Question 1

The best response to competitors' price changes is to panic and lower prices in order to regain market share.

Accepted Answer

A) True 
 B)False  False

Question 2

A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it ________.

Accepted Answer

A)   rolls out an improved product.
B)   changes styles.
C)   needs to increase bottom line results.
D)   enters bids on new contract work.
E)   raises prices due to cost escalation. D

Question 3

Today's companies try to adapt their offers and terms to different buyers. ________ accounting tries to identify the real costs associated with serving each customer. It allocates indirect costs to the activities that use them and are tagged back to each customer.

Accepted Answer

A)   Target costing
B)   Activity-based cost
C)   Direct product profitability
D)   Experience cost
E)   Cost accounting B

Question 4

As the marketing manager for a "brand leader" in your industry, you noticed that a competitor has just reduced his prices by 15 percent on his number one selling product. In a memo to your boss, you must outline how (or if you wish to) respond to this latest threat. In creating your letter, you outline three possible response alternatives that are available to you. These three responses are?

Accepted Answer

The answer of As the marketing manager for a "brand...

Question 5

If the company has determined that the price for its product is "less elastic," then one or more of the following conditions must exist. List these conditions for a product to have an inelastic demand.

Accepted Answer

The answer of If the company has determined that the...

Question 6

Some brands adopt scarcity as a means to signify quality and justify

Accepted Answer

A)   EDLP.
B)   "9" endings.
C)   premium pricing.
D)   discounting.
E)   value pricing.

Question 7

Your company has recently sold its resin producing plant in India to a local concern. As part of the sales price, your company agrees to accept as partial payment the production of the resin at an agreed upon price for six years. This is an example of what type of countertrade?

Accepted Answer

The answer of Your company has recently sold its resin...

Question 8

Companies price their products in a number of ways. Small companies prices are set by the boss, in larger companies, pricing is handled by division and product-line managers. In industries where price is a key factor, companies often establish a ________ department reporting to other internal departments.

Accepted Answer

A)   financial
B)   marketing
C)   pricing
D)   sales
E)   distribution

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Manufacturing costs such as rent, utilities, interest expense, and some salaries are considered ________ and these costs do not vary with the production or sale of the item.

Accepted Answer

A)   overhead
B)   variable
C)   division overhead
D)   corporate overhead
E)   fixed costs

Question 11

Your competitor has reduced prices on his entire line of products. You can interpret these price cuts by assuming that your competitor is trying to gain market share, that the competitor is doing poorly and wants to increase revenue quickly, and that

Accepted Answer

A)   the competitor is matching your price change.
B)   the competitor wishes to end price/promotion wars.
C)   the competitor wants you to reduce your prices below his.
D)   the competitor wants the whole industry to reduce prices.
E)   price is no longer a competitive advantage.

Question 12

In attempt to "rein in" the continued discounting by the sales force, you implement a net price analysis program to arrive at the "real price" of your products. Describe the steps necessary to implement such a program.

Accepted Answer

The answer of In attempt to "rein in" the continued...

Question 13

Evian prices a 1.4-litre bottle of its mineral water at $.200 and 50 mL of the same water in a moisturizer spray at $6.00. With which of the following types of pricing are different versions of the product priced differently but not proportionately to their respective costs?

Accepted Answer

A)   customer-segment pricing
B)   channel pricing
C)   location pricing
D)   product-form pricing
E)   new product pricing

Question 14

Following the industry average, your firm accepts a 20 percent markup on sales. If the unit cost of your product is $20.00 then the retail price would be

Accepted Answer

A)   $44.00.
B)   $25.00.
C)   $24.00.
D)   $22.00.
E)   $40.00.

Question 15

Research on reference prices has found that "unpleasant surprises can have a ________ impact on purchase likelihood than pleasant surprises.

Accepted Answer

A)   greater
B)   more diminished
C)   less significant
D)   brand switching
E)   lesser

Question 16

One marketing strategy that can be used to avoid raising prices is to shrink the amount of product.

Accepted Answer

A) True 
 B)False

Question 17

The quantity demanded of your firm's product increased only 5 percent when the price of each unit was reduced by 33 percent. This is an example of what type of demand?

Accepted Answer

A)   unitary
B)   supply
C)   coefficient
D)   inelastic
E)   elastic

Question 18

Market-skimming prices make sense under which of the following conditions?

Accepted Answer

A)   The unit costs of producing a small number of units is low.
B)   The average price communicates average value.
C)   The product is a "me-too" and contains no new technology or points of difference.
D)   An insufficient number of buyers have a high current demand.
E)   The high initial price blocks competition from entering the market

Question 19

Activity-based cost is just another method to distribute attributable costs across the product line.

Accepted Answer

A) True 
 B)False

Question 20

In exchange for the distribution of your products overseas, your firm has accepted to receive a shipment of imported products in trade. This is an example of what type of countertrade?

Accepted Answer

A)   allowance
B)   buyback agreement
C)   compensation deal
D)   barter
E)   offset

Exam 14: Developing Pricing Strategies and Programs

The best response to competitors' price changes is to panic and lower prices in order to regain market share.

A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it ________.

Today's companies try to adapt their offers and terms to different buyers. ________ accounting tries to identify the real costs associated with serving each customer. It allocates indirect costs to the activities that use them and are tagged back to each customer.

If the company has determined that the price for its product is "less elastic," then one or more of the following conditions must exist. List these conditions for a product to have an inelastic demand.

Some brands adopt scarcity as a means to signify quality and justify

Your company has recently sold its resin producing plant in India to a local concern. As part of the sales price, your company agrees to accept as partial payment the production of the resin at an agreed upon price for six years. This is an example of what type of countertrade?

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

Manufacturing costs such as rent, utilities, interest expense, and some salaries are considered ________ and these costs do not vary with the production or sale of the item.

Your competitor has reduced prices on his entire line of products. You can interpret these price cuts by assuming that your competitor is trying to gain market share, that the competitor is doing poorly and wants to increase revenue quickly, and that

In attempt to "rein in" the continued discounting by the sales force, you implement a net price analysis program to arrive at the "real price" of your products. Describe the steps necessary to implement such a program.

Evian prices a 1.4-litre bottle of its mineral water at $.200 and 50 mL of the same water in a moisturizer spray at $6.00. With which of the following types of pricing are different versions of the product priced differently but not proportionately to their respective costs?

Following the industry average, your firm accepts a 20 percent markup on sales. If the unit cost of your product is $20.00 then the retail price would be

Research on reference prices has found that "unpleasant surprises can have a ________ impact on purchase likelihood than pleasant surprises.

One marketing strategy that can be used to avoid raising prices is to shrink the amount of product.

The quantity demanded of your firm's product increased only 5 percent when the price of each unit was reduced by 33 percent. This is an example of what type of demand?

Market-skimming prices make sense under which of the following conditions?

Activity-based cost is just another method to distribute attributable costs across the product line.

In exchange for the distribution of your products overseas, your firm has accepted to receive a shipment of imported products in trade. This is an example of what type of countertrade?