Question 1

With cost-oriented approaches,a price setter stresses the cost side of the pricing problem,not the __________ side.

Accepted Answer

A) shareholder equity 
B) income 
C) service 
D) supply 
E) demand 
A) shareholder equity 
B) income 
C) service 
D) supply 
E) demand

Question 2

Which of the following statements regarding a trade-in allowance is most accurate?

Accepted Answer

A) A trade-in allowance is a noncash exchange of one product for another of equal or lesser value. 
B) A trade-in allowance is an effective way to lower the price a buyer has to pay without formally reducing the list price. 
C) A trade-in allowance is a cash-back payment when a more expensive item is replaced with a less expensive one. 
D) A trade-in allowance is the return of money based on proof of purchase. 
E) A trade-in allowance is a cash payment to a retailer for extra in-store support or special featuring of the brand. 
A) A trade-in allowance is a noncash exchange of one product for another of equal or lesser value. 
B) A trade-in allowance is an effective way to lower the price a buyer has to pay without formally reducing the list price. 
C) A trade-in allowance is a cash-back payment when a more expensive item is replaced with a less expensive one. 
D) A trade-in allowance is the return of money based on proof of purchase. 
E) A trade-in allowance is a cash payment to a retailer for extra in-store support or special featuring of the brand.

Question 3

Larry's Lawn Care allows customers to use a credit card for purchases.Larry pays 4 percent of the sale to the credit card company.To promote more business,Larry decides to offer a lower price to customers paying cash-that price being 3 percent less than the standard list price.Larry is giving his customers a(n)

Accepted Answer

A) functional discount. 
B) trade-in allowance. 
C) promotional allowance. 
D) cash discount. 
E) everyday low price. 
A) functional discount. 
B) trade-in allowance. 
C) promotional allowance. 
D) cash discount. 
E) everyday low price.

Question 4

When establishing product line pricing,the lowest-priced item is typically positioned as

Accepted Answer

A) the youngest product item in the line. 
B) the smallest selling product item in the line. 
C) the lost-cost item in the line in terms of quality and features. 
D) the profit leader for the rest of the product line. 
E) the traffic builder designed to capture the attention of first-time buyers. 
A) the youngest product item in the line. 
B) the smallest selling product item in the line. 
C) the lost-cost item in the line in terms of quality and features. 
D) the profit leader for the rest of the product line. 
E) the traffic builder designed to capture the attention of first-time buyers.

Question 5

The price for Nintendo's Wii video game console was likely insufficient to cover its fixed and variable costs.However,the price of its video games was set high enough to cover its video game console's loss and deliver a handsome profit for the entire Nintendo product line.This example illustrates Nintendo's use of

Accepted Answer

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

Question 6

Marginal analysis might take the form of such questions as,"Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Accepted Answer

A) as long as a marketing action breaks even,the action is worth taking. 
B) expected incremental revenues from pricing and other marketing actions must more than offset incremental costs. 
C) you "don't rock the boat" if your program is making a profit;"leave well enough alone." 
D) if you are not willing to take risks,even if the numbers tell you otherwise,your business will ultimately fail. 
E) marketing and finance are two different animals: "If it feels right in your gut…go for it." 
A) as long as a marketing action breaks even,the action is worth taking. 
B) expected incremental revenues from pricing and other marketing actions must more than offset incremental costs. 
C) you "don't rock the boat" if your program is making a profit;"leave well enough alone." 
D) if you are not willing to take risks,even if the numbers tell you otherwise,your business will ultimately fail. 
E) marketing and finance are two different animals: "If it feels right in your gut…go for it."

Question 7

Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

Accepted Answer

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

Question 8

Manufacturers of generic brands use which method of competition-oriented pricing?

Accepted Answer

A) penetration pricing 
B) below-market pricing 
C) loss-leader pricing 
D) prestige pricing 
E) skimming pricing 
A) penetration pricing 
B) below-market pricing 
C) loss-leader pricing 
D) prestige pricing 
E) skimming pricing

Question 9

Lady Marion Seafood,Inc.sells 5-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a 5-pound package of salmon?

Accepted Answer

A) $25.00 
B) $33.94 
C) $40.00 
D) $48.00 
E) $61.25 
A) $25.00 
B) $33.94 
C) $40.00 
D) $48.00 
E) $61.25

Question 10

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

Accepted Answer

A) target profit pricing. 
B) standard markup pricing. 
C) target return-on-investment pricing. 
D) customary pricing. 
E) everyday low pricing. 
A) target profit pricing. 
B) standard markup pricing. 
C) target return-on-investment pricing. 
D) customary pricing. 
E) everyday low pricing.

Question 11

The prices for all furniture sold at American Furniture Warehouse end in $9.99,such as $599.99,$899.99,etc.American Furniture Warehouse uses

Accepted Answer

A) odd-even pricing. 
B) dynamic pricing. 
C) price lining. 
D) bundle pricing. 
E) product line pricing. 
A) odd-even pricing. 
B) dynamic pricing. 
C) price lining. 
D) bundle pricing. 
E) product line pricing.

Question 12

Two of the three types of adjustments to list or quoted price are

Accepted Answer

A) profit-oriented and marginal adjustments. 
B) fixed- price and dynamic price adjustments. 
C) discounts and marginal adjustments. 
D) discounts and allowances. 
E) incremental costs and incremental revenues. 
A) profit-oriented and marginal adjustments. 
B) fixed- price and dynamic price adjustments. 
C) discounts and marginal adjustments. 
D) discounts and allowances. 
E) incremental costs and incremental revenues.

Question 13

Price fixing refers to

Accepted Answer

A) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
B) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
C) the practice of charging different prices to different buyers for goods of like grade and quality. 
D) a conspiracy among firms to set prices for a product. 
E) a seller's requirement that the purchaser of one product also buy another product in the line. 
A) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
B) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
C) the practice of charging different prices to different buyers for goods of like grade and quality. 
D) a conspiracy among firms to set prices for a product. 
E) a seller's requirement that the purchaser of one product also buy another product in the line.

Question 14

A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world,costing over 1.5 million dollars.This is an example of a __________ strategy.

Accepted Answer

A) penetration pricing 
B) target pricing 
C) bundle pricing 
D) loss leader pricing 
E) prestige pricing 
A) penetration pricing 
B) target pricing 
C) bundle pricing 
D) loss leader pricing 
E) prestige pricing

Question 15

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1)demand-oriented; (2)cost-oriented; (3)profit-oriented;and (4)__________ approaches.

Accepted Answer

A) revenue-oriented 
B) distribution-oriented 
C) stakeholder-oriented 
D) competition-oriented 
E) cause-oriented 
A) revenue-oriented 
B) distribution-oriented 
C) stakeholder-oriented 
D) competition-oriented 
E) cause-oriented

Question 16

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

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

Question 17

The reward a manufacturer gives to wholesalers and retailers for marketing functions they will perform in the future is referred to as __________.

Accepted Answer

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

Question 18

A 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 19

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Accepted Answer

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

Question 20

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Accepted Answer

A) Using price differentials when price differences are given on the basis of other family businesses. 
B) Using price differentials when charging different prices to different buyers for goods of like grade or quality. 
C) When price differences are quoted to selected buyers in good faith to meet competitors' prices and are not intended to injure competition. 
D) Using price differentials when charging different prices on the basis of religious affiliation. 
E) When price differences result from changing market conditions,avoiding obsolescence of seasonal merchandise,including perishables,or closing out sales. 
A) Using price differentials when price differences are given on the basis of other family businesses. 
B) Using price differentials when charging different prices to different buyers for goods of like grade or quality. 
C) When price differences are quoted to selected buyers in good faith to meet competitors' prices and are not intended to injure competition. 
D) Using price differentials when charging different prices on the basis of religious affiliation. 
E) When price differences result from changing market conditions,avoiding obsolescence of seasonal merchandise,including perishables,or closing out sales.

Exam 14: Arriving at the Final Price

With cost-oriented approaches,a price setter stresses the cost side of the pricing problem,not the __________ side.

Which of the following statements regarding a trade-in allowance is most accurate?

When establishing product line pricing,the lowest-priced item is typically positioned as

Marginal analysis might take the form of such questions as,"Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

Manufacturers of generic brands use which method of competition-oriented pricing?

Lady Marion Seafood,Inc.sells 5-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a 5-pound package of salmon?

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

The prices for all furniture sold at American Furniture Warehouse end in $9.99,such as $599.99,$899.99,etc.American Furniture Warehouse uses

Two of the three types of adjustments to list or quoted price are

Price fixing refers to

A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world,costing over 1.5 million dollars.This is an example of a __________ strategy.

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1)demand-oriented; (2)cost-oriented; (3)profit-oriented;and (4)__________ approaches.

A penetration pricing policy is MOST LIKELY to be effective when

The reward a manufacturer gives to wholesalers and retailers for marketing functions they will perform in the future is referred to as __________.

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

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

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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