The University of Oklahoma

MKT 3013

Ch. 11

1)A company sets not a single price, but rather a that covers different items in its line that change over time as products move through their life cycles.

2. Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and  .

3. Of the following, which statement would NOT support a market-skimming policy for a new product?

4. A firm is using           when it charges a high, premium price for a new product with the intention of reducing the price in the future.

5.               pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.

6. Accent Software faces the conditions below, all of which support Accent's use of a market-penetration pricing strategy EXCEPT that     .

7. Which of the following is a reason that a marketer would choose a penetration pricing strategy?

8. Companies usually develop       rather than single products.

9. A marketer must be familiar with the five major product mix pricing situations. Which of the following is NOT one of them?

10. A challenge for management in product line pricing is to decide on the price steps between the     .

11. When using price steps, the seller must establish perceived     that support the price differences.

12. Many producers who use captive-product pricing set the price of the main product              and set        on the supplies necessary to use the product.
13. When amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n)   pricing strategy.

14. HiPoint Telephone Company uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed rate plus a  .

15. Companies involved in deciding which items to include in the base price and which to offer as options are engaged in          pricing.

16. Keeping in mind that a seller must sell by-products at a price that covers more than the cost of storing and delivering them, which of the following will by-product pricing permit a seller to do?

17. With product bundle pricing, sellers can combine several products and offer the bundle     .

18. What is a major advantage of product bundle pricing?

19. Which of the following is NOT a price adjustment strategy?

20. Service Industries, Inc., plans to offer a price-adjustment strategy in the near future. They could consider each of the following EXCEPT         .

21. A quantity discount is a price reduction to buyers who purchase          .

22. Trade or functional discounts are offered by manufacturers to which of the following?

23. Which of the following is an example of a cash discount?

24. When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs, it is granting a(n)           .

25. Quantity discounts provide an incentive to the customer to buy           .

26. By definition, this type of pricing is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost.

27. When a firm varies its price by the season, month, day, or even hour, it is using     pricing.

28. Airlines, hotels, and restaurants call segmented pricing            .

29. Which of the following conditions should exist for segmented pricing to be an effective strategy?

30. Consumers usually perceive higher-priced products as .

31. Consumer use price less to judge the quality of a product when they   .

32. Michael and John both own leather jackets and are currently shopping for two new ones. They both have prices in mind and refer to them when shopping. These prices are termed  .

33. Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product?

34. When consumers cannot judge quality because they lack the information or skill, price becomes     .

35. All of the following are typical ways a reference price might be formed in a buyer's mind EXCEPT   .

36. What type of pricing is being used when a company temporarily prices it product below the list price or even below cost to create buying excitement and urgency?

37. Promotional pricing can have all of the following adverse effects EXCEPT       .
38. The most likely effect of the frequent use of promotional pricing is an industry     .

39. When customers buy products from manufacturers' dealers within a specified time period, the manufacturer sends the customer a check called a .

40. Durango China Company charges all customers within a given geographical area a single total price. The more distant the area, the higher the price. This is      .

41. Under which type of geographic pricing strategy does each customer pay the exact freight for the product from the factory to its destination?

42. Using this pricing strategy, the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.

43. Which of the following is the opposite of FOB-origin pricing?

44. Freight-absorption pricing is used for    and              .

45. When a company charges the same rate to ship a product anywhere in the United States, it is using which form of geographic pricing?

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

47. Some companies are reversing the fixed pricing trend and using        
48. When pricing internationally, most companies adjust their prices to reflect    .

49. Most companies that conduct international business                to         .

50. Price escalation in international markets may result from differences in market conditions or     .

51. Which of the following is LEAST likely to cause price escalation in foreign markets?
52. Price escalation in international markets may result from four of these five marketing conditions. Which one will have the LEAST effect?

53. There are many reasons why a firm might consider cutting its price. All of the following are among them EXCEPT .

54. Which of the following is a reason for a company to raise its prices?
55. Which of the following is a major factor that influence price increases?

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

57. A competitor is likely to interpret your firm's decision to cut prices in many ways, including all of the following EXCEPT as  .

58. When a competitor cuts its price, a company is most likely to decide to          if it believes it will not lose much market share or would lose too much profit by cutting its own price.

59. When faced with a competitor who has cut its product's price, which of the following is typically the most efficient way for a company to maintain its own price but raise the perceived value of its offer?

60. Which of the following is NOT on an effective action that a company can take to combat a competitor's price cut on a product?

61. When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction, the firm in essence is      .

62. A company would most likely consider launching a low-price "fighting brand" in response to a competitor reducing prices if            .

63. Price-fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of     .

64. The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of   .

65. When sellers set prices after talking to competitors and engaging in collusion, they are involved in  .

66. Federal legislation on price-fixing requires that sellers set their prices     .

67. If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting them out of business, the retailer would be guilty of        .

68. Which of the following would most likely be considered predatory pricing?

69. The Robinson-Patman Act seeks to prevent unfair by ensuring that sellers offer the same price terms to customers at a given price level.

70. Price discrimination is legal under which of the following conditions?

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

             .

72. Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of .

73.               results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.

74. Failure to enter the current price into a retailer's system may result in charges of     .

75. Comparison pricing claims are legal if they are truthful. However, sellers should not advertise a price reduction unless         .

76. Valeo Fashions has just introduced a new line of fashion dresses for teens. They will initially enter the market at high prices in a     pricing strategy.

77. Market-skimming pricing would likely be most effective in selling       .

78. Among the following, a market-penetration strategy will likely be most effective with     .

79. When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers they were using, Pepsi was using          .

80. Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a     pricing strategy.

81. When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is using

             .

82. When Polaroid set the general price range of its cameras low and the markup on its film high, it was practicing

             .

83. When product managers at Schwinn make decisions about which types of bicycle seats, handle bars, and saddlebags to offer customers on their bikes, they are engaged in         .

84. Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is most likely used?

85. The fact that a hot dog cost five times more at Disneyland than at Sam's Club is an example of     .

86. A manufacturer offers 3/10, net 30, terms to a wholesaler for a recent purchase. The wholesaler may deduct

              percent if the bill is paid within     days.

87. When Whallans Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas, Whallans is giving a(n)          discount.

88. The New Age Gallery has three admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called      .

89. Brown Baby Tanning Salon offers weekly tanning sessions for $15 and season passes with unlimited tanning for

$150. Brown Baby Tanning Salon is offering    pricing.

90. Lancaster Recycling has a history of problems with customers who do not pay their bills on time. Lancaster Recycling wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. The company might consider which of the following forms of pricing?

91. Secret Sneaker will give anyone $10 for their old sneakers, regardless of condition, when purchasing a new pair of sneakers. The end result is essentially reducing the price of the new sneakers by $10. What is this type of price adjustment called?

92. Bose prices its most expensive noise reduction earphones at $399.95, which is a full $100.00 more than its next most expensive earphones. It costs Bose only a few dollars more to make the most expensive earphones. Bose is using       pricing.

93. The Chicago Bears organization charges different prices for seats in different areas of the Soldier Field, even though the costs are the same. This form of pricing is called   .

94. Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m.

when accompanied by a paying customer. This is an example of   .

95. The JC Whitney Company of Chicago offers replacement parts for older Volkswagen Beetles. Parts are often shipped from other locations throughout the United States. However, the company charges for shipping as if every

part was shipped from their Chicago headquarters. The company practices         .

96. If Northwest Awnings charges the same price for delivery of their product to any customer that is located within the Great Lakes states, the company is using           .

97. Big Mike's Health Food Store sells nutritional energy-producing foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of     .

98. Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most at risk of being accused of      .

Refer to the scenario below to answer the following questions.

Quills, Inc., is a manufacturer of ballpoint pens, pencils, and stationery. The firm's primary distribution strategy is to

sell in large volumes to office supply stores and large discount chains. Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets.

99. Why might have Charles Powell have avoided using market-skimming pricing at Quills?

100. By offering a set of pens packaged with stationery and matching envelopes, Quills is using .

101. Pricing strategies tend to change and evolve as the average product passes through its life cycle.

102. When Murphy's Candies sets a low initial price in order to get its "foot in the door" and quickly attract a large number of buyers, the company is practicing market-skimming pricing.

103. Market-skimming is a more popular strategy for pricing new products, while market-penetration is a more popular strategy for pricing products that are more advanced in the product life cycle.

104. Pricing is often difficult because various products have related demand and costs, and they face different degrees of competition.

105. Water Light Fishing Boats is like most companies. They commercialize their new product ideas one at a time rather than developing a product line.

106. Just Hats prices its various types of caps at ten different price levels, ranging from $2.00 to $4.95. This is an illustration of price steps.

107. When Johnny On the Spot, a house mover, sells boxes and pads that must be used in moving a household's furniture, the company is practicing by-product pricing.

108. Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.

109. When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

110. When using product bundle pricing, sellers combine several of their products and offer the bundle at an increased price for increased profit.

111. Most companies adjust their basic prices to account for various customer differences and changing situations.

112. A seasonal discount is a price reduction to buyers who buy merchandise or services while they are in season.

113. Manufacturers may offer functional discounts within trade channels for channel members who store inventory.

114. The basic difference between customer-segment pricing and product-form pricing is that the latter offers alternative versions of the product that are priced differently but not according to differences in their costs.