Question 1

A company placing an order from the Lab Safety Supply catalog is instructed to add $25 to the total cost of the order to pay for shipping regardless of the buyer's location. Which method of shipping does this catalog supplier use?

Accepted Answer

A) FOB origin pricing 
B) multiple-zone pricing 
C) freight absorption pricing 
D) single-zone pricing 
E) basing-point pricing

Question 2

Wrigley recently introduced a new flavor of Orbit brand sugar-free chewing gum-mint mojito. The introductory price was low so that it quickly created loyal customers for the flavor. In this example, Wrigley used

Accepted Answer

A) skimming pricing. 
B) penetration pricing. 
C) price lining. 
D) odd-even pricing. 
E) loss-leader pricing.

Question 3

Price deals that mislead consumers fall into the category of

Accepted Answer

A) predatory pricing. 
B) deceptive pricing. 
C) price discrimination. 
D) caveat emptor. 
E) resale price maintenance.

Question 4

Experience curve pricing is considered to be a __________ approach to pricing.

Accepted Answer

A) demand-oriented 
B) cost-oriented 
C) profit-oriented 
D) competition-oriented 
E) service-oriented

Question 5

The purpose of a cash discount is to

Accepted Answer

A) reward retailers for making large quantity purchases. 
B) encourage purchasing items during periods of low demand. 
C) prevent competitors from obtaining shelf space. 
D) counteract the introduction of a new product by a competitor. 
E) encourage retailers to pay their bills promptly.

Question 6

When a firm offers a very low price on a product to attract customers to a store and once in the store the customer is persuaded to purchase a higher-priced item, the practice is referred to as

Accepted Answer

A) predatory pricing. 
B) deceptive pricing. 
C) price discrimination. 
D) caveat emptor. 
E) bait and switch.

Question 7

Yield management pricing is a form of

Accepted Answer

A) target pricing. 
B) loss-leader pricing. 
C) dynamic pricing. 
D) customary pricing. 
E) price lining.

Question 8

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as

Accepted Answer

A) cost-plus pricing. 
B) customary pricing. 
C) standard markup pricing. 
D) loss-leader pricing. 
E) target profit pricing.

Question 9

Which of the following statements about everyday low pricing (EDLP) is most accurate?

Accepted Answer

A) EDLP encourages manufacturer allowances. 
B) Supermarkets have hailed EDLP as the most effective form of value pricing. 
C) Some argue that EDLP without price specials is boring for many grocery shoppers. 
D) EDLP allows supermarkets to use deeply discounted price specials. 
E) EDLP can increase average retail prices by as much as 10 percent.

Question 10

When Sherman bought gas, he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase. The convenience store was offering him a

Accepted Answer

A) trade discount. 
B) cash discount. 
C) promotional allowance. 
D) rebate. 
E) functional discount.

Question 11

Marketing two or more products in a single package price is referred to as

Accepted Answer

A) package pricing. 
B) loss-leader pricing. 
C) bundle pricing. 
D) tie-in pricing. 
E) multi-product pricing.

Question 12

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Accepted Answer

A) skimming pricing. 
B) status pricing. 
C) price lining. 
D) value pricing. 
E) prestige pricing.

Question 13

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 14

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 15

Which of the following statements about the price-setting process is most accurate?

Accepted Answer

A) When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it. 
B) Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level. 
C) Demand-oriented pricing approaches rely heavily on competitors' prices. 
D) Skimming pricing is a competition-oriented pricing strategy. 
E) Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach.

Question 16

Cost-plus-percentage-of-cost pricing refers to

Accepted Answer

A) summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price. 
B) adding a fixed percentage to the cost of all items in a specific product class. 
C) setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors. 
D) setting the price of a product or service by adding a fixed percentage to the total unit cost. 
E) charging different prices to different buyers for goods of like grade and quality.

Question 17

To reward wholesalers and retailers for marketing functions they will perform in the future, a manufacturer often gives __________ discounts.

Accepted Answer

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

Question 18

The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has declined, and mechanics are often idle. He decides to offer a promotion-a $20 off coupon for an oil change that is to be mailed to 800 households within a two-mile radius from the gas station. The cost of printing and mailing is $1,000. The normal cost of an oil change is $40. Materials and labor per oil change cost is $15. How many additional maintenance service jobs must result for the promotion to break even?

Accepted Answer

A) 25 jobs 
B) 40 jobs 
C) 50 jobs 
D) 67 jobs 
E) 200 jobs

Question 19

Discounts are reductions from the __________ that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller.

Accepted Answer

A) final price 
B) list price 
C) wholesaler's cost 
D) manufacturer's cost 
E) retailer's cost

Question 20

Which one of the following 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.

Exam 14: Arriving at the Final Price