Question 1

A dynamic pricing policy refers to

Accepted Answer

A)  setting the price of a line of products at a number of different specific pricing points. 
B)  setting the prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. 
C)  deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well. 
D)  setting different prices for products and services in real time in response to supply and demand conditions. 
E)  adding a fixed percentage to the cost of all items in a specific product class.

Question 2

Give an example of yield management pricing and explain why it is used.

Accepted Answer

The answer of Give an example of yield management pricing...

Question 3

The retail price of fax machines has decreased from over $10,000 in the early 1970s to less than $100 today. This is due in large part to

Accepted Answer

A)  skimming pricing. 
B)  prestige pricing. 
C)  odd-even pricing. 
D)  experience-curve pricing. 
E)  customary pricing.

Question 4

Which one of these 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.

Question 5

Predatory pricing is

Accepted Answer

A)  most effective in the growth stage of the product life cycle. 
B)  a popular technique preferred by online businesses. 
C)  illegal but often difficult to prosecute. 
D)  most effective in business-to-business marketing. 
E)  one of the most widely used pricing practices for professional marketers.

Question 6

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Accepted Answer

A)  above-, at-, or below-market pricing. 
B)  loss-leader pricing. 
C)  penetration pricing. 
D)  standard markup pricing. 
E)  experience-curve pricing.

Question 7

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.

Question 8

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other dishwasher on the market. Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price. Asko used

Accepted Answer

A)  prestige pricing. 
B)  price lining. 
C)  cost-plus pricing. 
D)  target pricing. 
E)  customary pricing.

Question 9

Tendollars.com offers thousands of gifts, all priced at $10. This is an example of

Accepted Answer

A)  a skimming pricing approach. 
B)  a loss-leader pricing approach. 
C)  a fixed-price policy. 
D)  a penetration pricing approach. 
E)  an everyday low pricing approach.

Question 10

Vertical price fixing refers to

Accepted Answer

A)  two or more competitors explicitly or implicitly setting prices. 
B)  the practice of charging different prices to different buyers for goods of like grade and quality. 
C)  controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price. 
D)  a conspiracy among firms to set prices for a product or service. 
E)  a seller's requirement that the purchaser of one product also buy another product in the line.

Question 11

The Robinson-Patman Act covers promotional allowances as well as discounts. To legally offer promotional allowances to buyers, the seller must do so on a(n) ________ basis to all buyers distributing the seller's products.

Accepted Answer

A)  a proportionally equal 
B)  a limited 
C)  a time-restriced 
D)  a geographical 
E)  an across-the-board

Question 12

The price the seller quotes that includes all transportation costs is referred to as

Accepted Answer

A)  inclusive transport pricing. 
B)  geomodal pricing. 
C)  uniform delivered pricing. 
D)  FOB origin pricing. 
E)  destination pricing.

Question 13

Your local instant photocopying service charges 10 cents a copy up to 25 copies, 9 cents a copy for 26 to 99 copies, and 8 cents a copy for 100 copies or more. What kind of adjustment to its list or quoted price of 10 cents per copy is the photocopying service using?

Accepted Answer

A)  experience-curve pricing 
B)  loss-leader pricing 
C)  a quantity discount 
D)  a promotional discount 
E)  everyday low pricing

Question 14

Uniform delivered pricing refers to

Accepted Answer

A)  the price the seller quotes that includes all transportation costs. 
B)  the price the seller quotes that excludes all transportation costs. 
C)  the price the seller quotes that includes a fixed allowance whereby the buyer pays all additional costs. 
D)  the price the seller quotes includes a fixed percentage of transportation costs for which it will be responsible. 
E)  the guarantee that a retailer will be charged the same transportation fee for all its outlets regardless of where they are located.

Question 15

What are three special adjustments to the list or quoted price?

Accepted Answer

The answer of What are three special adjustments to the...

Question 16

Free on board (FOB) origin pricing is

Accepted Answer

A)  a method of pricing where the price the seller sets includes all transportation costs. 
B)  a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country of origin of a product and not its destination. 
C)  the price the seller quotes that includes only the cost of loading the product onto or into a vehicle and where the loading is to occur. 
D)  a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country destination of a product and not its place of origin. 
E)  the buyer's naming the location of this loading as the seller's factory or warehouse.

Question 17

If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you would pay a total of $109.99. However, if you order the peach and apple tree together in the same order, you pay only $89.99 each. When purchasing the two trees together, what pricing strategy does Stark Bros. employ?

Accepted Answer

A)  product-line pricing 
B)  prestige pricing 
C)  price lining 
D)  discount pricing 
E)  bundle pricing

Question 18

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

Accepted Answer

The answer of There are four common approaches to selecting...

Question 19

Setting a price to achieve a profit that is a specified percentage of the sales volume is referred to as

Accepted Answer

A)  target return-on-investment pricing. 
B)  target return-on-sales pricing. 
C)  loss-leader pricing. 
D)  target pricing. 
E)  standard markup pricing.

Question 20

What type of discount would Toro, a domestic yard machinery company, most likely offer its channel members to carry and sell its riding lawn mowers during the winter?

Accepted Answer

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

Exam 14: Arriving at the Final Price