Question 1

Which of the following is a form of dynamic pricing?

Accepted Answer

A) odd-even pricing 
B) yield management pricing 
C) above-,at-,and below-market pricing 
D) target pricing 
E) cost-plus pricing 
A) odd-even pricing 
B) yield management pricing 
C) above-,at-,and below-market pricing 
D) target pricing 
E) cost-plus pricing

Question 2

In one of its least favorite actions,Amazon.com was caught manipulating its prices.Avid DVD buyers,buying in quantity for resale,found that the online retailer was offering different customers different prices for the same DVD,and complained vociferously.Company officials admitted that the company was trying to see how much it could charge for an item before buyers balked.Amazon was caught attempting

Accepted Answer

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

Question 3

Product-line pricing refers to

Accepted Answer

A) setting the price of a line of products at a number of different specific pricing points. 
B) 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. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting of 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. 
E) the marketing of two or more products in a single package. 
A) setting the price of a line of products at a number of different specific pricing points. 
B) 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. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting of 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. 
E) the marketing of two or more products in a single package.

Question 4

Another name for freight-absorption pricing is

Accepted Answer

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

Question 5

The four types of discounts are

Accepted Answer

A) quantity,trade-in,promotional,and cash. 
B) quantity,seasonal,trade (functional),and cash. 
C) quantity,seasonal,promotional,and FOB. 
D) cash,trade (functional),seasonal,and promotional. 
E) trade-in,promotional,geographic,and functional. 
A) quantity,trade-in,promotional,and cash. 
B) quantity,seasonal,trade (functional),and cash. 
C) quantity,seasonal,promotional,and FOB. 
D) cash,trade (functional),seasonal,and promotional. 
E) trade-in,promotional,geographic,and functional.

Question 6

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.This practice is also called

Accepted Answer

A) price discrimination. 
B) predatory pricing. 
C) a tying arrangement. 
D) resale price maintenance. 
E) exclusive dealing. 
A) price discrimination. 
B) predatory pricing. 
C) a tying arrangement. 
D) resale price maintenance. 
E) exclusive dealing.

Question 7

Another name for a dynamic pricing policy is

Accepted Answer

A) target pricing. 
B) fluid pricing. 
C) price lining. 
D) market-based pricing. 
E) a flexible-price policy. 
A) target pricing. 
B) fluid pricing. 
C) price lining. 
D) market-based pricing. 
E) a flexible-price policy.

Question 8

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) Lo-Hi pricing 
B) alternative pricing 
C) Hi-Lo pricing 
D) bundle-pricing 
E) dynamic pricing policy 
A) Lo-Hi pricing 
B) alternative pricing 
C) Hi-Lo pricing 
D) bundle-pricing 
E) dynamic pricing policy

Question 9

Figure 14-2
  
-Figure 14-2 above represents the four approaches to selecting an appropriate price level.Box A 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 10

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price is referred to as

Accepted Answer

A) standard markup pricing. 
B) experience curve pricing. 
C) cost-plus pricing. 
D) product-line pricing. 
E) target return-on-investment pricing. 
A) standard markup pricing. 
B) experience curve pricing. 
C) cost-plus pricing. 
D) product-line pricing. 
E) target return-on-investment pricing.

Question 11

A critical assumption when using target profit pricing is that

Accepted Answer

A) a higher average price will not cause the demand for a product to fall. 
B) a higher average price will cause new competitors to join the industry. 
C) a higher average price will be offset by reductions in manufacturing costs. 
D) profit is tied to the current value of the dollar in relation to foreign currencies. 
E) any price increase will be followed quickly by similar moves from all of your competitors. 
A) a higher average price will not cause the demand for a product to fall. 
B) a higher average price will cause new competitors to join the industry. 
C) a higher average price will be offset by reductions in manufacturing costs. 
D) profit is tied to the current value of the dollar in relation to foreign currencies. 
E) any price increase will be followed quickly by similar moves from all of your competitors.

Question 12

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use ________ to compensate them for any cost overruns.

Accepted Answer

A) at-market pricing 
B) experience curve pricing 
C) cost-plus-fixed-fee pricing 
D) standard markup pricing 
E) yield management pricing 
A) at-market pricing 
B) experience curve pricing 
C) cost-plus-fixed-fee pricing 
D) standard markup pricing 
E) yield management pricing

Question 13

Target pricing refers to

Accepted Answer

A) a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item. 
B) a method of charging different prices to maximize revenue for a set amount of capacity at any given time. 
C) the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. 
D) a method of estimating the price that ultimate consumers would be willing to pay for a product,then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers. 
E) a method of estimating the price that ultimate consumers would be willing to pay for a product,then determining how much wholesalers wish to charge its customers,deliberately adjusting the composition and features of the product to achieve the price to consumers. 
A) a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item. 
B) a method of charging different prices to maximize revenue for a set amount of capacity at any given time. 
C) the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. 
D) a method of estimating the price that ultimate consumers would be willing to pay for a product,then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers. 
E) a method of estimating the price that ultimate consumers would be willing to pay for a product,then determining how much wholesalers wish to charge its customers,deliberately adjusting the composition and features of the product to achieve the price to consumers.

Question 14

The price for Nintendo's Wii video game console was likely insufficient to cover its fixed and variable costs.However,the price of its video games was set high enough to cover its video game console's loss and deliver a handsome profit for all Nintendo products.This example illustrates Nintendo's use of

Accepted Answer

A) bundle pricing. 
B) product-line pricing. 
C) price lining. 
D) customary pricing. 
E) loss-leader pricing. 
A) bundle pricing. 
B) product-line pricing. 
C) price lining. 
D) customary pricing. 
E) loss-leader pricing.

Question 15

Figure 14-7
  
-Figure 14-7 above shows the three major types of special adjustments to the list or quoted price.Box B 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 16

A dynamic pricing policy refers to

Accepted Answer

A) setting the price of a line of products at a number of different specific pricing points. 
B) setting the 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. 
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) setting different prices for products and services in real time in response to supply and demand conditions. 
E) adding a fixed percentage to the cost of all items in a specific product class. 
A) setting the price of a line of products at a number of different specific pricing points. 
B) setting the 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. 
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) setting different prices for products and services in real time in response to supply and demand conditions. 
E) adding a fixed percentage to the cost of all items in a specific product class.

Question 17

Explain predatory pricing.

Accepted Answer

Predatory pricing is the practice of cha

Question 18

Which of the following statements about geographical adjustments to price is most accurate?

Accepted Answer

A) In FOB origin pricing,the seller selects the mode of transportation. 
B) In FOB with freight-allowed pricing,the buyer subtracts the transportation costs from the list price. 
C) Multiple-zone pricing is sometimes referred to as "spider web" pricing. 
D) Basing-point pricing seems to have been used in industries where freight expenses are only a minor part of the total cost to the buyer. 
E) Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains,rivers,weather conditions,etc. )explaining why those adjustments need to be made. 
A) In FOB origin pricing,the seller selects the mode of transportation. 
B) In FOB with freight-allowed pricing,the buyer subtracts the transportation costs from the list price. 
C) Multiple-zone pricing is sometimes referred to as "spider web" pricing. 
D) Basing-point pricing seems to have been used in industries where freight expenses are only a minor part of the total cost to the buyer. 
E) Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains,rivers,weather conditions,etc. )explaining why those adjustments need to be made.

Question 19

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499,Amazon was using a ________ pricing strategy.

Accepted Answer

A) skimming 
B) price lining 
C) BOGO 
D) penetration 
E) loss-leader 
A) skimming 
B) price lining 
C) BOGO 
D) penetration 
E) loss-leader

Question 20

To promote their business,some psychics advertise on television free tarot-card readings and other insights into their customers' futures.Unfortunately,this "free reading" has cost some unsuspecting callers as much as $700 in phone charges.This sort of pricing practice would be primarily monitored by the

Accepted Answer

A) Consumer Protection Agency. 
B) U)S.Department of Justice. 
C) Federal Trade Commission. 
D) Federal Communications Commission. 
E) Consumer Product Safety Commission. 
A) Consumer Protection Agency. 
B) U)S.Department of Justice. 
C) Federal Trade Commission. 
D) Federal Communications Commission. 
E) Consumer Product Safety Commission.

Exam 14: Arriving at the Final Price

Which of the following is a form of dynamic pricing?

Product-line pricing refers to

Another name for freight-absorption pricing is

The four types of discounts are

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.This practice is also called

Another name for a dynamic pricing policy is

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.

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

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price is referred to as

A critical assumption when using target profit pricing is that

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use ________ to compensate them for any cost overruns.

Target pricing refers to

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

A dynamic pricing policy refers to

Explain predatory pricing.

Which of the following statements about geographical adjustments to price is most accurate?

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499,Amazon was using a ________ pricing strategy.

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

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Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

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Managing Successful Products, services, and Brands

Services Marketing

Building the Price Foundation

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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 Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Writing Successful Marketing and Business Plans: Tips and Guidelines

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