Question 1

penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

A)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs. 
B)  the high initial prices do not attract competitors. 
C)  a low initial price discourages competitors from entering the market. 
D)  customers interpret high price as signifying high quality. 
E)  customers are willing to buy immediately at the high initial price. 
A)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs. 
B)  the high initial prices do not attract competitors. 
C)  a low initial price discourages competitors from entering the market. 
D)  customers interpret high price as signifying high quality. 
E)  customers are willing to buy immediately at the high initial price.

Question 2

method of pricing where the price the seller quotes includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur is referred to as

Accepted Answer

A)  FOB origin pricing. 
B)  FOB destination pricing. 
C)  geographical allowance. 
D)  uniform delivered pricing. 
E)  mode of transportation pricing. 
A)  FOB origin pricing. 
B)  FOB destination pricing. 
C)  geographical allowance. 
D)  uniform delivered pricing. 
E)  mode of transportation pricing.

Question 3

Geographical Pricing Map B
-According to the Geographical Pricing Map B above,if the plant in Denver ships its products to all of the identified cities at different prices based on distance as indicated by the color-coded regions,it is most likely using which type of pricing?

Accepted Answer

A)  FOB origin pricing 
B)  multiple-zone pricing 
C)  single-zone pricing 
D)  FOB destination pricing 
E)  basing-point pricing 
A)  FOB origin pricing 
B)  multiple-zone pricing 
C)  single-zone pricing 
D)  FOB destination pricing 
E)  basing-point pricing

Question 4

Which pricing approach complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Accepted Answer

A)  cost-plus percentage-of-cost pricing 
B)  cost-plus fixed-fee pricing 
C)  standard markup pricing 
D)  derived demand pricing 
E)  experience curve pricing 
A)  cost-plus percentage-of-cost pricing 
B)  cost-plus fixed-fee pricing 
C)  standard markup pricing 
D)  derived demand pricing 
E)  experience curve pricing

Question 5

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

Accepted Answer

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

Question 6

pricing method where a supplier is reimbursed for all costs,regardless of what they may be,and is allowed a fixed fee as profit that is independent of the final cost of the project is referred to as

Accepted Answer

A)  target return on investment pricing. 
B)  cost-plus percentage-of-cost pricing. 
C)  target return on sales pricing. 
D)  experience curve pricing. 
E)  cost-plus fixed-fee pricing. 
A)  target return on investment pricing. 
B)  cost-plus percentage-of-cost pricing. 
C)  target return on sales pricing. 
D)  experience curve pricing. 
E)  cost-plus fixed-fee pricing.

Question 7

purpose of a cash discount is to

Accepted Answer

A)  reward retailers for making large quantity purchases. 
B)  encourage purchasing items during periods of low demand. 
C)  prevent competitors from obtaining shelf space. 
D)  counteract the introduction of a new product by a competitor. 
E)  encourage retailers to pay their bills promptly. 
A)  reward retailers for making large quantity purchases. 
B)  encourage purchasing items during periods of low demand. 
C)  prevent competitors from obtaining shelf space. 
D)  counteract the introduction of a new product by a competitor. 
E)  encourage retailers to pay their bills promptly.

Question 8

of the following are cost-oriented approaches to select an approximate price level EXCEPT:

Accepted Answer

A)  cost-plus fixed-fee pricing. 
B)  standard markup pricing. 
C)  yield management. 
D)  experience curve pricing. 
E)  cost-plus percentage-of-cost pricing. 
A)  cost-plus fixed-fee pricing. 
B)  standard markup pricing. 
C)  yield management. 
D)  experience curve pricing. 
E)  cost-plus percentage-of-cost pricing.

Question 9

Another name for a one-price policy is

Accepted Answer

A)  customary pricing. 
B)  fixed pricing. 
C)  flexible pricing. 
D)  standard markup pricing. 
E)  uniform pricing. 
A)  customary pricing. 
B)  fixed pricing. 
C)  flexible pricing. 
D)  standard markup pricing. 
E)  uniform pricing.

Question 10

penetration pricing policy is MOST LIKELY to be effective when: (1)__________; (2)unit production and marketing costs fall dramatically as production volume increases; and (3)many segments of the market are price sensitive.

Accepted Answer

A)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs 
B)  the high initial prices do not attract competitors 
C)  customers interpret high prices as signifying high quality 
D)  customers are willing to buy immediately at the high initial price 
E)  a low initial price discourages competitors from entering the market 
A)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs 
B)  the high initial prices do not attract competitors 
C)  customers interpret high prices as signifying high quality 
D)  customers are willing to buy immediately at the high initial price 
E)  a low initial price discourages competitors from entering the market

Question 11

Manufacturers use seasonal discounts to

Accepted Answer

A)  get rid of expired merchandise. 
B)  prevent retailers from purchasing competitors' products. 
C)  extend the peak seasonal selling season. 
D)  encourage buyers to stock inventory earlier than their normal demand would require. 
E)  temporarily spur primary demand during periods of soft sales, such as the beginning of a month, after which prices will return to normal when selective demand picks up. 
A)  get rid of expired merchandise. 
B)  prevent retailers from purchasing competitors' products. 
C)  extend the peak seasonal selling season. 
D)  encourage buyers to stock inventory earlier than their normal demand would require. 
E)  temporarily spur primary demand during periods of soft sales, such as the beginning of a month, after which prices will return to normal when selective demand picks up.

Question 12

Different brands within a company's product line generally have different profit margins; for example,items with higher price lines have higher profit margins.Nike Variety tennis shoes have variable costs of $6 and sell for $24,whereas Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48,but when fixed overhead is added,the shoe is unprofitable by $2 per pair.Which statement is most accurate regarding Nike's pricing approach with these two product lines?

Accepted Answer

A)  Demand for each shoe line is unrelated to price. 
B)  Nike is using a cost-plus percentage-of-cost pricing strategy. 
C)  Nike is using a product-line pricing strategy. 
D)  Demand for each shoe line is unrelated to product quality. 
E)  Consumers do not use price as an indication of quality. 
A)  Demand for each shoe line is unrelated to price. 
B)  Nike is using a cost-plus percentage-of-cost pricing strategy. 
C)  Nike is using a product-line pricing strategy. 
D)  Demand for each shoe line is unrelated to product quality. 
E)  Consumers do not use price as an indication of quality.

Question 13

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

Price Premium Marketing Dashboard
-Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.What is the price premium for Red Bull in 2010?

Accepted Answer

A)  -12.5% 
B)  -7.5% 
C)  -5.3% 
D)  0% 
E)  15.2% 
A)  -12.5% 
B)  -7.5% 
C)  -5.3% 
D)  0% 
E)  15.2%

Question 15

Figure 14-1
-According to Figure 14-1 above,"F" represents which step in the price-setting process?

Accepted Answer

A)  set list or quoted price 
B)  select an approximate price level 
C)  scan competitors for prices of similar products or services 
D)  make special adjustments to list or quoted price 
E)  identify pricing objectives and constraints 
A)  set list or quoted price 
B)  select an approximate price level 
C)  scan competitors for prices of similar products or services 
D)  make special adjustments to list or quoted price 
E)  identify pricing objectives and constraints

Question 16

Advertising such as "Retail Value $100,Our Price $85" is deceptive if

Accepted Answer

A)  a verified and substantial number of stores in the market area did not price the item at $100. 
B)  even one store in that retail chain did not price the item at $100. 
C)  a competitor is selling the same item for $75 on sale and their normal price is only $85. 
D)  there is not enough product on hand at that price to satisfy the needs of the store's regular customer traffic. 
E)  the markup on the original price is more than 200 percent. 
A)  a verified and substantial number of stores in the market area did not price the item at $100. 
B)  even one store in that retail chain did not price the item at $100. 
C)  a competitor is selling the same item for $75 on sale and their normal price is only $85. 
D)  there is not enough product on hand at that price to satisfy the needs of the store's regular customer traffic. 
E)  the markup on the original price is more than 200 percent.

Question 17

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Accepted Answer

A)  demand backward pricing. 
B)  target pricing. 
C)  skimming pricing. 
D)  yield management pricing. 
E)  penetration pricing. 
A)  demand backward pricing. 
B)  target pricing. 
C)  skimming pricing. 
D)  yield management pricing. 
E)  penetration pricing.

Question 18

Standard markup 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 the price of a line of products at a number of different price points. 
C)  setting prices to achieve a profit that is a specified percentage of the sales volume. 
D)  increasing the price slightly to protect against undue profit losses from unforeseen environmental forces. 
E)  adding a fixed percentage to the cost of all items in a specific product class. 
A)  adjusting the price of a product so it is "in line" with that of its largest competitor. 
B)  setting the price of a line of products at a number of different price points. 
C)  setting prices to achieve a profit that is a specified percentage of the sales volume. 
D)  increasing the price slightly to protect against undue profit losses from unforeseen environmental forces. 
E)  adding a fixed percentage to the cost of all items in a specific product class.

Question 19

Figure 14-1
-Figure 14-1 above represents the six steps in the price-setting process.Which letter represents the step where a firm would establish a one price or flexible price policy?

Accepted Answer

A)  "A" 
B)  "F" 
C)  "C" 
D)  "E" 
E)  "D" 
A)  "A" 
B)  "F" 
C)  "C" 
D)  "E" 
E)  "D"

Question 20

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum-mint mojito.The introductory price was low so that it quickly created loyal customers for the flavor.In this example,Wrigley used

Accepted Answer

A)  skimming pricing. 
B)  penetration pricing. 
C)  price lining. 
D)  odd-even pricing. 
E)  loss-leader pricing. 
A)  skimming pricing. 
B)  penetration pricing. 
C)  price lining. 
D)  odd-even pricing. 
E)  loss-leader pricing.

Exam 14: Arriving at the Final Price

penetration pricing policy is MOST LIKELY to be effective when

method of pricing where the price the seller quotes includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur is referred to as

Geographical Pricing Map B -According to the Geographical Pricing Map B above,if the plant in Denver ships its products to all of the identified cities at different prices based on distance as indicated by the color-coded regions,it is most likely using which type of pricing?

Which pricing approach complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

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

pricing method where a supplier is reimbursed for all costs,regardless of what they may be,and is allowed a fixed fee as profit that is independent of the final cost of the project is referred to as

purpose of a cash discount is to

of the following are cost-oriented approaches to select an approximate price level EXCEPT:

Another name for a one-price policy is

penetration pricing policy is MOST LIKELY to be effective when: (1)__________; (2)unit production and marketing costs fall dramatically as production volume increases; and (3)many segments of the market are price sensitive.

Manufacturers use seasonal discounts to

of the following are demand-oriented approaches to selecting an approximate price level EXCEPT:

Price Premium Marketing Dashboard -Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.What is the price premium for Red Bull in 2010?

Figure 14-1 -According to Figure 14-1 above,"F" represents which step in the price-setting process?

Advertising such as "Retail Value $100,Our Price $85" is deceptive if

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Standard markup pricing refers to

Figure 14-1 -Figure 14-1 above represents the six steps in the price-setting process.Which letter represents the step where a firm would establish a one price or flexible price policy?

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum-mint mojito.The introductory price was low so that it quickly created loyal customers for the flavor.In this example,Wrigley used

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