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Homework answers / question archive / Western New Mexico University BSAD 340 1)The tactic that allows different customers to pay different prices for essentially the same merchandise bought in equal quantities is called              

Western New Mexico University BSAD 340 1)The tactic that allows different customers to pay different prices for essentially the same merchandise bought in equal quantities is called              


Western New Mexico University

BSAD 340

1)The tactic that allows different customers to pay different prices for essentially the same merchandise bought in equal quantities is called               . It is often found in the sale of shopping goods, specialty merchandise, and most industrial goods except supply items.

a.            zoning (or basing) pricing

b.            illegal price fixing

c.             price maintenance

d.            psychological (or odd–even) pricing e. flexible (or variable) pricing


2.            All of the following are potential disadvantages of a flexible pricing policy EXCEPT:

a.            it causes inconsistent profit margins.

b.            it enables a seller to close a sale with a price-conscious customer.

c.             it causes ill will among customers if they discover that other customers are paying lower prices.

d.            it enables salespeople to automatically lower the price to make a sale.

e.            it can spark a price war with competitors.




3.            Suppose an advertising agency develops logos for its clients. It charges $10,000 per logo–– whether the team that’s working on the logo takes 30 minutes or days to design the logo. Agency management explain that clients pay for the agency’s expertise and creativity, not the amount of time it literally takes to develop a logo. This pricing approach is known as:

a.            professional services pricing.

b.            potential (or base) pricing.

c.             price maintenance.

d.            psychological pricing.

e.            flexible (or variable) pricing.


4.            Which of the following statements is NOT true with regard to trade-ins?

a.            Flexible pricing and trade-ins often go hand in hand.

b.            If a trade-in is involved, the consumer must negotiate two prices, one for the new product and one for the existing product.

c.             Research found that trade-in customers tend to care more about the trade-in value they receive than the price they pay for the new product.

d.            Car trade-in values have plummeted in recent years.

e.            On average, customers who trade-in an automobile when purchasing a new one end up paying more than customers who simply buy a new car from a dealer.


5.            Lea Kirkham is a physician. She charges each patient the same price for a physical examination, whether the procedure takes 10 minutes or a full hour. Which pricing policy is Dr. Kirkham following?

a.            Professional services

b.            Potential (or base)

c.             Price maintenance

d.            Psychological

e.            Flexible (or variable)


6.            Often a seller will establish a series of prices for a family of merchandise items. There may be several different models at specific price points but no prices in between. This policy is called:

a.            price lining.

b.            price bracketing.

c.             family pricing.

d.            variable pricing.

e.            price bundling.


7.            At the Greenville Florist, there are four different prices for funeral bouquets. The smallest bouquet sells for $30; there is also a $40 version and a $75 version. For those who want to express their grief through the purchase of a dramatic floral arrangement, the florist also offers a $150 version. The owner of the florist shop has chosen price lining because it will:

a.            enable the shop to carry a larger total inventory.

b.            maintain all of the product line at the same stage in the product life cycle.

c.             confuse customers and allow salespeople to sell more of the expensive models.


d.            reach several different target market segments.

e.            thwart competitors that are trying to sell similar products.

8.            Price lining presents certain drawbacks to sellers, especially if:

a.            costs are continually rising.

b.            competition suddenly increases.

c.             profit margins are lowered.

d.            demand is rising.

e.            costs are flat.


9.            Why is price lining a valuable tactic for marketing managers?

a. Price lining results in a greater inventory carrying charge. b. It reduces confusion for its customers.

c.             A company that uses price lining has more price markdowns and greater markup.

d.            The price lining strategy allows the company to gain brand loyalty from its targeted segments.

e.            Price lining tends to confuse customers and requires them to listen closely to the salesperson’s pitch.


10.          The owner of a neighborhood hardware store has decided to sell a set of three padlocks for $5. He hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items. The owner is encouraging store patronage through:

a.            deceptive pricing.

b.            incentive pricing.

c.             pricing lining.

d.            cumulative pricing. e. leader pricing.


11.          Leader pricing is used to:

a.            attract customers to a store so they can be persuaded to buy a more expensive product instead.

b.            bundle products together for sale.

c.             attract customers to the store so they will buy other products in addition to the leader product.

d.            price products at odd-numbered amounts to stimulate demand.

e.            maintain a status quo pricing strategy.


12.          Every week, Keller’s Grocery runs a weekly ad in the newspaper touting its sale prices on a number of products. For example, this week the store is selling cherries for $1.50/pound and boneless chicken breasts for 99 cents/pound. Keller’s sells these products at a below market price to lure customers into the store in hope that while they are in the store to buy chicken and

cherries, they will also buy other grocery items that have a much higher markup. The store is using:

a.            price lowballing.

b.            price maintenance.

c.             price   lining. d. leader pricing.

e. functional pricing.



13.                         tries to get customers into the store with misleading advertising and then uses high- pressure selling to persuade the consumer to buy something else more expensive.

a. Functional pricing b. Bait pricing

c.             Sales-oriented pricing

d.            Production-oriented pricing

e.            Decoy pricing


14.          Cashtown Used Cars aired a radio spot announcing, “Today only, previously owned cars are only $200!” Meghan just wanted some kind of in town transportation. When she went to Cashtown, the salesperson said, “We have only one $200 car left, and it’s not the kind of car I’d want my wife to drive. However, we do have some great deals on newer models.” Meghan went home with an

$8,000 used car. Cashtown is probably practicing:

a.            decoy pricing.

b.            deal pricing.

c.             functional pricing. d. bait pricing.

e. price pressuring.


15.          Which type of pricing means pricing at odd-numbered prices to connote bargains and pricing at even-numbered prices to imply quality?

a.            Bait pricing

b.            Price bundling

c.             1–2 pricing

d.            Odd–even pricing

e.            Two-part pricing


16.          If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains and at even-numbered amounts to denote quality, he or she is using:

a.            two-part pricing.

b.            price lining.

c.             price bracketing.

d.            decoy pricing.

e.            psychological pricing.


17.          Leader pricing is also called:

a.            psychological pricing.

b.            follower pricing.

c.             frontrunner pricing.

d.            price bundling.

e.            loss-leader pricing.



18.          Marketing two or more products in a single package for a special price is known as: a. price bundling.

b.            two-part pricing.

c.             psychological pricing.

d.            price lining.

e.            family pricing.


19.          AMC Theaters offers customers a package that includes two movie tickets, two small drinks, and one small popcorn all priced together at $29.99. this pricing technique is called:

a.            price lining.

b.            two-part pricing.

c.             horizontal pricing. d. price bundling.

e. bait pricing.


20.          The Comcast Triple Play package includes cable television, Internet, and telephone service for a price significantly lower than the cost of the three services priced separately. This is an example of:

a.            multiple unit pricing.

b.            professional services pricing.

c.             price lining.

d.            price bundling.

e.            two-part pricing.


21.          In a catalog targeted to people who like to bake, customers can buy a single yeast bread mix designed specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50. This is an example of:

a.            price bundling.

b.            CRM pricing.

c.             psychological pricing.

d.            penetration pricing.

e.            status quo pricing.


22.          Reducing the services that come with the basic product is called:

a.            Demarketing.

b.            Contraction.

c.             two-part pricing.

d.            retroactive pricing. e. Unbundling.


23.          Tickets to a combined amusement park and water slide were $49 for the day. Then the company gave customers the option to purchase tickets for either the amusement park or the water slide for $18. To help keep costs in line, the park management also began charging its customers a small parking fee. Initially, the cost of parking was figured into the $49 price. The amusement park is using:

a.            price lining.

b.            potential (or base) pricing. c. Unbundling.

d. professional services pricing.

e. price maintenance.


24.          Louisiana State University (LSU) football season ticket holders have to pay a fee (also known as a “donation”) to the LSU Foundation every January, which is not deemed to be part of the ticket price. They pay for their tickets later in the year for the next football season. The Foundation fee must be paid in order to retain the rights to purchase a season ticket. LSU is using:

a.            multiple unit pricing.

b.            professional services pricing.

c.             price lining.

d.            price bundling. e. two-part pricing.


25.          Consumers sometimes prefer two-part pricing because:

a.            prices are often perceived as quality indicators.

b.            consumers like to be in control of costs.

c.             consumers are uncertain about the number and types of activities they might use at places like an amusement park.

d.            consumers prefer a limited number of choices.

e.            prices have little or no psychological influence on most consumers.


26.                         are extra fees paid by consumers for violating the terms of purchase agreements.

a.            Decoy fees

b.            Misuse discounts

c.             Punitive fees

d.            Consumer penalties

e.            Financial judgments


27.          Consumers are required to pay consumer fees because businesses allegedly:

a. will sell more if the consumer is unaware of the actual costs. b. suffer an irrevocable revenue loss.

c.             are required by the federal government to charge this fee.

d.            avoid additional transactional costs when purchase agreements are violated.

e.            incur greater fixed costs as a result of the purchase agreement violation.


28.          Costs that are shared in the manufacturing and marketing of several products in a product line are called:

a.            joint costs.

b.            integrated costs.

c.             fixed costs.

d.            variable costs.

e.            combined costs.


29.          Post makes several varieties of cereals. In promoting this product line, Post offers a 50-cents-off coupon that can be used to purchase any of its cereals. Therefore, Post must consider            when pricing its cereals.

a.            joint costs

b.            differential costs

c.             bundling costs

d.            potential (or basing) costs

e.            factorial costs


30.          Alissa Dunn is the owner and operator of Dunn’s Best Jams, which she sells at craft festivals. She only makes and sells three types of jams––pecan pie jam, chocolate pie jam, and lemon tart jam. The costs of leasing her professional kitchen for manufacturing, travel to craft shows, insurance, and so on are allocated on an equal basis to the three types of jam sold. In other words, these costs are:

a.            derived costs.

b.            elastic costs. c. joint costs.

d. revenue impediments.

e. synergistic costs.


31.          Nestlé Purina sells chicken feed and Wheat Chex, but the sale of one of these products has no known impact on demand for the other. In this case, the two products have a(n)            relationship.

a. inverse b. neutral

c.             complementary

d.            substitute

e.            negative


32.          Best Buy charges customers a 15 percent restocking fee on some returned items. A restocking fee is for putting a returned item back into inventory. This is an example of a:

a.            bait-and-switch.

b.            trade-in.

c.             consumer penalty.

d.            product absorption strategy.

e.            price bundle.


33.          If items are         , an increase in the sale of one good causes an increase in the sale of the other (and vice versa).

a.            inverse

b.            neutral

c.             complementary

d.            substitute

e.            negative


34.          Kule, Inc. produces three different lines of car racks for transporting large, bulky items. Bicycle Luggage Skis Sales $140,000 $100,000 $160,000

Less cost of goods sold 110,000 110,000 140,000

Gross margin 30,000 (10,000) 20,000

Total company net annual profit = $40,000 Included in the cost of goods sold is $12,000 of annual rent (a fixed cost) that is distributed equally among the three product lines. As a consultant to Kule, will you recommend that it drop the luggage rack line?

a. No, dropping the line will actually decrease overall net profits. b. Yes, dropping the line will increase company net profits.

c.             No, dropping the line will result in increased fixed costs.

d.            Yes, dropping the line will reduce joint costs.

e.            Yes, dropping the line will reduce cost of goods sold and increase revenues.


35.          When using        , price is not set on the product until the item is either finished or delivered.

a.            price shading

b.            escalator pricing

c.             delayed-quotation pricing

d.            bid pricing

e.            two-part pricing


36.          Delayed-quotation pricing:

a.            requires the seller to place a later date on the product invoice to help accounts receivable in recording transactions.

b.            allows the final selling price to reflect cost increases incurred between the time the order is placed and the final delivery takes place, often over a period of years.

c.             prevents the competitor from submitting an earlier bid.

d.            requires a seller to submit a bid after the closing date.

e.            is also known as price-shading bidding.


37.          A(n)       allows for price increases based on the cost-of-living index or some other formula.

a.            consumer penalty

b.            price shade

c.             price allowance

d.            escalator price clause

e.            elasticity quotient


38.          Escalator pricing is:

a.            a demand-oriented pricing tactic.

b.            similar to delayed-quotation pricing.

c.             similar to price shading.

d.            a form of market penetration pricing.

e.            also called “postage stamp” pricing.


39.          Business-to-business salespeople often use       to increase demand for one or more products in a line. It is a discounting practice that is often done routinely without much forethought.

a.            decremental pricing

b.            price lining

c.             devaluation d. price shading

e. consumer discounts


40.          What can a marketing manager do to make demand for his or her product more inelastic?

a.            Eliminate brand equity

b.            Eliminate any unique products from the product line c. Cultivate selected demand

d. Avoid making any product changes

e. Implement escalator pricing


41.          All of the following are strategies to make the demand for a good or service more inelastic EXCEPT:

a.            reducing consumer awareness.

b.            cultivating selected demand.

c.             changing the package design.

d.            creating a unique offering.

e.            heightening buyer dependence.


42.          For sports marketers, an inelastic demand curve means that they have greater flexibility in making pricing decisions. What can a sports marketer do to make demand for his or her product more inelastic?

a.            Have a winning team that people want to see play.

b.            Sell the rights to buy a season pass.

c.             Eliminate all quantity discounts.

d.            Use discriminatory pricing.

e.            Any of these strategies will help render demand more inelastic.


43.          Which of the following pricing methods can be used to build market share during a recession?

a.            Price lining

b.            Resale price maintenance

c.             Psychological pricing d. Bundling

e. Variable pricing


44.          During a recent worldwide recession when wine usage was declining, Nickel & Nickel launched a new brand of wine, which it sold at $125 a bottle. The wine is allowed to age three times as long as lower-priced wines, and the grapes used in the wine’s production are handpicked. Wine lovers appreciate how both production techniques improve wine quality. Nickel & Nickel used          to build market share.

a.            value-based pricing

b.            unbundling

c.             price lining

d.            status quo pricing

e.            leader pricing


45.          Two effective pricing tactics that can be used to hold or build market share during a recession are:

a.            flexible pricing and price shading.

b.            price shading and price lining.

c.             unbundling and price shading.

d.            value-based pricing and bundling.

e.            price lining and escalator pricing.


46.          During a recent recession, many manufacturers determined that their suppliers were an excellent source of cost savings. Specific cost reduction strategies manufacturers have used with their suppliers include:

a.            offering help in boosting productivity of suppliers.

b.            renegotiating contracts.

c.             setting annual across-the-board cost reduction targets for suppliers.

d.            improving economies of scale by cutting number of suppliers. e. all of the choices.


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