Question 1

A major problem associated with a retail policy of price lining is:

Accepted Answer

A)  it increases the probability of cognitive dissonance. 
B)  it complicates a consumer's buying decisions. 
C)  what to do when merchandise costs increase. 
D)  that it is not useful when trade-ins are involved. 
E)  the policy cannot be used with demand-based pricing.

Question 2

_____ is a form of price competition aimed at improving the ratio of a product's benefits to its price and related costs.

Accepted Answer

A)  Fair-trade pricing 
B)  Psychological pricing 
C)  Cost-plus pricing 
D)  Penetration pricing 
E)  Value pricing

Question 3

The Consumer Goods Pricing Act of 1975:

Accepted Answer

A)  did away with fair-trade laws. 
B)  made price discrimination illegal. 
C)  required manufacturers to provide suggested retail prices for all their products. 
D)  banned loss leaders. 
E)  prohibited price wars.

Question 4

Under the Robinson-Patman Act, price differentials may be allowed if:

Accepted Answer

A)  the differentials do not exceed differences in the cost of manufacture, sales, or delivery of the product. 
B)  the product is physically deteriorating. 
C)  the seller of the product is having a going-out-of-business sale. 
D)  the product is on the verge of obsolescence. 
E)  any of the above occur.

Question 5

Which of the following statements about the Robinson-Patman Act is True?

Accepted Answer

A)  According to the act, quantity discounts are the only kind of discount that is always permissible in interstate trade. 
B)  Under this act, the buyer is as guilty as the seller if the buyer knowingly receives an unlawful price discrimination. 
C)  The act only applies to intrastate activities. 
D)  All price differentials are illegal according to this act. 
E)  The act applies to sales made to middlemen and to ultimate consumers.

Question 6

A manufacturer of laminated posters sells its posters to retailers for $14. If a retailer buys between 25 and 50 posters in any 6-month period, the price is $12 per poster. If a retailer buys more than 50 posters in a 6-month period, the price is $11 a poster. The poster manufacturer is offering a _____ discount.

Accepted Answer

A)  seasonal 
B)  cash 
C)  noncumulative quantity 
D)  trade 
E)  cumulative quantity

Question 7

A tactic is a broad plan of action by which an organization intends to reach its goal.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an example of how a jewelry store could use nonprice competition?

Accepted Answer

A)  It could provide free cleaning for all rings it sells. 
B)  It could offer a 50-percent off sale on all costume jewelry. 
C)  It could advertise that its price on Mexican silver jewelry is the lowest in town. 
D)  It could hire salespeople to work on commission and reduce prices by ten percent. 
E)  It could give a quantity discounts to customers who purchased more than two gold necklaces.

Question 9

Mike is the financial officer for a company that manufactures lawn furniture from recycled materials. Cash flow has become a problem for the company, so Mike has decided to offer a 5 percent discount to its middlemen who pay a bill within 10 days after its invoice date. All bills are due within 30 days of the invoice date. How should he write these terms?

Accepted Answer

A)  10/30, n/5 
B)  5/30, n/10 
C)  5/10, n/30 
D)  n/30, 5/10 
E)  n/10, 5/30

Question 10

All the clothing in the Just $8 store is priced at $8, whether it is a blouse, a skirt, or a pair of slacks. The Just $8 store uses a(n) _____ strategy.

Accepted Answer

A)  single-price 
B)  odd pricing 
C)  list pricing 
D)  cash-discount 
E)  cost-plus pricing

Question 11

A _____ begins when one firm decreases its price in an effort to increase its sales volume and/or its market share.

Accepted Answer

A)  loss leader dispute 
B)  distribution channel conflict 
C)  discount conflict 
D)  loss of industry synergy 
E)  price war

Question 12

If Pattie saw an ad for a life-size, museum-quality human skeleton that indicated its price was slightly higher in Alaska and Hawaii, it would mean its manufacturer was probably using zone-delivered pricing.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a type of geographic pricing strategy?

Accepted Answer

A)  uniform delivered pricing 
B)  zone-delivered pricing 
C)  freight-absorption pricing 
D)  FOB factory pricing 
E)  all of the above

Question 14

Apple Computer Inc. introduced its computers to the Japanese market at a low introductory price to appeal to a broader segment of the market and to increase the company's market share. Apple Computers used _____ pricing.

Accepted Answer

A)  market-skimming 
B)  market-absorption 
C)  market-penetration 
D)  cost-plus 
E)  value-added

Question 15

In order to offset the competitive disadvantage of FOB factory pricing, Tate Marble Company in Georgia could use _____ pricing to ship its products to building contractors and furniture restorers in any part of the United States.

Accepted Answer

A)  uniform delivered 
B)  freight-absorption 
C)  market-skimming 
D)  zone-delivered 
E)  market-penetration

Question 16

Many marketing executives prefer nonprice competition rather than price competition because:

Accepted Answer

A)  a seller has more potential selling features with which to hold customer loyalty. 
B)  a seller can move up or down on the same demand curve rather than worrying about a shift in demand. 
C)  price wars are more prevalent in nonprice competition. 
D)  price competition is usually illegal. 
E)  there is more price flexibility in nonprice competition.

Question 17

The strategy of market-skimming pricing is especially suited for new products because:

Accepted Answer

A)  markets cannot be effectively segmented on an income basis. 
B)  price competition is typically most important in the introductory stage of the product life cycle. 
C)  high initial prices can keep demand from exceeding supply. 
D)  profits are more important than recouping costs. 
E)  all of the above are True.

Question 18

Due to a number of layoffs in the technology industry, there are many technology experts who are unemployed. Some saw an opportunity to become a third-party suppliers of tech support, especially after they became aware that even handling a small problem for a major company can cost $20. One of the new services is called GeekHelp. When the service was introduced to the market, the entrepreneur who started the company announced it has the cheapest per-minute rate of any of the tech support companies. Another one called Ask Dr. Tech charges a fee of $299 per year to provide tech support for a small business. Because some consumers cannot explain what is wrong with their computers beyond the fact it will not work, GeekXpress will make house calls to organization members who pay a fee of $35 per month. When it added house calls to its services, it did not raise its prices.
-What type of pricing strategy did GeekHelp use when it introduced its tech support service?

Accepted Answer

A)  cost-plus 
B)  marketing-skimming 
C)  market-absorption 
D)  marginal-cost 
E)  market-penetration

Question 19

A cumulative quantity discount is advantageous to the seller because it often ties customers more closely to the seller's firm.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a direct form of price competition?

Accepted Answer

A)  Family Dollar Store carries the same Palmolive dishwashing detergent as Triangle Supermarket, but at a 15 percent lower price. 
B)  Piggly-Wiggly supermarkets pay double the face value of any coupons used in their stores. 
C)  A retailer closes its store and opens an Internet retailing site to reduce its fixed costs. 
D)  McRae's department store runs a 50-percent-off sale on its Healthtex toddler clothes. 
E)  Office Depot offers free software with every computer purchased.

Exam 13: Pricing Strategies

A major problem associated with a retail policy of price lining is:

_____ is a form of price competition aimed at improving the ratio of a product's benefits to its price and related costs.

The Consumer Goods Pricing Act of 1975:

Under the Robinson-Patman Act, price differentials may be allowed if:

Which of the following statements about the Robinson-Patman Act is True?

A tactic is a broad plan of action by which an organization intends to reach its goal.

Which of the following is an example of how a jewelry store could use nonprice competition?

All the clothing in the Just $8 store is priced at $8, whether it is a blouse, a skirt, or a pair of slacks. The Just $8 store uses a(n) _____ strategy.

A _____ begins when one firm decreases its price in an effort to increase its sales volume and/or its market share.

If Pattie saw an ad for a life-size, museum-quality human skeleton that indicated its price was slightly higher in Alaska and Hawaii, it would mean its manufacturer was probably using zone-delivered pricing.

Which of the following is a type of geographic pricing strategy?

Apple Computer Inc. introduced its computers to the Japanese market at a low introductory price to appeal to a broader segment of the market and to increase the company's market share. Apple Computers used _____ pricing.

In order to offset the competitive disadvantage of FOB factory pricing, Tate Marble Company in Georgia could use _____ pricing to ship its products to building contractors and furniture restorers in any part of the United States.

Many marketing executives prefer nonprice competition rather than price competition because:

The strategy of market-skimming pricing is especially suited for new products because:

A cumulative quantity discount is advantageous to the seller because it often ties customers more closely to the seller's firm.

Which of the following is a direct form of price competition?