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Exam 11: Pricing Products and Services

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Question 51

Multiple Choice

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Loss-leader pricing refers to

A) a pricing method where the price the seller charges is below the actual cost to make the product.
B) setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer.
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) a method of pricing based on a product's tradition,standardized channel of distribution,or other competitive factors.
E) pricing a product between 8 and 10 percent lower than nationally branded competitive products.

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Question 52

Multiple Choice

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Functional discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

A) the size of the order.
B) the frequency of the order.
C) when orders are placed during the year.
D) the length of the relationship with the manufacturer.
E) the marketing activities they are expected to perform in the future.

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Question 53

Multiple Choice

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Supermarket managers use standard markup pricing because it is particularly suited to situations when

In order to deliver a product that the average consumer can afford,Vizio

Hallmark was the official supplier of flowers at the last Winter Olympics.Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch.Consumers were able to buy a smaller version of this same bouquet at the Hallmark website for $74.95.The Olympic bouquet that consumers could buy contained two dozen yellow roses,yet you could buy the same two dozen yellow roses for less than $35 at most supermarkets.If Hallmark is treating the Olympic bouquet as an innovative product,then it is using which demand-oriented pricing approach?

Explain why price elasticity is important to marketing managers.

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty dessert treat?

The average price Washburn charges for a guitar is $349.This price must cover its variable costs of $25 for direct materials and $120 in direct labor.It must also cover fixed expenses of $38,000.Assuming everything else stays the same,the company's planned move to Nashville,Tennessee,will reduce its fixed costs by $4,800.This would cause total costs to __________ and the break-even quantity to __________.

The vertical axis of a demand curve graph represents __________.

Three different objectives relate to a firm's profit,which have different implications for pricing strategy.The three profit-oriented objectives include managing for long-run profits,maximizing current profit objectives,and __________.

Four pricing practices are closely scrutinized because of potentially unethical or illegal actions.They include: (1) predatory pricing; (2) price discrimination; (3) deceptive pricing; and (4) __________.

When microwave ovens were in the introduction stage of their product life cycle,some consumers were willing to pay exorbitant prices for these innovative ovens.Taking advantage of this strong consumer desire,marketers set the price for microwave ovens at the highest initial price possible.Marketers of microwave ovens used a __________ pricing strategy.

Which of the following statements regarding odd-even pricing is most accurate?

Reductions in unit costs for a larger order are referred to as

Marketers using a flexible-price policy should take care to avoid

When Dell sells various laptops,it also pre-installs Microsoft Office and other software customers order at a discount before a laptop is shipped.This is an example of

In one of its least favorite actions,Amazon.com was caught fiddling with its price tags.Avid DVD buyers,buying in quantity for resale,found that the online retailer was offering different customers different prices for the same DVD,and complained vociferously.Amazon was caught red-handed.Company officials admitted that the company was trying to see how much it could charge for an item before buyers balked.No matter what the reasoning behind it,Amazon.com was using

Marketing managers often use break-even analysis to analyze the relationship between total revenue and total cost to determine profitability at various levels of output.What is the break-even formula? Use the formula to calculate how many DVD players a dealer must sell if her fixed costs are $100,000,unit variable costs are $150,and the selling price is $200.

Netflix used to charge $14.99 per month for its movie rental service.However,when Blockbuster introduced the same service at $13.99,Netflix then dropped its price to $13.99.Netflix most likely made this price reduction in an attempt to

UMD11: Price Premium Marketing Dashboard -The UMD11: Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.What is the price premium for Red Bull in 2009?