Question 1

Casual Comfort sells its catalog items using FOB-origin pricing. Who pays the freight charges?

Accepted Answer

The custom...

Question 2

Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

Accepted Answer

A)   market-skimming pricing
B)   market-penetration pricing
C)   market-segmentation pricing
D)   cost-plus pricing
E)   captive-product pricing

Question 3

In the case of services, captive product pricing is called ________ pricing.

Accepted Answer

A)   by-product
B)   optional product
C)   two-part
D)   bundle
E)   segmented

Question 4

For a market penetration-price strategy to succeed, which of the following is LEAST likely to be true?

Accepted Answer

A)   Production costs decrease as sales volume increases.
B)   A low price triggers market growth.
C)   Distribution costs decrease as sales volume increases.
D)   Low prices must inhibit competition from entering the market.
E)   The strategy can be changed quickly, to a higher-priced position, with no negative impact.

Question 5

Discuss the conditions under which a company might consider using price cuts or price increases.

Accepted Answer

Price cuts may be necessary when there i...

Question 6

For market skimming to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

Accepted Answer

A) True 
 B)False

Question 7

Segmented pricing is only effective when ________.

Accepted Answer

A)   the segments show similar degrees of demand
B)   the cost of segmenting does not exceed the revenue obtained from the price difference
C)   the segmented prices do not reflect real differences in customers' perceived value
D)   the customers of different socio-economic classes are treated according to their rank
E)   companies make their services and products accessible exclusively to wealthy patrons

Question 8

A market-skimming pricing strategy should NOT be used for a new product when ________.

Accepted Answer

A)   the product's quality and image support its higher price
B)   enough buyers want the products at that price
C)   competitors are unable to enter the market
D)   competitors can undercut prices easily
E)   producing a smaller number of goods is feasible

Question 9

Go Zone plans to introduce four tablet models over the next year. These models range from basic readers at $99 per unit, to more sophisticated tablets at $399 per unit. The more features a model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of tablets?

Accepted Answer

A)   product line pricing
B)   product bundle pricing
C)   captive product pricing
D)   by-product pricing
E)   optional product pricing

Question 10

Reasons for a price increase include all of the following EXCEPT ________.

Accepted Answer

A)   a desire to improve profits
B)   cost inflation
C)   when the alternative is rationing of the product
D)   decreasing gross margins
E)   increasing supply of product

Question 11

Competitors are most likely to react to a price change when ________.

Accepted Answer

A)   a large number of competitors are involved
B)   the product is uniform
C)   the buyers are not well informed about product features
D)   buyers are not well informed about price differences
E)   the products are not uniform

Question 12

A(n)  ________ is a straight reduction in price on purchases during a stated period of time or of larger quantities.

Accepted Answer

A)   allowance
B)   free sample
C)   discount
D)   tax credit
E)   quota

Question 13

When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?

Accepted Answer

Competitors are most likely to react whe...

Question 14

A lumber mill takes in logs, turns them into 2 x 4's and other sizes needed for building construction. Wood chips created in the milling process are a(n)  ________ that can be sold.

Accepted Answer

A)   bundled product
B)   captive product
C)   by-product
D)   optional product
E)   primary product

Question 15

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Accepted Answer

A)   captive pricing
B)   dynamic pricing
C)   basing-point pricing
D)   price bundling
E)   cost-plus pricing

Question 16

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?

Accepted Answer

A)   uniform-delivered pricing
B)   psychological pricing
C)   zone pricing
D)   FOB-origin pricing
E)   basing-point pricing

Question 17

Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices?

Accepted Answer

A)   by-product pricing
B)   product bundle pricing
C)   optional product pricing
D)   captive product pricing
E)   product line pricing

Question 18

Online flash sales are used to create buying urgency and make buyers feel lucky to have gotten in on the deal.

Accepted Answer

A) True 
 B)False

Question 19

Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.

Accepted Answer

A)   defensive
B)   offensive
C)   publicized
D)   private
E)   uniform across channels

Question 20

Explain the psychology behind a price of $9.99 instead of $10.00.

Accepted Answer

Consumers typically see a prod...

Exam 11: Pricing Strategies: Additional Considerations

For market skimming to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

Correct AnswerverifiedShow Answer

Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.

Correct AnswerverifiedShow Answer

When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?

Correct AnswerverifiedCompetitors are most likely to react whe...View AnswerShow Answer

Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

Correct AnswerverifiedShow Answer

Competitors are most likely to react to a price change when ________.

Correct AnswerverifiedShow Answer

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Correct AnswerverifiedShow Answer

Explain the psychology behind a price of $9.99 instead of $10.00.

Correct AnswerverifiedConsumers typically see a prod...View AnswerShow Answer

Discuss the conditions under which a company might consider using price cuts or price increases.

Correct AnswerverifiedPrice cuts may be necessary when there i...View AnswerShow Answer

For a market penetration-price strategy to succeed, which of the following is LEAST likely to be true?

Correct AnswerverifiedShow Answer

Casual Comfort sells its catalog items using FOB-origin pricing. Who pays the freight charges?

Correct AnswerverifiedThe custom...View AnswerShow Answer

A(n) ________ is a straight reduction in price on purchases during a stated period of time or of larger quantities.

Correct AnswerverifiedShow Answer

Segmented pricing is only effective when ________.

Correct AnswerverifiedShow Answer

A lumber mill takes in logs, turns them into 2 x 4's and other sizes needed for building construction. Wood chips created in the milling process are a(n) ________ that can be sold.

Correct AnswerverifiedShow Answer

Online flash sales are used to create buying urgency and make buyers feel lucky to have gotten in on the deal.

Correct AnswerverifiedShow Answer

In the case of services, captive product pricing is called ________ pricing.

Correct AnswerverifiedShow Answer

Reasons for a price increase include all of the following EXCEPT ________.

Correct AnswerverifiedShow Answer

Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices?

Correct AnswerverifiedShow Answer

A market-skimming pricing strategy should NOT be used for a new product when ________.

Correct AnswerverifiedShow Answer

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?

Correct AnswerverifiedShow Answer

Go Zone plans to introduce four tablet models over the next year. These models range from basic readers at $99 per unit, to more sophisticated tablets at $399 per unit. The more features a model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of tablets?

Correct AnswerverifiedShow Answer

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Competitors are most likely to react whe...
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Consumers typically see a prod...
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Price cuts may be necessary when there i...
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The custom...
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