Deck 12: Creating and Pricing Products That Satisfy Customers

Question 1

A men's clothing store sells ties only at $20 and $35. This type of pricing strategy is known as price lining.

Answer 1

True

Question 2

Innovations are much less common than imitations and adaptations.

Answer 2

True

Question 3

Costs that depend on the number of units produced are called variable costs.

Answer 3

True

Question 4

Seasonal discounts provide price incentives to customers during peak selling seasons.

Question 5

The three levels of brand loyalty are preference, recognition, and insistence.

Question 6

Brand equity refers to making all of a company's brands approximately equal with respect to brand loyalty.

Question 7

Competition-based pricing is important if competing products are similar and the organization is serving markets in which price is the crucial variable of the marketing strategy.

Question 8

Because markup pricing is difficult to use, few retailers and wholesalers use it.

Question 9

Some pricing objectives include surviving, maximizing profit, obtaining market-share goals, and maintaining status quo.

Question 10

Packages have marketing value but no functional value.

Question 11

Even if a grocery item is a generic product, a consumer can tell who produced it by examining the package carefully.

Question 12

The sum of the fixed costs and the variable costs attributed to the units produced is the selling price.

Question 13

Once it becomes effective, a product mix for a given product remains effective for a long time.

Question 14

Price competition occurs when a seller makes its product stand out from the competition by distinctive product quality and customer service.

Question 15

Management must set pricing objectives based on the primary objective of making a profit.

Question 16

In the decline life-cycle stage of a product, less profitable versions of the product are sold at reduced rates to cut losses.

Question 17

New products are often immediate successes.

Question 18

Psychological pricing strategies encourage purchases to be based on economically rational responses rather than on emotional responses.

Question 19

The strategy of charging the highest possible price for a product during the introduction stage of its life-cycle is called price skimming.

Question 20

During the decline stage of the product life-cycle, the sales volume decreases sharply because of an increase in the number of competing firms.

Question 21

Odd-number pricing is limited to low-priced items.

Question 22

An early-bird special offered by a restaurant during off-peak hours is an example of a secondary-market pricing strategy.

Question 23

A major reason why retailers use markup pricing is because it is easy to apply.

Question 24

Pricing strategies act as guides for achieving pricing objectives.

Question 25

There are two dimensions to a firm's product mix: volume and breadth.

Question 26

The legality of uniform geographic pricing has been challenged and so its use has been abandoned.

Question 27

Generic brands are becoming more popular with today's price-conscious shoppers.

Question 28

A trademark is legally protected from use by anyone except its owner.

Question 29

A product may be a good or a service but not an idea.

Question 30

The width of a product mix is a measure of the number of individual products within each line.

Question 31

Price allocates goods and services among those who are willing and able to pay for them.

Question 32

Manufacturers, wholesalers, and retailers do not use negotiated pricing strategies.

Question 33

Aspirin, yo-yo, and escalator were all brand names at one time.

Question 34

Setting prices for organizational buyers is very similar to setting prices for consumers.

Question 35

A price of $5.95 for a product would fall into the category of odd-number pricing.

Question 36

Entirely new products are innovations.

Question 37

Pricing whereby the buyer absorbs all or part of the freight costs is freight absorption pricing.

Question 38

One of the major dangers of competition-based pricing is that it often results in price wars.

Question 39

The depth of a product mix is a measure of the average number of individual products within each line.

Question 40

Multiple-unit pricing is packaging together two or more complementary products and selling them for a single price.

Question 41

The price floor is the lowest price at which a producer can sell its product without incurring a loss.

Question 42

The strategy of developing a large market share for a new product by setting a very low price is called penetration pricing.

Question 43

BMW's acquisition of the British automaker Rover provides BMW with instant entry into the growing sport-utility vehicle market with the legendary Range Rover line. BMW's purchase is an attempt to widen its product mix.

Question 44

Differential pricing means different buyers pay different prices for the same quality and quantity of a product.

Question 45

Appliances, stereos, and furniture are all considered specialty products.

Question 46

A product cannot perform its function if it is priced incorrectly.

Question 47

A product mix is a combination of all the information a producer uses to sell its product to the public.

Question 48

The breakeven quantity is the number of units that must be sold to equal the projected total revenue for the period.

Question 49

A variation of an existing product, such as freeze-dried coffee, is an example of product imitation.

Question 50

Fixed costs are costs that depend on the number of units produced.

Question 51

A company's product mix usually must be changed to stay competitive.

Question 52

A name, term, symbol, design, or any combination of these that identifies a product and distinguishes it from a competitor's product is called packaging.

Question 53

Craftsman and Kenmore are examples of a store brand.

Question 54

The branding strategy in which a firm uses the same brand for all or most of its products is called individual branding.

Question 55

Three types of product-line pricing are price leaders, special-event pricing, and comparison discounting.

Question 56

The same price will be charged no matter what pricing objective is used.

Question 57

Candy bars, milk, and newspapers are all examples of convenience products.

Question 58

Markup pricing is easy to apply, although it is difficult to determine an effective markup percentage.

Question 59

A trade discount is the price producers set to draw the public's attention to new products.

Question 60

In some cases, prices are assigned to goods on the basis of nothing more than customs and traditions.

Question 61

In which order do the stages of the product life-cycle occur?

A)Growth, introduction, maturity, decline
B)Introduction, maturity, slowdown, decline
C)Innovation, distribution, maturity, decline
D)Introduction, growth, maturity, decline
E)Introduction, growth, slowdown, decline

Question 62

The strategy of setting a single price for two or more units is known as

A)penetration pricing.
B)price skimming.
C)sample pricing.
D)multiple-unit pricing.
E)odd pricing.

Question 63

Automobile fenders are an example of

A)accessory equipment.
B)raw materials.
C)process materials.
D)component parts.
E)supplies.

Question 64

Price is the amount of money a seller is willing to accept in exchange for a product, at a given time and under given circumstances.

Question 65

Texaco, Exxon, and Ford are examples of a store brand.

Question 66

Renee collects antique Fabergé eggs. For most of these eggs, only one or a few were created of each design. These eggs would best be classified as ____ products.

A)specialty
B)convenience
C)business
D)shopping
E)luxury

Question 67

A pricing strategy in which a manufacturer pays for the shipping cost of its merchandise to the wholesaler is called ____ pricing.

A)geographic
B)FOB origin
C)trade discount
D)FOB destination
E)postage-stamp

Question 68

Brands help reduce a consumer's perceived risk of purchase.

Question 69

Which of the following is not a major factor contributing to brand equity?

A)Brand loyalty
B)Perceived brand quality
C)Brand awareness
D)Brand relationship
E)Brand associations

Question 70

Bread, gasoline, and ____ are examples of convenience products.

A)cars
B)furniture
C)newspapers
D)large appliances
E)a cruise

Question 71

Costs incurred regardless of how many units of a product are produced or sold are called fixed costs.

Question 72

What type of product modification is likely to make the greatest impact on a food product?

A)Quantity
B)Aesthetic
C)Functional
D)Versatility
E)Texture

Question 73

Random discounting is often predictable so consumers wait to make purchases until they can benefit from the price reductions.

Question 74

A brand mark is the part of a brand that consists of a symbol or distinctive design.

Question 75

​A major big box store allegedly adds 5 percent to the total cost of production or cost of purchasing items it sells in its store, then adds to this number the additional costs and profits in order to arrive at the product's selling price. The 5 percent represents the ___ amount.

A)​markup
B)​income
C)​equity
D)​market share

Question 76

​Carol, a farmer, sells a dozen ears of corn to her neighbor for $1/dozen. She sells a dozen ears of corn to the small market down the street for $.75/dozen. She sells corn to the chain grocery store in town for $.50/dozen. Carol is using

A)​differential pricing.
B)​discriminatory pricing.
C)​price skimming.
D)​illegal pricing.

Question 77

​Janice is starting a new business and is confused about how to determine the price to set for her product. She comes to you for advice and you tell her, correctly, that the two factors that determine the price at which a product will sell are

A)​the market and the awareness that costs and expected sales can be used only to establish a price floor.
B)​the market and status-quo.
C)​the cost of production and maximum price that can be charged.
D)​the competition price point and product demand.

Question 78

The stage in the evolution of new products in which ideas that match company objectives are analyzed as to whether the firm has the required expertise for the product's development and marketing is called

A)exploration.
B)test marketing.
C)screening.
D)product development.
E)business analysis.

Question 79

Screening ideas for feasibility is the first stage of the new product development process.

Question 80

The product life-cycle stage in which consumer awareness and acceptance of the product are low, there are few competitors, and there is a gradual rise in sales because of promotion is called

A)extension.
B)introduction.
C)growth.
D)decline.
E)maturity.