Question 1

Predatory pricing is

Accepted Answer

A)  most effective in the growth stage of the product life cycle.
B)  a popular technique preferred by online businesses.
C)  illegal but often difficult to prosecute.
D)  most effective in business-to-business marketing.
E)  one of the most widely used pricing practices for professional marketers.

Question 2

A dynamic pricing policy allows marketers to respond to

Accepted Answer

A)  requests for allowances.
B)  threats of discrimination.
C)  success measures for the firm's previous promotions.
D)  changes in demand, cost, and competitive factors.
E)  inquiries by government agencies.

Question 3

While the most commonly used pricing method for business products is cost-plus pricing, this method is becoming more and more popular among __________ in the service sector.

Accepted Answer

A)  e-businesses
B)  business-to-consumer firms
C)  business-to-government sellers
D)  nonprofit organizations
E)  business-to-business marketers

Question 4

In some cases, penetration pricing may follow which pricing strategy?

Accepted Answer

A)  experience curve
B)  target ROI
C)  odd-even
D)  above market
E)  skimming

Question 5

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect

Accepted Answer

A)  loyalty to the local economy whether it be city, state, or nationally designated.
B)  changes in price due to tariffs or excise taxes.
C)  the cost of transportation of the products from seller to buyer.
D)  the differentiated aspect of the particular product or service.
E)  simplicity in pricing structures.

Question 6

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price. This practice is also called

Accepted Answer

A)  price discrimination.
B)  predatory pricing.
C)  a tying arrangement.
D)  resale price maintenance.
E)  exclusive dealing.

Question 7

Allowances, like discounts, are

Accepted Answer

A)  rewards given to retailers to encourage early payment.
B)  payment extensions given to cash-strapped consumers during the current recession.
C)  list price deductions based on surges in consumer demand.
D)  list price deductions based on sudden drops in consumer demand.
E)  reductions from list or quoted prices to buyers for performing some activity.

Question 8

Penetration pricing is intended to appeal to which market?

Accepted Answer

A)  highly selective, quality-seeking consumers
B)  price-insensitive markets
C)  specialty product markets
D)  the same markets as those targeted with a skimming pricing strategy
E)  the mass market

Question 9

Explain the deceptive pricing practice known as bait and switch.

Accepted Answer

One common deceptive pricing practice is...

Question 10

A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and who also receives an agreed upon dollar amount of profit that is independent of the final cost of the project, is referred to as

Accepted Answer

A)  target return on investment pricing.
B)  cost-plus-percentage-of-cost pricing.
C)  target return on sales pricing.
D)  experience curve pricing.
E)  cost-plus-fixed-fee pricing.

Question 11

A penetration pricing policy is most likely to be effective when

Accepted Answer

A)  unit production and marketing costs fall dramatically as production volumes increase.
B)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.
C)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
D)  the high initial price will not attract competitors.
E)  customers interpret the high price as signifying high quality.

Question 12

Five pricing practices are scrutinized because of potential unethical or illegal actions. They are (1)  price fixing, (2)  price discrimination, (3)  predatory pricing, (4)  geographical pricing, and (5)  __________.

Accepted Answer

A)  price discounting
B)  deceptive pricing
C)  lateral pricing
D)  regional rollback pricing
E)  delayed payment penalties

Question 13

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499, Amazon was using a __________ pricing strategy.

Accepted Answer

A)  skimming
B)  price lining
C)  BOGO
D)  penetration
E)  loss-leader

Question 14

Within the channel of distribution for certain types of imported furniture, the typical trade terms are 40/15/10. If a dining room table has a list price of $1,000, how much would the manufacturer sell the table to a jobber for?

Accepted Answer

A)  $1,000
B)  $600
C)  $510
D)  $459
E)  $400

Question 15

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price is referred to as

Accepted Answer

A)  standard markup pricing.
B)  experience curve pricing.
C)  cost-plus pricing.
D)  product-line pricing.
E)  target return-on-investment pricing.

Question 16

The two general methods for quoting prices related to transportation costs are FOB origin pricing and

Accepted Answer

A)  uniform delivered pricing.
B)  mode of transportation pricing.
C)  regional pricing.
D)  flexible pricing.
E)  FOB destination pricing.

Question 17

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to selecting an approximate price level are (1)  demand-oriented, (2)  __________, (3)  profit-oriented, and (4)  competition-oriented approaches.

Accepted Answer

A)  cost-oriented
B)  cause-oriented
C)  revenue-oriented
D)  stakeholder-oriented
E)  distribution-oriented

Question 18

Geographic adjustments are made by manufacturers or wholesalers to cover

Accepted Answer

A)  production costs.
B)  administrative costs.
C)  selling costs.
D)  promotional costs.
E)  transportation costs.

Question 19

Odd-even pricing is considered to be a __________ approach to pricing.

Accepted Answer

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

Question 20

Uniform delivered pricing refers to

Accepted Answer

A)  the price the seller quotes that includes all transportation costs.
B)  the price the seller quotes that excludes all transportation costs.
C)  the price the seller quotes that includes a fixed allowance whereby the buyer pays all additional costs.
D)  the price the seller quotes includes a fixed percentage of transportation costs for which it will be responsible.
E)  the guarantee that a retailer will be charged the same transportation fee for all its outlets regardless of where they are located.

Exam 14: Arriving at the Final Price

Within the channel of distribution for certain types of imported furniture, the typical trade terms are 40/15/10. If a dining room table has a list price of $1,000, how much would the manufacturer sell the table to a jobber for?

Correct AnswerverifiedShow Answer

Odd-even pricing is considered to be a __________ approach to pricing.

Correct AnswerverifiedShow Answer

A penetration pricing policy is most likely to be effective when

Correct AnswerverifiedShow Answer

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to selecting an approximate price level are (1) demand-oriented, (2) __________, (3) profit-oriented, and (4) competition-oriented approaches.

Correct AnswerverifiedShow Answer

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price. This practice is also called

Correct AnswerverifiedShow Answer

Geographic adjustments are made by manufacturers or wholesalers to cover

Correct AnswerverifiedShow Answer

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect

Correct AnswerverifiedShow Answer

A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and who also receives an agreed upon dollar amount of profit that is independent of the final cost of the project, is referred to as

Correct AnswerverifiedShow Answer

Predatory pricing is

Correct AnswerverifiedShow Answer

In some cases, penetration pricing may follow which pricing strategy?

Correct AnswerverifiedShow Answer

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price is referred to as

Correct AnswerverifiedShow Answer

While the most commonly used pricing method for business products is cost-plus pricing, this method is becoming more and more popular among __________ in the service sector.

Correct AnswerverifiedShow Answer

Uniform delivered pricing refers to

Correct AnswerverifiedShow Answer

Penetration pricing is intended to appeal to which market?

Correct AnswerverifiedShow Answer

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499, Amazon was using a __________ pricing strategy.

Correct AnswerverifiedShow Answer

The two general methods for quoting prices related to transportation costs are FOB origin pricing and

Correct AnswerverifiedShow Answer

A dynamic pricing policy allows marketers to respond to

Correct AnswerverifiedShow Answer

Allowances, like discounts, are

Correct AnswerverifiedShow Answer

Explain the deceptive pricing practice known as bait and switch.

Correct AnswerverifiedOne common deceptive pricing practice is...View AnswerShow Answer

Five pricing practices are scrutinized because of potential unethical or illegal actions. They are (1) price fixing, (2) price discrimination, (3) predatory pricing, (4) geographical pricing, and (5) __________.

Correct AnswerverifiedShow Answer

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One common deceptive pricing practice is...
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