer

A) True 
 B)False

Question 6

There were two prices on the jacket that Ivah purchased. One was obviously placed there by the manufacturer and provided information on how the garment was made and its price of $49.95. The second tag contained a lower price and no other information. Since Ivah paid the lower price for the jacket, the higher price was most likely a _____ price.

Accepted Answer

A)  marginal 
B)  discounted 
C)  suggested list 
D)  fixed 
E)  promotional allowance 
A)  marginal 
B)  discounted 
C)  suggested list 
D)  fixed 
E)  promotional allowance

Question 7

For which of the following new products would the manufacturer be most likely to use a market-skimming strategy?

Accepted Answer

A)  low-fat condensed milk 
B)  a portable x-ray machine 
C)  a sugar-free jelly 
D)  mildew-free shower curtains 
E)  an insect spray that is safe to use around children and pets 
A)  low-fat condensed milk 
B)  a portable x-ray machine 
C)  a sugar-free jelly 
D)  mildew-free shower curtains 
E)  an insect spray that is safe to use around children and pets

Question 8

A manufacturer of kits for making beaded moccasins offers a discount of 15 percent to its wholesalers in return for their transporting and storing the kits. This is an example of a ____ discount.

Accepted Answer

A)  seasonal 
B)  trade 
C)  cumulative quantity 
D)  noncumulative quantity 
E)  case 
A)  seasonal 
B)  trade 
C)  cumulative quantity 
D)  noncumulative quantity 
E)  case

Question 9

The MCI telemarketer offered customers a chance to make all of the unlimited local and long distance calls they wanted to make for a monthly fee of $49.95 plus state sales tax. This is an example of _____ pricing.

Accepted Answer

A)  variable 
B)  flat-rate 
C)  uniform delivered 
D)  flexible 
E)  prestige 
A)  variable 
B)  flat-rate 
C)  uniform delivered 
D)  flexible 
E)  prestige

Question 10

_____ pricing involves setting a price that is high in the range of expected prices.

Accepted Answer

A)  Market-penetration 
B)  Market-absorption 
C)  Cost-plus 
D)  Market-skimming 
E)  Marginal-cost 
A)  Market-penetration 
B)  Market-absorption 
C)  Cost-plus 
D)  Market-skimming 
E)  Marginal-cost

Question 11

In nonprice competition, sellers attempt to move up or down their individual demand curves by changing prices.

Accepted Answer

A) True 
 B)False

Question 12

Retailers that use a _____ strategy typically purchase close-out and discontinued products as well as production overruns from a variety of sources at a fraction of their original cost.

Accepted Answer

A)  single-price 
B)  odd pricing 
C)  cash-discount 
D)  list pricing 
E)  price lining 
A)  single-price 
B)  odd pricing 
C)  cash-discount 
D)  list pricing 
E)  price lining

Question 13

The Robinson-Patman Act prohibits all forms of price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

Guan-yin went into her neighborhood bookstore today looking for a mystery to read. A sign in the store stated, "Buy 5 paperback books during March and get the 6thone free." The bookstore was offering a _____ discount.

Accepted Answer

A)  seasonal 
B)  cash 
C)  noncumulative quantity 
D)  trade 
E)  cumulative quantity 
A)  seasonal 
B)  cash 
C)  noncumulative quantity 
D)  trade 
E)  cumulative quantity

Question 15

A chain of restaurants in San Francisco uses Stroh Ranch Marinade in many of its meat entrees. The chain also sells the marinade in a display next to its cash registers. For every case the restaurant sells, it receives a free bottle for the kitchen. This is an example of a:

Accepted Answer

A)  promotional allowance. 
B)  forward-dated discount. 
C)  seasonal discount. 
D)  rebate. 
E)  quantity discount. 
A)  promotional allowance. 
B)  forward-dated discount. 
C)  seasonal discount. 
D)  rebate. 
E)  quantity discount.

Question 16

Every time you buy a gallon of Golden Gallon milk, you can have your Golden Gallon milk card punched. When the card has 12 punches, your thirteenth gallon of milk is free. Golden Gallon is using a _____ discount.

Accepted Answer

A)  seasonal 
B)  cash 
C)  noncumulative quantity 
D)  trade 
E)  cumulative quantity 
A)  seasonal 
B)  cash 
C)  noncumulative quantity 
D)  trade 
E)  cumulative quantity

Question 17

The intent of price customization is to:

Accepted Answer

A)  create a price glass ceiling. 
B)  establish various prices on the basis of how much value is attached to a product by different people. 
C)  eliminate the perceptual impact of prestige pricing. 
D)  eliminate quantity discounts. 
E)  reward retailers for performing services that are normally performed by manufacturers. 
A)  create a price glass ceiling. 
B)  establish various prices on the basis of how much value is attached to a product by different people. 
C)  eliminate the perceptual impact of prestige pricing. 
D)  eliminate quantity discounts. 
E)  reward retailers for performing services that are normally performed by manufacturers.

Question 18

Value pricing is a form of nonprice competition in which benefits are emphasized instead of price.

Accepted Answer

A) True 
 B)False

Question 19

Last year Jim and his wife Angel both attended the MidSouth Educator's Conference. He, as a college instructor, paid the full price of $199 while his wife paid the spouse price of $89. The sponsors of the conference used:

Accepted Answer

A)  price customization. 
B)  price fixing. 
C)  illegal price discrimination. 
D)  a tying price strategy. 
E)  promotional pricing. 
A)  price customization. 
B)  price fixing. 
C)  illegal price discrimination. 
D)  a tying price strategy. 
E)  promotional pricing.

Question 20

A retail firm that uses leader pricing is:

Accepted Answer

A)  engaged in legal, but unethical price gouging. 
B)  cutting the regular price on a few items with the hope of attracting customers. 
C)  leading the industry in pricing and encouraging its competitors to raise their prices, too. 
D)  selling its most popular products at higher prices. 
E)  raising the price of its best-selling products. 
A)  engaged in legal, but unethical price gouging. 
B)  cutting the regular price on a few items with the hope of attracting customers. 
C)  leading the industry in pricing and encouraging its competitors to raise their prices, too. 
D)  selling its most popular products at higher prices. 
E)  raising the price of its best-selling products.

Exam 13: Pricing Strategies

Why would a manufacturer of snow boots offer a seasonal discount?

All of the following strategies are examples of nonprice competition EXCEPT:

The expected price for sunscreen is in the $3 to $6 price range. The introductory price for Shade UVA Guard by Schering-Plough was $5.99 to recover its research and development costs. Schering-Plough was using a _____ strategy.

_____ is the term used to describe efforts by manufacturers to control the price at which middlemen resell their products

Market-skimming pricing is suitable when a large mass market exists for the new product, and the demand for the product is highly elastic.

For which of the following new products would the manufacturer be most likely to use a market-skimming strategy?

A manufacturer of kits for making beaded moccasins offers a discount of 15 percent to its wholesalers in return for their transporting and storing the kits. This is an example of a ____ discount.

The MCI telemarketer offered customers a chance to make all of the unlimited local and long distance calls they wanted to make for a monthly fee of $49.95 plus state sales tax. This is an example of _____ pricing.

_____ pricing involves setting a price that is high in the range of expected prices.

In nonprice competition, sellers attempt to move up or down their individual demand curves by changing prices.

Retailers that use a _____ strategy typically purchase close-out and discontinued products as well as production overruns from a variety of sources at a fraction of their original cost.

The Robinson-Patman Act prohibits all forms of price discrimination.

Guan-yin went into her neighborhood bookstore today looking for a mystery to read. A sign in the store stated, "Buy 5 paperback books during March and get the 6thone free." The bookstore was offering a _____ discount.

A chain of restaurants in San Francisco uses Stroh Ranch Marinade in many of its meat entrees. The chain also sells the marinade in a display next to its cash registers. For every case the restaurant sells, it receives a free bottle for the kitchen. This is an example of a:

Every time you buy a gallon of Golden Gallon milk, you can have your Golden Gallon milk card punched. When the card has 12 punches, your thirteenth gallon of milk is free. Golden Gallon is using a _____ discount.

The intent of price customization is to:

Value pricing is a form of nonprice competition in which benefits are emphasized instead of price.

Last year Jim and his wife Angel both attended the MidSouth Educator's Conference. He, as a college instructor, paid the full price of $199 while his wife paid the spouse price of $89. The sponsors of the conference used:

A retail firm that uses leader pricing is:

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