Question 1

When a retailer puts a sign on a product that says "reduced" or a retailer puts a sign on a product that says "compare to XXX at $10.00 more," the retailer is encouraging what kind of pricing psychology for its shoppers?

Accepted Answer

A) Reference pricing 
B) Price cues 
C) Price leadership 
D) Going-rate pricing 
E) None of the above

Question 2

Many consumers use price as an indicator of quality and value.

Accepted Answer

A) True 
 B)False

Question 3

Value pricing is not a matter of simply setting lower prices;it is a matter of reengineering the company's operations to become a low-cost producer without sacrificing quality and lowering prices significantly to attract a large number of ________ customers.

Accepted Answer

A) expert 
B) price-orientated 
C) value-conscious 
D) product-orientated 
E) none of the above

Question 4

If demand hardly changes with a small change in price,we say that the demand is ________.

Accepted Answer

A) equal 
B) marginal 
C) inelastic 
D) elastic 
E) none of the above

Question 5

Companies often adjust their basic price to accommodate differences in customers,products,locations,and so forth.Examples of these differentiated prices include all of the following EXCEPT ________.

Accepted Answer

A) new-product pricing 
B) customer-segment pricing 
C) product-form pricing 
D) channel pricing 
E) none of the above

Question 6

In markets that are characterized by products that are highly homogenous,how should a firm react to a competitor's price decline?

Accepted Answer

A) Reduce product performance levels. 
B) Enhance services. 
C) Reduce services. 
D) Reduce product characteristics. 
E) Augment the product.

Question 7

The final price charged by the company does not necessarily have to take into account the brand's quality and advertising relative to competition.

Accepted Answer

A) True 
 B)False

Question 8

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

Accepted Answer

A) True 
 B)False

Question 9

For price discrimination to work,certain conditions must exist.List and briefly explain these conditions.

Accepted Answer

The answer of For price discrimination to work,certain conditions must...

Question 10

Prior research has shown that although consumers may have fairly good knowledge of the range of prices involved,surprisingly few can recall specific prices of products accurately.When examining products,consumers often employ reference prices.List the possible prices consumers use as their "reference."

Accepted Answer

The answer of Prior research has shown that although consumers...

Question 11

A well-designed and marketed product can command a price premium and reap big profits.

Accepted Answer

A) True 
 B)False

Question 12

The formula for the break-even volume calculation is ________.

Accepted Answer

A) (price - variable costs)/fixed costs 
B) fixed costs/(price - variable costs) 
C) fixed costs/unit sales 
D) fixed costs/(variable costs - price) 
E) fixed costs X (variable costs - price)

Question 13

In ________ pricing,the company decides how to price its products to different customers in different locations and countries.

Accepted Answer

A) specialty 
B) geographical 
C) offset 
D) regional 
E) none of the above

Question 14

In responding to a competitor's price cut,a firm in a nonhomogeneous market has more latitude and should consider what four issues before responding?

Accepted Answer

The answer of In responding to a competitor's price cut,a...

Question 15

________ communicates to the market the company's intended value positioning of its product or brand.

Accepted Answer

A) Packaging 
B) Price 
C) Place 
D) Promotion 
E) Product features

Question 16

If consumers were largely indifferent to a $0.10 increase in the price of a gallon of milk,the rise can be said to fall within customers' ________.

Accepted Answer

A) price indifference band 
B) price elasticity zone 
C) price inelasticity range 
D) coefficient of ambivalence 
E) none of the above

Question 17

Identify and discuss the six steps of the pricing procedure.

Accepted Answer

The answer of Identify and discuss the six steps of...

Question 18

IKEA and Southwest Airlines are among the best practitioners of value pricing-win loyal customers by charging a fairly low price for a high-quality offering.Why is value pricing not a matter of simply lowering prices?

Accepted Answer

The answer of IKEA and Southwest Airlines are among the...

Question 19

All products have experienced heavy discounting in recent years.

Accepted Answer

A) True 
 B)False

Question 20

Traditionally,________ has operated as the major determinant of buyer choice.

Accepted Answer

A) promotion 
B) packaging 
C) placement 
D) distribution 
E) price

Exam 14: Developing Pricing Strategies and Programs

When a retailer puts a sign on a product that says "reduced" or a retailer puts a sign on a product that says "compare to XXX at $10.00 more," the retailer is encouraging what kind of pricing psychology for its shoppers?

Many consumers use price as an indicator of quality and value.

Value pricing is not a matter of simply setting lower prices;it is a matter of reengineering the company's operations to become a low-cost producer without sacrificing quality and lowering prices significantly to attract a large number of ________ customers.

If demand hardly changes with a small change in price,we say that the demand is ________.

Companies often adjust their basic price to accommodate differences in customers,products,locations,and so forth.Examples of these differentiated prices include all of the following EXCEPT ________.

In markets that are characterized by products that are highly homogenous,how should a firm react to a competitor's price decline?

The final price charged by the company does not necessarily have to take into account the brand's quality and advertising relative to competition.

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

For price discrimination to work,certain conditions must exist.List and briefly explain these conditions.

A well-designed and marketed product can command a price premium and reap big profits.

The formula for the break-even volume calculation is ________.

In ________ pricing,the company decides how to price its products to different customers in different locations and countries.

In responding to a competitor's price cut,a firm in a nonhomogeneous market has more latitude and should consider what four issues before responding?

________ communicates to the market the company's intended value positioning of its product or brand.

If consumers were largely indifferent to a $0.10 increase in the price of a gallon of milk,the rise can be said to fall within customers' ________.

Identify and discuss the six steps of the pricing procedure.

IKEA and Southwest Airlines are among the best practitioners of value pricing-win loyal customers by charging a fairly low price for a high-quality offering.Why is value pricing not a matter of simply lowering prices?

All products have experienced heavy discounting in recent years.

Traditionally,________ has operated as the major determinant of buyer choice.