Question 1

Which of the following statements about a flexible-price policy is most accurate?

Accepted Answer

A)  A flexible-price policy is especially suited to low cost items where profit margins are slim. 
B)  A flexible-price policy should not be used with large ticket items such as cars or real estate. 
C)  When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act. 
D)  Flexible pricing is not a form of yield management pricing. 
E)  Flexible pricing is rarely used for online purchases because of the high cost to develop information technology and data warehouses. 
A)  A flexible-price policy is especially suited to low cost items where profit margins are slim. 
B)  A flexible-price policy should not be used with large ticket items such as cars or real estate. 
C)  When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act. 
D)  Flexible pricing is not a form of yield management pricing. 
E)  Flexible pricing is rarely used for online purchases because of the high cost to develop information technology and data warehouses.

Question 2

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 use a demand-oriented approach to setting price?

Accepted Answer

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

Question 3

Which of the following is a profit-oriented pricing method?

Accepted Answer

A)  target return-on-sales pricing 
B)  loss leader pricing 
C)  above-, at-, or below-market pricing 
D)  price lining 
E)  penetration pricing 
A)  target return-on-sales pricing 
B)  loss leader pricing 
C)  above-, at-, or below-market pricing 
D)  price lining 
E)  penetration pricing

Question 4

of the following statements regarding the legal and regulatory aspects of pricing are true EXCEPT:

Accepted Answer

A)  there has been a movement towards a "rule of reason" in both horizontal and vertical price fixing cases. 
B)  the Robinson-Patman Act allows for price differentials to different customers under the "cost justification defense." 
C)  a manufacturer's MSRP has been declared illegal per se by a recent U.S. Supreme Court decision. 
D)  The "rule of reason" perspective is the direct opposite of the per se rule. 
E)  wholesalers can fix the maximum retail price for their products provided the price agreement does not create an "unreasonable restraint of trade." 
A)  there has been a movement towards a "rule of reason" in both horizontal and vertical price fixing cases. 
B)  the Robinson-Patman Act allows for price differentials to different customers under the "cost justification defense." 
C)  a manufacturer's MSRP has been declared illegal per se by a recent U.S. Supreme Court decision. 
D)  The "rule of reason" perspective is the direct opposite of the per se rule. 
E)  wholesalers can fix the maximum retail price for their products provided the price agreement does not create an "unreasonable restraint of trade."

Question 5

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

Accepted Answer

Four common approaches to helping find t

Question 6

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

Accepted Answer

A)  below-market pricing. 
B)  customary pricing. 
C)  above-market pricing. 
D)  price lining. 
E)  at-market pricing. 
A)  below-market pricing. 
B)  customary pricing. 
C)  above-market pricing. 
D)  price lining. 
E)  at-market pricing.

Question 7

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 8

Explain predatory pricing.

Accepted Answer

Predatory pricing is the practice of cha

Question 9

Cumulative quantity discounts refer to

Accepted Answer

A)  reductions in unit costs for a larger order. 
B)  cash payments or extra amounts of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product. 
C)  discounts offered to sellers for first-time purchases of a new product as incentives for providing shelf space. 
D)  a series of discounts for every additional rebuy in which the discount becomes incrementally higher. 
E)  discounts that apply to the accumulation of purchases of a product over a given time period, typically a year. 
A)  reductions in unit costs for a larger order. 
B)  cash payments or extra amounts of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product. 
C)  discounts offered to sellers for first-time purchases of a new product as incentives for providing shelf space. 
D)  a series of discounts for every additional rebuy in which the discount becomes incrementally higher. 
E)  discounts that apply to the accumulation of purchases of a product over a given time period, typically a year.

Question 10

two general methods for quoting prices related to transportation costs are FOB origin pricing and __________.

Accepted Answer

A)  uniform delivered pricing 
B)  mode of transportation pricing 
C)  regional pricing 
D)  flexible pricing 
E)  FOB destination pricing 
A)  uniform delivered pricing 
B)  mode of transportation pricing 
C)  regional pricing 
D)  flexible pricing 
E)  FOB destination pricing

Question 11

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 consider a demand-,cost-,profit-,or competition-oriented approach?

Accepted Answer

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

Question 12

Skimming pricing is a strategy that introduces a new or innovative product by

Accepted Answer

A)  following a price elastic strategy. 
B)  creating multiple price points. 
C)  setting a high initial price. 
D)  setting a low initial price. 
E)  setting the price at the average of competitors' prices. 
A)  following a price elastic strategy. 
B)  creating multiple price points. 
C)  setting a high initial price. 
D)  setting a low initial price. 
E)  setting the price at the average of competitors' prices.

Question 13

Which of the following statements about the price-setting process is most accurate?

Accepted Answer

A)  When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it. 
B)  Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level. 
C)  Demand-oriented pricing approaches rely heavily on competitors' prices. 
D)  Skimming pricing is a competition-oriented pricing strategy. 
E)  Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach. 
A)  When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it. 
B)  Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level. 
C)  Demand-oriented pricing approaches rely heavily on competitors' prices. 
D)  Skimming pricing is a competition-oriented pricing strategy. 
E)  Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach.

Question 14

which of the following products is a manufacturer most likely to use basing-point pricing?

Accepted Answer

A)  pet food 
B)  furniture 
C)  crystal glass bowls 
D)  coal 
E)  cut flowers 
A)  pet food 
B)  furniture 
C)  crystal glass bowls 
D)  coal 
E)  cut flowers

Question 15

penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)a low initial price discourages competitors from entering the market; and (3)_________.

Accepted Answer

A)  unit production and marketing costs fall dramatically as production volumes increase 
B)  customers are willing to buy immediately at the high initial price 
C)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs 
D)  when the high initial prices do not attract competitors 
E)  when customers interpret high prices as signifying high quality 
A)  unit production and marketing costs fall dramatically as production volumes increase 
B)  customers are willing to buy immediately at the high initial price 
C)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs 
D)  when the high initial prices do not attract competitors 
E)  when customers interpret high prices as signifying high quality

Question 16

Basing-point pricing refers to

Accepted Answer

A)  selecting a single geographical location from which the list price for products plus freight expenses are charged to the seller. 
B)  selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the seller. 
C)  having all buyers pay the same delivered price for the products, regardless of their distance from the seller. 
D)  a firm dividing a selling territory into geographic areas or zones and charging the same delivered price to all buyers within the same zone, but charging different prices in different zones depending on distance from the factory or warehouse. 
E)  selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer. 
A)  selecting a single geographical location from which the list price for products plus freight expenses are charged to the seller. 
B)  selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the seller. 
C)  having all buyers pay the same delivered price for the products, regardless of their distance from the seller. 
D)  a firm dividing a selling territory into geographic areas or zones and charging the same delivered price to all buyers within the same zone, but charging different prices in different zones depending on distance from the factory or warehouse. 
E)  selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer.

Question 17

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Accepted Answer

A)  skimming pricing. 
B)  status pricing. 
C)  price lining. 
D)  value pricing. 
E)  prestige pricing. 
A)  skimming pricing. 
B)  status pricing. 
C)  price lining. 
D)  value pricing. 
E)  prestige pricing.

Question 18

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 19

conspiracy among firms to set prices for a product is referred to as

Accepted Answer

A)  price discrimination. 
B)  price fixing. 
C)  predatory pricing. 
D)  tying arrangements. 
E)  exclusive dealing. 
A)  price discrimination. 
B)  price fixing. 
C)  predatory pricing. 
D)  tying arrangements. 
E)  exclusive dealing.

Question 20

Talbot's sells women's clothes.A T-shirt with the Talbot's label costs $25.By comparison,you can buy a T-shirt for $5 at a Family Dollar Store,but it won't have the Talbot's label or quality.What kind of demand-oriented approach to pricing does Talbot's use?

Accepted Answer

A)  experience curve pricing 
B)  skimming pricing 
C)  demand-backward pricing 
D)  prestige pricing 
E)  flexible pricing 
A)  experience curve pricing 
B)  skimming pricing 
C)  demand-backward pricing 
D)  prestige pricing 
E)  flexible pricing

Exam 14: Arriving at the Final Price

Which of the following statements about a flexible-price policy is most accurate?

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 use a demand-oriented approach to setting price?

Which of the following is a profit-oriented pricing method?

of the following statements regarding the legal and regulatory aspects of pricing are true EXCEPT:

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

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

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

Explain predatory pricing.

Cumulative quantity discounts refer to

two general methods for quoting prices related to transportation costs are FOB origin pricing and __________.

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 consider a demand-,cost-,profit-,or competition-oriented approach?

Skimming pricing is a strategy that introduces a new or innovative product by

Which of the following statements about the price-setting process is most accurate?

which of the following products is a manufacturer most likely to use basing-point pricing?

penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)a low initial price discourages competitors from entering the market; and (3)_________.

Basing-point pricing refers to

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Odd-even pricing refers to

conspiracy among firms to set prices for a product is referred to as

Talbot's sells women's clothes.A T-shirt with the Talbot's label costs $25.By comparison,you can buy a T-shirt for $5 at a Family Dollar Store,but it won't have the Talbot's label or quality.What kind of demand-oriented approach to pricing does Talbot's use?

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 Multi-Channel Marketing

Pulling It All Together: The Strategic Marketing Process

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