Deck 17: Pricing Objectives and Policies

Question 1

Pricing objectives need not be explicitly stated.

Answer 1

False
Explanation: Pricing objectives should be explicitly stated because they have a direct effect on pricing policies as well as the methods used to set prices.

Question 2

A sales-oriented pricing objective seeks some level of unit sales,dollar sales,or share of market-without referring to profit.

Answer 2

True
Explanation: A sales-oriented pricing objective seeks some level of unit sales,dollar sales,or share of market without referring to profit.

Question 3

A profit maximization pricing objective may lead to relatively low prices,especially if demand is very elastic.

Answer 3

True
Explanation: Low prices may expand the size of the market and result in greater sales and profits.

Question 4

The price paid by students to colleges is called tuition.

Question 5

Defining price in real-life situations is easy because price reflects many dimensions.

Question 6

Sales-oriented pricing objectives always refer to profit.

Question 7

Profit maximization objectives lead to high prices and monopolies and are generally not in the public interest.

Question 8

Any business transaction can be thought of as an exchange of "something" of value for money-where money is the price.

Question 9

Almost every business transaction in our modern economy involves an exchange of money.

Question 10

Many nonprofit organizations try to set a price level that will earn a target return figure of zero.

Question 11

Sales-oriented pricing objectives are sensible because sales growth almost guarantees higher profits.

Question 12

Pricing to achieve profit maximization always leads to high prices.

Question 13

A target return pricing objective seeks to obtain a specific level of profit,which is often stated as a percentage of sales or return on investment.

Question 14

Price plays an indirect role in shaping customer value.

Question 15

A lawyer's advice does not have a price.

Question 16

The target return figure is zero for an organization that sets a price level that will just recover costs.

Question 17

Pricing objectives and policies should flow from company-level objectives.

Question 18

A target return pricing objective has administrative advantages in a large company where there are many divisions to compare.

Question 19

The target return objective and profit maximization objective are both profit-oriented objectives.

Question 20

Pricing decisions affect both the number of sales a firm makes and how much money it earns.

Question 21

A firm should not simply assume that its profits will grow if its sales grow.

Question 22

A marketing manager who sets prices to achieve a given level of market share is using a profit-oriented pricing objective.

Question 23

Flexible pricing is most common in the channels,in direct sales of business products,and at retail for expensive shopping products.

Question 24

The majority of U.S.firms use a one-price policy.

Question 25

Nonprice competition,a status quo pricing objective,is never part of an aggressive overall marketing strategy.

Question 26

The haggling that often occurs when a consumer buys a new car is a direct result of the flexible pricing most auto dealers use.

Question 27

Meeting competition and nonprice competition are both status quo objectives

Question 28

Status quo pricing objectives might focus on meeting competition,avoiding competition,or stabilizing prices.

Question 29

In less-developed economies,retail shopkeepers typically use a one-price policy.

Question 30

"Meeting competition" is a sales-oriented pricing objective.

Question 31

Managers satisfied with their current market share and profits are most likely to adopt sales growth oriented objectives.

Question 32

Status quo pricing objectives suggest avoiding Price competition but may lead to very aggressive competition with Promotion,Place,or Product.

Question 33

When a firm sells through intermediaries,there is little reason to try to administer the price intermediaries charge final consumers.

Question 34

Flexible-price policies are most common in the channels,in direct sales to business customers,and for expensive shopping products,because sales reps may need to make adjustments for market conditions.

Question 35

Most firms in the U.S.avoid using a one-price policy because it is so inconvenient to administer and leads to more negotiation and higher selling costs.

Question 36

Administered prices are prices agreed to by competing firms in a market.

Question 37

A flexible-price policy is most often used where products are not standardized and where bargaining is common.

Question 38

Flexible-price policies are illegal in the United States.

Question 39

A skimming price policy tries to sell to customers who are at the top of the demand curve first,before aiming for more price-sensitive customers.

Question 40

Sales-oriented pricing objectives-such as maintaining or increasing market share-are unpopular because it is so difficult to measure results.

Question 41

Penetration pricing may be wise if the firm expects strong competition very soon after introduction.

Question 42

Seasonal discounts tend to smooth out sales during the year and therefore permit year-round operation.

Question 43

A lease requires a consumer to pay a monthly fee over a specified time period.

Question 44

A low penetration price discourages competitors from entering the market.

Question 45

Basic list prices are the prices that final consumers or users are normally asked to pay.

Question 46

Cumulative quantity discounts encourage repeat buying from the same seller,while noncumulative quantity discounts encourage large individual orders.

Question 47

Noncumulative quantity discounts are intended to encourage customers to make more of their ongoing purchases from the same seller.

Question 48

Introductory price dealing means setting a low "penetration" price early in the product life cycle to discourage competitors from entering the market.

Question 49

Quantity discounts encourage customers to buy in larger amounts.

Question 50

A discount of 2/10,net 30 means the buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days.

Question 51

The term "3/10,net 30" means that a 3 percent discount off the face value of the invoice is allowed if the invoice is paid within 10 days,and that otherwise the full face value is due within 30 days.

Question 52

The term "3/10,net 30" means that 30 percent of the face value of the invoice is due immediately,and that the rest must be paid within 30 days.

Question 53

A seasonal discount encourages buyers to stock products earlier than present demand requires.

Question 54

A skimming price policy often involves a slow reduction in price over time.

Question 55

A skimming policy does not involve price reduction over time.

Question 56

There are two kinds of quantity discounts: cumulative and accumulative.

Question 57

In the market introduction stage of the product life cycle,if a firm has economies of scale and expects competitors to enter the market soon,it would be wise to adopt a skimming price policy.

Question 58

If a firm's demand curve is fairly elastic,a penetration pricing policy would be more suitable than a skimming price policy.

Question 59

Not taking advantage of cash discounts may have the same effect as paying a fairly large "interest charge."

Question 60

An installment involves a single transaction.

Question 61

Value pricing involves developing a "bare bones" marketing mix and a cheap price.

Question 62

Allowances are given to final consumers,business customers,or channel members for accepting more of something.

Question 63

Many intermediaries seek advertising allowances from manufacturers to help them pay the cost of advertising the products they sell.

Question 64

There are more pricing options in pure competition than in monopolistic competition.

Question 65

Charging a lower price for a competing product may actually hinder sales of that product.

Question 66

Uniform delivered pricing is most commonly used when transportation costs are relatively low.

Question 67

Push money allowances are intended to make the retailers' salespeople sell particular products very aggressively.

Question 68

Trade-in allowances,sometimes called PMs or spiffs,are given to retailers or wholesalers to pass on to the retailers' salesclerks for aggressively selling certain items.

Question 69

Most firms operate in monopolistic competition,where products and whole marketing mixes are not exactly the same.

Question 70

Freight-absorption pricing basically amounts to cutting the list price on sales to distant customers.

Question 71

Stocking allowances are given to an intermediary to get shelf space for a product.

Question 72

If a seller wanted to pay the delivery charges and keep title to the products until delivered to a buyer,the seller could use "F.O.B.buyer's factory" geographic pricing terms.

Question 73

F.O.B."shipping point" pricing simplifies the seller's pricing but tends to reduce the size of the seller's market.

Question 74

By presenting a coupon to a retailer,the consumer is given a discount off the list price.

Question 75

When a seller uses "zone pricing," the actual freight charge for delivering each order is included in the price the buyer pays for the product.

Question 76

Rebates are refunds paid to consumers after a purchase.

Question 77

Value pricing means setting a fair price level for a marketing mix that gives the target market superior customer value.

Question 78

Most firms operate in monopolistic competition instead of pure competition.

Question 79

A value pricer tries to offer a target market the same marketing mix as competitors but with a below-the-market price.

Question 80

In zone pricing,the seller pays the actual freight charges and bills each customer the exact amount.