Question 1

Why do manufacturers offer seasonal discounts to channel members? Provide an example of how one would work.

Accepted Answer

To encourage buyers to stock inventory e

Question 2

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) benchmark 
A) customary price 
B) prestige price 
C) price premium 
D) price lining 
E) benchmark

Question 3

A manufacturer offers a suggested list price for a cashmere sweater of $250.The trade discount is 40/20/10.What amount does the manufacturer expect to receive for the sweater?

Accepted Answer

A) $175.00 
B) $225.00 
C) $108.00 
D) $125.00 
E) $100.00 
A) $175.00 
B) $225.00 
C) $108.00 
D) $125.00 
E) $100.00

Question 4

The pricing approach that results in the manufacturer deliberately adjusting the composition and features of the product to achieve the desired price for consumers is referred to as

Accepted Answer

A) cost-benefit pricing. 
B) cost-plus percentage-of-cost pricing. 
C) target pricing. 
D) cost-plus fixed-fee pricing. 
E) product feature pricing. 
A) cost-benefit pricing. 
B) cost-plus percentage-of-cost pricing. 
C) target pricing. 
D) cost-plus fixed-fee pricing. 
E) product feature pricing.

Question 5

The three major types of special adjustments to list or quoted price are

Accepted Answer

A) demand-oriented,cost-oriented,and profit-oriented adjustments. 
B) one price,flexible price,and discounts. 
C) discounts,allowances,and marginal adjustments. 
D) discounts,allowances,and geographical adjustments. 
E) discounts,incremental costs and revenues,and geographical adjustments. 
A) demand-oriented,cost-oriented,and profit-oriented adjustments. 
B) one price,flexible price,and discounts. 
C) discounts,allowances,and marginal adjustments. 
D) discounts,allowances,and geographical adjustments. 
E) discounts,incremental costs and revenues,and geographical adjustments.

Question 6

The successive price cutting by competitors to increase or maintain their unit sales or market share is referred to as

Accepted Answer

A) everyday even lower pricing. 
B) a price war. 
C) fair trade pricing. 
D) a market war. 
E) a price reduction. 
A) everyday even lower pricing. 
B) a price war. 
C) fair trade pricing. 
D) a market war. 
E) a price reduction.

Question 7

Companies use a price premium to assess whether their products and brands are priced above,at,or below the market.This price premium equals

Accepted Answer

A) unit volume market share for a brand divided by dollar sales market share for a brand,minus one. 
B) dollar sales market share for a brand divided by unit volume market share for a brand,plus one. 
C) dollar sales market share for a brand divided by unit volume market share for a brand,minus one. 
D) dollar sales market share for a brand,divided by unit volume market share for a brand,plus one. 
E) dollar sales market share for a brand,divided by unit volume market share for a brand,minus the number of competitors against which a brand is being measured. 
A) unit volume market share for a brand divided by dollar sales market share for a brand,minus one. 
B) dollar sales market share for a brand divided by unit volume market share for a brand,plus one. 
C) dollar sales market share for a brand divided by unit volume market share for a brand,minus one. 
D) dollar sales market share for a brand,divided by unit volume market share for a brand,plus one. 
E) dollar sales market share for a brand,divided by unit volume market share for a brand,minus the number of competitors against which a brand is being measured.

Question 8

All of the following are competition-oriented approaches to selecting an approximate price level except

Accepted Answer

A) loss-leader pricing. 
B) customary pricing. 
C) above-market pricing. 
D) odd-even pricing. 
E) at-market pricing. 
A) loss-leader pricing. 
B) customary pricing. 
C) above-market pricing. 
D) odd-even pricing. 
E) at-market pricing.

Question 9

If the cash discount terms for a $500 purchase are 4/10 net 30,the number 4 refers to

Accepted Answer

A) the percentage markup on the product. 
B) the percentage discount if the bill is paid within 10 days. 
C) the percentage increase in price if the bill is not paid within 10 days. 
D) the discount in dollars per unit if the order is paid on time within 30 days. 
E) the penalty in dollars if the bill is not paid within 10 days. 
A) the percentage markup on the product. 
B) the percentage discount if the bill is paid within 10 days. 
C) the percentage increase in price if the bill is not paid within 10 days. 
D) the discount in dollars per unit if the order is paid on time within 30 days. 
E) the penalty in dollars if the bill is not paid within 10 days.

Question 10

A penetration pricing policy is most likely to be effective when

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) a low initial price discourages competitors from entering the market. 
D) customers interpret the high price as signifying high quality. 
E) enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable. 
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) a low initial price discourages competitors from entering the market. 
D) customers interpret the high price as signifying high quality. 
E) enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

Question 11

Price lining is considered to be a ________ approach to pricing.

Accepted Answer

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

Question 12

The Consumer Goods Pricing Act,the Sherman Act,the Federal Trade Commission Act,and the Robinson-Patman Act all address different aspects of deceptive pricing.Select one example for each act and explain which aspects of the practice would be considered illegal.

Accepted Answer

The Consumer Goods Pricing Act considers

Question 13

The pricing strategy that is almost the exact opposite of skimming pricing is

Accepted Answer

A) target pricing. 
B) penetration pricing. 
C) price lining. 
D) odd-even pricing. 
E) prestige pricing. 
A) target pricing. 
B) penetration pricing. 
C) price lining. 
D) odd-even pricing. 
E) prestige pricing.

Question 14

Allowances,like discounts,are

Accepted Answer

A) rewards given to retailers to encourage early payment. 
B) payment extensions given to cash-strapped consumers during the current recession. 
C) list price deductions based on surges in consumer demand. 
D) list price deductions based on sudden drops in consumer demand. 
E) reductions from list or quoted prices to buyers for performing some activity. 
A) rewards given to retailers to encourage early payment. 
B) payment extensions given to cash-strapped consumers during the current recession. 
C) list price deductions based on surges in consumer demand. 
D) list price deductions based on sudden drops in consumer demand. 
E) reductions from list or quoted prices to buyers for performing some activity.

Question 15

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 16

Which of the following type of business 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

Question 17

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 18

According to the text,Revlon cosmetics uses ________ pricing.

Accepted Answer

A) above-market 
B) at-market 
C) below-market 
D) prestige pricing 
E) everyday low pricing 
A) above-market 
B) at-market 
C) below-market 
D) prestige pricing 
E) everyday low pricing

Question 19

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other dishwasher on the market.Based on this price,Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price.Asko used

Accepted Answer

A) prestige pricing. 
B) price lining. 
C) cost-plus pricing. 
D) target pricing. 
E) customary pricing. 
A) prestige pricing. 
B) price lining. 
C) cost-plus pricing. 
D) target pricing. 
E) customary pricing.

Question 20

Predatory pricing is

Accepted Answer

A) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
B) the practice of charging different prices to different buyers for goods of like grade and quality. 
C) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
D) a conspiracy among firms to set prices for a product or service. 
E) a seller's requirement that the purchaser of one product must also buy another product in the line. 
A) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
B) the practice of charging different prices to different buyers for goods of like grade and quality. 
C) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
D) a conspiracy among firms to set prices for a product or service. 
E) a seller's requirement that the purchaser of one product must also buy another product in the line.

Exam 14: Arriving at the Final Price

Why do manufacturers offer seasonal discounts to channel members? Provide an example of how one would work.

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

A manufacturer offers a suggested list price for a cashmere sweater of $250.The trade discount is 40/20/10.What amount does the manufacturer expect to receive for the sweater?

The pricing approach that results in the manufacturer deliberately adjusting the composition and features of the product to achieve the desired price for consumers is referred to as

The three major types of special adjustments to list or quoted price are

The successive price cutting by competitors to increase or maintain their unit sales or market share is referred to as

Companies use a price premium to assess whether their products and brands are priced above,at,or below the market.This price premium equals

All of the following are competition-oriented approaches to selecting an approximate price level except

If the cash discount terms for a $500 purchase are 4/10 net 30,the number 4 refers to

A penetration pricing policy is most likely to be effective when

Price lining is considered to be a ________ approach to pricing.

The Consumer Goods Pricing Act,the Sherman Act,the Federal Trade Commission Act,and the Robinson-Patman Act all address different aspects of deceptive pricing.Select one example for each act and explain which aspects of the practice would be considered illegal.

The pricing strategy that is almost the exact opposite of skimming pricing is

Allowances,like discounts,are

A fixed-price policy refers to

Which of the following type of business is most likely to use cost-plus-percentage-of-cost pricing?

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

According to the text,Revlon cosmetics uses ________ pricing.

Predatory pricing is

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