Question 1

The __________ is the ratio of profit to the investment used to earn that profit.

Accepted Answer

A) markup 
B) selling margin 
C) return on investment 
D) return on assets 
E) markdown 
A) markup 
B) selling margin 
C) return on investment 
D) return on assets 
E) markdown

Question 2

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

Accepted Answer

A) 20 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit. 
B) 20 percent of the suggested wholesale price that is available to the wholesaler to cover costs and provide a profit. 
C) 20 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit. 
D) 20 percent of the manufacturer's suggested retail price that is available to the ultimate consumer. 
E) 20 percent of the suggested retail price that is the profit margin to the manufacturer. 
A) 20 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit. 
B) 20 percent of the suggested wholesale price that is available to the wholesaler to cover costs and provide a profit. 
C) 20 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit. 
D) 20 percent of the manufacturer's suggested retail price that is available to the ultimate consumer. 
E) 20 percent of the suggested retail price that is the profit margin to the manufacturer.

Question 3

When Kroger,a national supermarket chain,uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29),it is attempting to

Accepted Answer

A) drive its competition out of business. 
B) attract customers in hopes they will buy other products as well. 
C) fill its parking lot so its store will look successful. 
D) work with the local bottler to move products that are close to their expiration dates. 
E) help stimulate the local economy and generate good will with its customers. 
A) drive its competition out of business. 
B) attract customers in hopes they will buy other products as well. 
C) fill its parking lot so its store will look successful. 
D) work with the local bottler to move products that are close to their expiration dates. 
E) help stimulate the local economy and generate good will with its customers.

Question 4

Which of the following is a form of dynamic pricing?

Accepted Answer

A) odd-even pricing 
B) yield management pricing 
C) above-,at-,and below-market pricing 
D) target pricing 
E) cost-plus pricing 
A) odd-even pricing 
B) yield management pricing 
C) above-,at-,and below-market pricing 
D) target pricing 
E) cost-plus pricing

Question 5

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Accepted Answer

A) $520 
B) $1,040 
C) $1,880 
D) $2,080 
E) $10,000 
A) $520 
B) $1,040 
C) $1,880 
D) $2,080 
E) $10,000

Question 6

Allowances,like discounts,refer to

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 7

What is the critical assumption when using target profit pricing?

Accepted Answer

A) a higher average price will usually cause the demand to fall 
B) a higher average price will always cause the demand to fall 
C) profit is relative to the current value of the dollar so this form of pricing is extremely risky 
D) a higher average price will not cause the demand to fall 
E) if the average price is increased,all a firm's competitors will do the same 
A) a higher average price will usually cause the demand to fall 
B) a higher average price will always cause the demand to fall 
C) profit is relative to the current value of the dollar so this form of pricing is extremely risky 
D) a higher average price will not cause the demand to fall 
E) if the average price is increased,all a firm's competitors will do the same

Question 8

Marginal analysis refers to

Accepted Answer

A) a continuing,concise trade-off of incremental costs against incremental revenues. 
B) the change in total cost that results from producing and marketing one additional unit of a product. 
C) a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. 
D) a continuing concise trade-off of incremental ROI and incremental ROA. 
E) a technique that analyzes the relationship between revenues,profit,and market share relative to changes in market growth rates. 
A) a continuing,concise trade-off of incremental costs against incremental revenues. 
B) the change in total cost that results from producing and marketing one additional unit of a product. 
C) a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. 
D) a continuing concise trade-off of incremental ROI and incremental ROA. 
E) a technique that analyzes the relationship between revenues,profit,and market share relative to changes in market growth rates.

Question 9

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 10

The acronym "FOB" stands for __________.

Accepted Answer

A) freight on board 
B) free on board 
C) freight of buyer 
D) forward onto buyer 
E) freight owner bonus 
A) freight on board 
B) free on board 
C) freight of buyer 
D) forward onto buyer 
E) freight owner bonus

Question 11

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 12

It is relatively easy to measure the incremental cost of a new advertising campaign;what is not as easy is

Accepted Answer

A) measuring the extra fixed cost involved. 
B) measuring the extra variable cost involved. 
C) measuring the incremental revenue generated by the new advertising campaign. 
D) determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself. 
E) determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form. 
A) measuring the extra fixed cost involved. 
B) measuring the extra variable cost involved. 
C) measuring the incremental revenue generated by the new advertising campaign. 
D) determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself. 
E) determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form.

Question 13

A critical assumption when using target profit pricing is that

Accepted Answer

A) a higher average price will not cause the demand for a product to fall. 
B) a higher average price will cause the demand for a product to rise. 
C) a higher average price will always cause the demand for a product to fall. 
D) this form of pricing is extremely risky because profit is tied to the current value of the dollar. 
E) being first is essential if you increase your average price since all of your competitors will do the same. 
A) a higher average price will not cause the demand for a product to fall. 
B) a higher average price will cause the demand for a product to rise. 
C) a higher average price will always cause the demand for a product to fall. 
D) this form of pricing is extremely risky because profit is tied to the current value of the dollar. 
E) being first is essential if you increase your average price since all of your competitors will do the same.

Question 14

What is experience curve pricing and how does it relate to marketing strategies?

Accepted Answer

Experience curve pricing is based on the

Question 15

Which one of the following statements regarding bundle pricing is most accurate?

Accepted Answer

A) Bundle pricing is intended to benefit the consumer,not the seller. 
B) Bundle pricing is really "bundle packaging" since the price charged is for two or more of the same products that are shrink-wrapped together. 
C) Bundle pricing is often associated with a skimming strategy. 
D) Bundle pricing often provides a lower total cost to buyers and lower marketing costs to sellers. 
E) Bundle pricing is based on the idea that consumers value the individual items more than they value the group contained in the package. 
A) Bundle pricing is intended to benefit the consumer,not the seller. 
B) Bundle pricing is really "bundle packaging" since the price charged is for two or more of the same products that are shrink-wrapped together. 
C) Bundle pricing is often associated with a skimming strategy. 
D) Bundle pricing often provides a lower total cost to buyers and lower marketing costs to sellers. 
E) Bundle pricing is based on the idea that consumers value the individual items more than they value the group contained in the package.

Question 16

Consider the Toro ad above.What type of discount would Toro MOST LIKELY offer its channel members to carry and sell its riding lawn mowers during the winter months?

Accepted Answer

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

Question 17

In some cases,manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Accepted Answer

A) progressively higher markup percentages 
B) different markup percentages depending how long the item remains on their shelves 
C) above-,at-,or below-market pricing 
D) approximately the same markup percentages 
E) elasticity of demand pricing calculations 
A) progressively higher markup percentages 
B) different markup percentages depending how long the item remains on their shelves 
C) above-,at-,or below-market pricing 
D) approximately the same markup percentages 
E) elasticity of demand pricing calculations

Question 18

Target return-on-investment (ROI)is frequently used by

Accepted Answer

A) contractors. 
B) public utilities. 
C) business-to-business markets. 
D) supermarkets. 
E) small privately owned firms. 
A) contractors. 
B) public utilities. 
C) business-to-business markets. 
D) supermarkets. 
E) small privately owned firms.

Question 19

A skimming pricing policy is likely to be most effective when

Accepted Answer

A) consumers tend to be price sensitive. 
B) it will be easier to set measurable sales unit goals. 
C) a lower price will significantly lower fixed costs. 
D) consumers perceive your product to be similar to other products on the market. 
E) customers are willing to buy immediately at the high initial price. 
A) consumers tend to be price sensitive. 
B) it will be easier to set measurable sales unit goals. 
C) a lower price will significantly lower fixed costs. 
D) consumers perceive your product to be similar to other products on the market. 
E) customers are willing to buy immediately at the high initial price.

Question 20

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world,would probably use which competition-oriented pricing approach?

Accepted Answer

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

Exam 14: Arriving at the Final Price

The __________ is the ratio of profit to the investment used to earn that profit.

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

When Kroger,a national supermarket chain,uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29),it is attempting to

Which of the following is a form of dynamic pricing?

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Allowances,like discounts,refer to

What is the critical assumption when using target profit pricing?

Marginal analysis refers to

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

The acronym "FOB" stands for __________.

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

It is relatively easy to measure the incremental cost of a new advertising campaign;what is not as easy is

A critical assumption when using target profit pricing is that

What is experience curve pricing and how does it relate to marketing strategies?

Which one of the following statements regarding bundle pricing is most accurate?

Consider the Toro ad above.What type of discount would Toro MOST LIKELY offer its channel members to carry and sell its riding lawn mowers during the winter months?

In some cases,manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Target return-on-investment (ROI)is frequently used by

A skimming pricing policy is likely to be most effective when

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world,would probably use which competition-oriented pricing approach?

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility in 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 to Connect With Consumers

Personal Selling and Sales Management

Implementing Interactive and Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Building an Effective Marketing Plan

Financial Aspects of Marketing

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