Question 1

Which of the following statements regarding cost-oriented approaches is most accurate?

Accepted Answer

A) These methods focus on the demand side of the pricing problem. 
B) These methods focus on production and marketing expenses. 
C) Target return on investment is an example of a cost-oriented method. 
D) Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production. 
E) Cost-oriented approaches are a subcategory of competition-oriented methods. 
A) These methods focus on the demand side of the pricing problem. 
B) These methods focus on production and marketing expenses. 
C) Target return on investment is an example of a cost-oriented method. 
D) Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production. 
E) Cost-oriented approaches are a subcategory of competition-oriented methods.

Question 2

Odd-even pricing refers to

Accepted Answer

A) setting prices one way for product lines and another way for individual brands. 
B) setting prices of luxury items at even price points and setting the price of necessities at odd price points. 
C) setting prices a few dollars or cents under an odd number. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices a few dollars or cents under an even number. 
A) setting prices one way for product lines and another way for individual brands. 
B) setting prices of luxury items at even price points and setting the price of necessities at odd price points. 
C) setting prices a few dollars or cents under an odd number. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices a few dollars or cents under an even number.

Question 3

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) __________; and (4) customers interpret the high price as signifying high quality.

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) it will be easier to set measurable sales unit goals 
D) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost 
E) consumers perceive your product to be similar to other products on the market 
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) it will be easier to set measurable sales unit goals 
D) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost 
E) consumers perceive your product to be similar to other products on the market

Question 4

Bob Biltmore owns dozens of very successful print shops throughout the Midwest. Biltmore's shops specialize in low-cost black-and-white copies and feature user-friendly machines consumers can easily operate. In recent months, Biltmore has noticed many more competitors in the areas where his stores are located. In an attempt to eliminate the competition, Biltmore has decided to charge a very low price for his black-and-white copies, a price so low his competitors will be forced out of business. After the competition has been driven out, Biltmore plans to raise the price of his copies. Biltmore is planning to engage in the illegal and unethical practice of

Accepted Answer

A) price fixing. 
B) price inflation. 
C) deceptive pricing. 
D) competitive pricing. 
E) predatory pricing. 
A) price fixing. 
B) price inflation. 
C) deceptive pricing. 
D) competitive pricing. 
E) predatory pricing.

Question 5

When Dell sells various laptops, it also pre-installs Microsoft Office and other software that customers order at a discount before a laptop is shipped. This is an example of

Accepted Answer

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

Question 6

A skimming pricing policy is likely to be most effective when

Accepted Answer

A) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost. 
B) consumers tend to be price-sensitive. 
C) it is easier to set measurable sales unit goals. 
D) a lower price will significantly lower fixed costs. 
E) consumers perceive your product to be similar to other products on the market. 
A) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost. 
B) consumers tend to be price-sensitive. 
C) it is easier to set measurable sales unit goals. 
D) a lower price will significantly lower fixed costs. 
E) consumers perceive your product to be similar to other products on the market.

Question 7

Five pricing practices are scrutinized because of potential unethical or illegal actions. They are (1) price fixing, (2) predatory pricing, (3) deceptive pricing, (4) geographical pricing, and (5) __________.

Accepted Answer

A) price discounting 
B) lateral price fixing 
C) regional rollbacks 
D) delayed payment pricing 
E) price discrimination 
A) price discounting 
B) lateral price fixing 
C) regional rollbacks 
D) delayed payment pricing 
E) price discrimination

Question 8

Setting one price for all buyers of a product or service is referred to as

Accepted Answer

A) customary pricing. 
B) a fixed-price policy. 
C) a dynamic pricing policy. 
D) standard markup pricing. 
E) uniform pricing. 
A) customary pricing. 
B) a fixed-price policy. 
C) a dynamic pricing policy. 
D) standard markup pricing. 
E) uniform pricing.

Question 9

Two or more competitors explicitly or implicitly setting prices is referred to as

Accepted Answer

A) competitive collusion. 
B) vertical price fixing. 
C) horizontal price fixing. 
D) lateral price fixing. 
E) price cooperation. 
A) competitive collusion. 
B) vertical price fixing. 
C) horizontal price fixing. 
D) lateral price fixing. 
E) price cooperation.

Question 10

Setting different prices for products and services in real time in response to supply and demand conditions is referred to as

Accepted Answer

A) price lining. 
B) a dynamic pricing policy. 
C) customary pricing. 
D) price fixing. 
E) discretionary pricing. 
A) price lining. 
B) a dynamic pricing policy. 
C) customary pricing. 
D) price fixing. 
E) discretionary pricing.

Question 11

Bundle pricing is considered to be a __________ pricing practice.

Accepted Answer

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

Question 12

A manufacturer estimates that consumers will accept a price of $275 for a snowboard. If the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers, respectively, what price will the manufacturer receive for the snowboard?

Accepted Answer

A) $275.00 
B) $178.75 
C) $151.94 
D) $144.34 
E) $100.00 
A) $275.00 
B) $178.75 
C) $151.94 
D) $144.34 
E) $100.00

Question 13

Setting a price to achieve an annual target return-on-investment (ROI) is referred to as

Accepted Answer

A) target return-on-investment pricing. 
B) target return-on-profit pricing. 
C) target return-on-sales pricing. 
D) target profit pricing. 
E) customary pricing. 
A) target return-on-investment pricing. 
B) target return-on-profit pricing. 
C) target return-on-sales pricing. 
D) target profit pricing. 
E) customary pricing.

Question 14

Target profit pricing refers to

Accepted Answer

A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting an annual target of a specific dollar volume of profit. 
C) setting the price of a line of products at a number of different price points. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices to achieve a profit that is a specified percentage of production costs. 
A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting an annual target of a specific dollar volume of profit. 
C) setting the price of a line of products at a number of different price points. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices to achieve a profit that is a specified percentage of production costs.

Question 15

A glassblowing studio makes fine pieces of art glass. It has decided on a retail list price of $2,000 for one of its vases. They sell only through wholesalers and retailers who receive 50/10 terms. How much will the studio receive from selling this vase?

Accepted Answer

A) $2,000 
B) $1,000 
C) $900 
D) $800 
E) $100 
A) $2,000 
B) $1,000 
C) $900 
D) $800 
E) $100

Question 16

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called

Accepted Answer

A) standard pricing. 
B) odd-even pricing. 
C) customary pricing. 
D) everyday lower pricing. 
E) at-market pricing. 
A) standard pricing. 
B) odd-even pricing. 
C) customary pricing. 
D) everyday lower pricing. 
E) at-market pricing.

Question 17

A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you a __________ of $1,000 for your 2006 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 18

The acronym EDLP stands for

Accepted Answer

A) estimated discount leveling policy. 
B) extended discounts for loss-leader products. 
C) everyday low pricing. 
D) either (free) delivery or lower prices. 
E) extended discounts in lieu of lower pricing. 
A) estimated discount leveling policy. 
B) extended discounts for loss-leader products. 
C) everyday low pricing. 
D) either (free) delivery or lower prices. 
E) extended discounts in lieu of lower pricing.

Question 19

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

Question 20

Penetration pricing refers to

Accepted Answer

A) charging different prices to different buyers for goods of like grade and quality. 
B) setting the highest initial price that customers really desiring the product are willing to pay. 
C) setting a low initial price on a new product to appeal immediately to the mass market. 
D) setting a market price for a product or product class based on a subjective feel for the competitors' prices or market price. 
E) setting prices a few dollars or cents under an even number. 
A) charging different prices to different buyers for goods of like grade and quality. 
B) setting the highest initial price that customers really desiring the product are willing to pay. 
C) setting a low initial price on a new product to appeal immediately to the mass market. 
D) setting a market price for a product or product class based on a subjective feel for the competitors' prices or market price. 
E) setting prices a few dollars or cents under an even number.

Exam 14: Arriving at the Final Price

Which of the following statements regarding cost-oriented approaches is most accurate?

Odd-even pricing refers to

When Dell sells various laptops, it also pre-installs Microsoft Office and other software that customers order at a discount before a laptop is shipped. This is an example of

A skimming pricing policy is likely to be most effective when

Five pricing practices are scrutinized because of potential unethical or illegal actions. They are (1) price fixing, (2) predatory pricing, (3) deceptive pricing, (4) geographical pricing, and (5) __________.

Setting one price for all buyers of a product or service is referred to as

Two or more competitors explicitly or implicitly setting prices is referred to as

Setting different prices for products and services in real time in response to supply and demand conditions is referred to as

Bundle pricing is considered to be a __________ pricing practice.

A manufacturer estimates that consumers will accept a price of $275 for a snowboard. If the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers, respectively, what price will the manufacturer receive for the snowboard?

Setting a price to achieve an annual target return-on-investment (ROI) is referred to as

Target profit pricing refers to

A glassblowing studio makes fine pieces of art glass. It has decided on a retail list price of $2,000 for one of its vases. They sell only through wholesalers and retailers who receive 50/10 terms. How much will the studio receive from selling this vase?

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called

A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you a __________ of $1,000 for your 2006 Nissan Altima.

The acronym EDLP stands for

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

Penetration pricing refers to

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 Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

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