Deck 19: Pricing Objectives and Policies

Question 1

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

Answer 1

True
Explanation: Many private and public nonprofit organizations set a price level that will just recover costs making the target return figure zero.

Question 2

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

Answer 2

True
Explanation: A target return objective sets a specific level of profit as an objective that is stated as a percentage of sales or of capital investment.

Question 3

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

Answer 3

True
Explanation: Many private and public nonprofit organizations set a price level that will just recover costs making the target return figure zero.

Question 4

Price plays an indirect role in shaping customer value.

Question 5

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

Question 6

Pricing to achieve profit maximization always leads to high prices.

Question 7

The price paid by students to colleges is called tuition.

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

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

Question 10

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

Question 11

A lawyer's advice does not have a price.

Question 12

Sales-oriented pricing objectives always refer to profit.

Question 13

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

Question 14

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

Question 15

Pricing objectives need not be explicitly stated.

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

Meeting competition and nonprice competition are both status quo objectives

Question 24

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 25

"Meeting competition" is a sales oriented pricing objective.

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

A flexible-price policy is illegal in the U.S.

Question 39

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 40

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

Question 41

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

Question 42

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

Question 43

Quantity discounts encourage customers to buy in larger amounts.

Question 44

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

Question 45

A skimming policy does not involve price reduction over time.

Question 46

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

Question 47

The exchange rate affects what is a competitive price for products sold in international markets,but not local markets.

Question 48

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

Question 49

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

Question 50

How much a nation's money is worth in some other nation's currency can impact the price level in both local and international markets.

Question 51

An installment involves a single transaction.

Question 52

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

Question 53

A low penetration price discourages competitors from entering the market.

Question 54

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

Question 55

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 56

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 pricing policy.

Question 57

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

Question 58

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

Question 59

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

Question 60

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

Question 61

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

Question 62

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Rebates are refunds paid to consumers after a purchase.

Question 63

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

Question 64

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

Question 65

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

Question 66

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

Question 67

Most firms operate in monopolistic competition instead of pure competition.

Question 68

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

Question 69

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

Question 70

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

Question 71

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

Question 72

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

Question 73

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

Question 74

"Deal-of-the-Day" websites are platforms that offer discounts that generally aren't enough to move consumers into action.

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

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

Question 77

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 78

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

Question 79

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

Question 80

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