Question 1

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 2

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 3

If the terms of the trade discount are listed 20/10/5, the number "5" represents

Accepted Answer

A) 5 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit. 
B) 5 percent of the suggested retail price that is available to the wholesaler to cover costs and provide a profit. 
C) 5 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit. 
D) 5 percent of the suggested retail price that is available to the ultimate consumer. 
E) 5 percent of the suggested retail price that is the profit margin to the manufacturer. 
A) 5 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit. 
B) 5 percent of the suggested retail price that is available to the wholesaler to cover costs and provide a profit. 
C) 5 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit. 
D) 5 percent of the suggested retail price that is available to the ultimate consumer. 
E) 5 percent of the suggested retail price that is the profit margin to the manufacturer.

Question 4

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) __________; (3) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost; and (4) customers interpret the high price as signifying high quality.

Accepted Answer

A) the high initial price will not attract competitors 
B) consumers tend to be price-sensitive 
C) it will be easier to set measurable sales unit goals 
D) a lower price will significantly reduce unit costs 
E) consumers perceive your product to be similar to other products on the market 
A) the high initial price will not attract competitors 
B) consumers tend to be price-sensitive 
C) it will be easier to set measurable sales unit goals 
D) a lower price will significantly reduce unit costs 
E) consumers perceive your product to be similar to other products on the market

Question 5

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

Accepted Answer

A) seasonal discounts 
B) trade discounts 
C) cash discounts 
D) promotional allowances 
E) trade-in allowances 
A) seasonal discounts 
B) trade discounts 
C) cash discounts 
D) promotional allowances 
E) trade-in allowances

Question 6

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as

Accepted Answer

A) FOB origin pricing. 
B) basing-point pricing. 
C) single-zone pricing. 
D) multiple-zone pricing. 
E) freight absorption pricing. 
A) FOB origin pricing. 
B) basing-point pricing. 
C) single-zone pricing. 
D) multiple-zone pricing. 
E) freight absorption pricing.

Question 7

What is the difference between a fixed-price policy and a dynamic pricing policy?

Accepted Answer

A fixed-price policy, also called a one-

Question 8

When is skimming pricing an effective strategy?

Accepted Answer

Skimming pricing is an effective strateg

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

What pricing method is often used because of the difficulty in establishing a benchmark of sales or investment to show how much of a firm's effort is needed to achieve the target?

Accepted Answer

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

Question 11

Skimming pricing is considered to be a __________ approach to pricing.

Accepted Answer

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

Question 12

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-in, 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-in, seasonal, and promotional. 
E) trade-in, promotional, geographic, and functional.

Question 13

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

Accepted Answer

A) odd-even. 
B) yield management. 
C) customary. 
D) bundle. 
E) prestige. 
A) odd-even. 
B) yield management. 
C) customary. 
D) bundle. 
E) prestige.

Question 14

After offering a promotional allowance, the price of a product returns to its regular price level. When this happens, the retail store's gross margin on that product __________ on those items that were bought with the allowance but not sold during the price special promotion.

Accepted Answer

A) decreases substantially 
B) increases substantially 
C) remains the same 
D) fluctuates wildly 
E) vanishes 
A) decreases substantially 
B) increases substantially 
C) remains the same 
D) fluctuates wildly 
E) vanishes

Question 15

When microwave ovens were in the introduction stage of their product life cycle, some consumers were willing to pay exorbitant prices for these innovative ovens. Taking advantage of this strong consumer desire, marketers set the price for microwave ovens at the highest initial price possible. Marketers of microwave ovens used 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 16

To reward wholesalers and retailers for having supplies in stock at the time customers want, manufacturers offer

Accepted Answer

A) noncumulative discounts. 
B) seasonal discounts. 
C) trade discounts. 
D) cumulative discounts. 
E) functional discounts. 
A) noncumulative discounts. 
B) seasonal discounts. 
C) trade discounts. 
D) cumulative discounts. 
E) functional discounts.

Question 17

While __________ often changes price based upon color or style, __________ often changes prices based on time, day, week, or season.

Accepted Answer

A) prestige pricing; skimming pricing 
B) yield management pricing; bundle pricing 
C) price lining; yield management pricing 
D) target pricing; target return on investment pricing 
E) bundle pricing; standard markup pricing 
A) prestige pricing; skimming pricing 
B) yield management pricing; bundle pricing 
C) price lining; yield management pricing 
D) target pricing; target return on investment pricing 
E) bundle pricing; standard markup pricing

Question 18

Explain predatory pricing.

Accepted Answer

Predatory pricing is the practice of cha

A penetration pricing policy is most likely to be effective when

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.

If the terms of the trade discount are listed 20/10/5, the number "5" represents

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as

What is the difference between a fixed-price policy and a dynamic pricing policy?

When is skimming pricing an effective strategy?

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

What pricing method is often used because of the difficulty in establishing a benchmark of sales or investment to show how much of a firm's effort is needed to achieve the target?

Skimming pricing is considered to be a __________ approach to pricing.

The four types of discounts are

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

After offering a promotional allowance, the price of a product returns to its regular price level. When this happens, the retail store's gross margin on that product __________ on those items that were bought with the allowance but not sold during the price special promotion.

To reward wholesalers and retailers for having supplies in stock at the time customers want, manufacturers offer

While often changes price based upon color or style, often changes prices based on time, day, week, or season.

Explain predatory 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 Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

Filters

Exam 14: Arriving at the Final Price

A penetration pricing policy is most likely to be effective when

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.

If the terms of the trade discount are listed 20/10/5, the number "5" represents

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as

What is the difference between a fixed-price policy and a dynamic pricing policy?

When is skimming pricing an effective strategy?

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

What pricing method is often used because of the difficulty in establishing a benchmark of sales or investment to show how much of a firm's effort is needed to achieve the target?

Skimming pricing is considered to be a __________ approach to pricing.

The four types of discounts are

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

After offering a promotional allowance, the price of a product returns to its regular price level. When this happens, the retail store's gross margin on that product __________ on those items that were bought with the allowance but not sold during the price special promotion.

To reward wholesalers and retailers for having supplies in stock at the time customers want, manufacturers offer

While __________ often changes price based upon color or style, __________ often changes prices based on time, day, week, or season.

Explain predatory 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 Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

Filters

While often changes price based upon color or style, often changes prices based on time, day, week, or season.