Deck 14: Arriving at the Final Price

Question 1

Estimating demand and revenue would occur during __________ of the price-setting process.

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Answer 1

B

Question 2

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would use a competition-oriented approach to setting price?

A)"A"
B)"F"
C)"C"
D)"E"
E)"D"

Answer 2

E

Question 3

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would offer discounts?

A)"E"
B)"D"
C)"F"
D)"C"
E)"B"

Answer 3

C

Question 4

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would balance incremental costs and revenues?

A)"E"
B)"F"
C)"D"
D)"C"
E)"A"

Question 5

According to Figure 14-1 above,"B" represents which step in the price-setting process?

A)estimate demand and revenue
B)identify pricing objectives and constraints
C)scan competitors for prices of similar products or services
D)select the appropriate pricing formula
E)determine cost,volume,and profit relationships

Question 6

Vizio's HDTVs are sold through all of the following types of retailers EXCEPT:

A)Amazon.com.
B)mass merchandisers,such as Target.
C)its own company stores.
D)wholesale club stores such as Sam's Club.
E)department stores such as Sears.

Question 7

Vizio,Inc.is the largest contender in the __________ market.

A)designer eyewear
B)virtual media
C)HDTV
D)3D video game
E)exotic travel

Question 8

North America's largest HDTV company is

A)Samsung.
B)Panasonic.
C)LG.
D)Sony.
E)Vizio.

Question 9

According to Figure 14-1 above,"A" represents which step in the price-setting process?

A)raise initial capital
B)identify pricing objectives and constraints
C)scan competitors for prices of similar products or services
D)select the appropriate pricing formula
E)establish the price range

Question 10

According to Vizio,"The whole goal is to ensure that we have the right product,at the right time and the right price and __________."

A)forever rid the world of plugs and wires
B)create customer value that is unmatched in the industry
C)deliver it to the right people
D)at the right place
E)drive a seamless end-to-end value chain

Question 11

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would offer allowances?

A)"F"
B)"E"
C)"D"
D)"C"
E)"B"

Question 12

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would establish a fixed price or a dynamic pricing policy?

A)"A"
B)"F"
C)"C"
D)"E"
E)"D"

Question 13

In order to deliver a product that the average consumer can afford,Vizio

A)handles product design and marketing in the United States and relies on contract manufacturers in Taiwan to build the product.
B)uses mass customization in Taiwan and then ships the HDTVs to the United States.
C)purchased a small company in China to distribute its products under the Vizio name.
D)purchased a small company in Japan to distribute its products under the Vizio name.
E)relies solely on recycled materials to build high quality,no-frills products.

Question 14

Identifying pricing objectives and constraints would occur during __________ of the price-setting process.

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 15

Determining cost,volume,and profit relationships would occur during __________ of the price-setting process.

A)Step 2
B)Step 3
C)Step 4
D)Step 5
E)Step 6

Question 16

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would make geographical adjustments?

A)"D"
B)"B"
C)"E"
D)"F"
E)"C"

Question 17

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would use a cost-oriented approach to setting price?

A)"B"
B)"C"
C)"D"
D)"E"
E)"F"

Question 18

Which of the following is the fourth step in setting a final price for a product?

A)set list or quoted price
B)select an approximate price level
C)scan competitors for prices of similar products or services
D)determine cost,volume,and profit relationships
E)identify pricing objectives and constraints

Question 19

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would use a demand-oriented approach to setting price?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 20

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would assess company,customer,and competitive effects on price?

A)"B"
B)"D"
C)"F"
D)"C"
E)"E"

Question 21

According to Figure 14-1 above,"C" represents which step in the price-setting process?

A)estimate demand and revenue
B)identify pricing objectives and constraints
C)scan competitors for prices of similar products or services
D)determine cost,volume,and profit relationships
E)establish the price range

Question 22

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as a

A)skimming strategy.
B)penetration strategy.
C)price-lining strategy.
D)experience-curve pricing strategy.
E)prestige pricing strategy.

Question 23

Figure 14-2 above represents the four approaches to selecting an appropriate price level."A" represents which approach?

A)cost-oriented approach
B)profit-oriented approach
C)competition-oriented approach
D)demand-oriented approach
E)results-oriented approach

Question 24

Skimming pricing is considered to be a __________ approach to pricing.

A)demand-oriented
B)cost-oriented
C)profit-oriented
D)competition-oriented
E)service-oriented

Question 25

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would consider discounts,allowances,and geographical adjustments to arrive at the final price?

A)"B"
B)"C"
C)"D"
D)"E"
E)"F"

Question 26

According to Figure 14-1 above,"E" represents which step in the price-setting process?

A)set list or quoted price
B)select an approximate price level
C)scan competitors for prices of similar products or services
D)determine cost,volume,and profit relationships
E)establish the price range

Question 27

All of the following are demand-oriented approaches to selecting an approximate price level EXCEPT:

A)odd-even.
B)yield management.
C)customary.
D)bundle.
E)prestige.

Question 28

Figure 14-2 above represents the four approaches to selecting an appropriate price level."C" includes target profit and target return on sales so it represents which approach?

A)demand-oriented approach
B)profit-oriented approach
C)competition-oriented approach
D)cost-oriented approach
E)results-oriented approach

Question 29

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would consider a fixed price or a dynamic pricing policy,company and competitive effects,and incremental costs and revenues?

A)"B"
B)"C"
C)"D"
D)"E"
E)"F"

Question 30

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would consider a demand-,cost-,profit-,or competition-oriented approach?

A)"B"
B)"C"
C)"D"
D)"E"
E)"F"

Question 31

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1)demand-oriented; (2)__________; (3)profit-oriented;and (4)competition-oriented approaches.

A)cost-oriented
B)cause-oriented
C)revenue-oriented
D)stakeholder-oriented
E)distribution-oriented

Question 32

Which of the following statements about the price-setting process is most accurate?

A)When selecting a strategy for setting an initial price,it doesn't matter which one you use as long as you stick with it.
B)Sometimes pricing strategies overlap,and a seasoned marketer will consider several strategies when choosing an approximate price level.
C)Demand-oriented pricing approaches rely heavily on competitors' prices.
D)Skimming pricing is a competition-oriented pricing strategy.
E)Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach.

Question 33

Figure 14-2 above represents the four approaches to selecting an appropriate price level."B" includes standard markup and cost-plus so it represents which approach?

A)demand-oriented approach
B)profit-oriented approach
C)competition-oriented approach
D)results-oriented approach
E)cost-oriented approach

Question 34

Skimming pricing refers to

A)setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors.
B)setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.
C)setting a low initial price on a new product to appeal immediately to the mass market.
D)the practice of replacing promotional allowances with higher manufacturer list prices.
E)setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Question 35

The key to setting a price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1)demand-oriented; (2)cost-oriented; (3)__________;and (4)competition-oriented approaches.

A)stakeholder-oriented
B)revenue-oriented
C)profit-oriented
D)distribution-oriented
E)cause-oriented

Question 36

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1)demand-oriented; (2)cost-oriented; (3)profit-oriented;and (4)__________ approaches.

A)revenue-oriented
B)distribution-oriented
C)stakeholder-oriented
D)competition-oriented
E)cause-oriented

Question 37

Demand-oriented approaches weigh factors that underlie expected __________ more heavily than such factors as cost,profit,and competition when selecting a price level.

A)total revenue
B)stakeholder concerns
C)prevailing prices
D)product substitutes
E)customer tastes

Question 38

According to Figure 14-1 above,"F" represents which step in the price-setting process?

A)set list or quoted price
B)select an approximate price level
C)scan competitors for prices of similar products or services
D)make special adjustments to list or quoted price
E)establish the price range

Question 39

According to Figure 14-1 above,"D" represents which step in the price-setting process?

A)estimate demand and revenue
B)select an approximate price level
C)scan competitors for prices of similar products or services.
D)determine cost,volume,and profit relationships
E)establish the price range

Question 40

Figure 14-2 above represents the four approaches to selecting an appropriate price level."D" includes customary and loss leader so it represents which approach?

A)competition-oriented approach
B)cost-oriented approach
C)profit-oriented approach
D)results-oriented approach
E)demand-oriented approach

Question 41

A skimming pricing policy is likely to be most effective when

A)consumers perceive one product to be similar to other products on the market.
B)a lower price will significantly lower fixed costs.
C)competitors will be attracted to the market due to the potential for high sales revenues.
D)consumers tend to be price sensitive.
E)the high initial price will not attract competitors.

Question 42

When microwave ovens were in the introduction stage of their product life cycle,some consumers were willing to pay exorbitant prices for these innovative ovens.Taking advantage of this strong consumer desire,marketers set the price for microwave ovens at the highest initial price possible.Marketers of microwave ovens used a __________ pricing strategy.

A)skimming
B)penetration
C)prestige
D)price lining
E)bundle

Question 43

A skimming pricing policy is likely to be most effective when

A)consumers tend to be price sensitive.
B)it will be easier to set measurable sales unit goals.
C)a lower price will significantly lower fixed costs.
D)consumers perceive your product to be similar to other products on the market.
E)customers are willing to buy immediately at the high initial price.

Question 44

Hallmark was the official supplier of flowers at the last Winter Olympics.Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch.Consumers were able to buy a smaller version of this same bouquet at the Hallmark website for $74.95.The Olympic bouquet that consumers could buy contained two dozen yellow roses,yet you could buy the same two dozen yellow roses for less than $35 at most supermarkets.If Hallmark is treating the Olympic bouquet as an innovative product,then it is using which demand-oriented pricing approach?

A)bundle pricing
B)yield management pricing
C)skimming pricing
D)target return-on-sales pricing
E)penetration pricing

Question 45

Penetration pricing is considered to be a __________ approach to pricing.

A)demand-oriented
B)cost-oriented
C)profit-oriented
D)competition-oriented
E)service-oriented

Question 46

A skimming pricing policy is likely to be most effective when: (1)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable; (2)the high initial price will not attract competitors; (3)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost;and (4)__________.

A)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
B)consumers tend to be price sensitive
C)customers interpret the high price as signifying high quality
D)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
E)consumers perceive your product to be similar to other products on the market

Question 47

Penetration pricing refers to

A)charging different prices to different buyers for goods of like grade and quality.
B)setting the highest initial price that customers really desiring the product are willing to pay.
C)setting a low initial price on a new product to appeal immediately to the mass market.
D)setting a market price for a product or product class based on a subjective feel for the competitors' prices or market price.
E)setting prices a few dollars or cents under an even number.

Question 48

The pricing strategy that is almost the exact opposite of skimming pricing is

A)target pricing.
B)penetration pricing.
C)price lining.
D)odd-even pricing.
E)prestige pricing.

Question 49

A penetration pricing policy is MOST LIKELY to be effective when: (1)__________; (2)a low initial price discourages competitors from entering the market;and (3)unit production and marketing costs fall dramatically as production volumes increase.

A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
B)the high initial price will not attract competitors
C)customers interpret the high price as signifying high quality
D)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
E)many segments of the market are price sensitive

Question 50

Skimming pricing is a strategy that introduces a new or innovative product by

A)following a price elastic strategy.
B)creating multiple price points.
C)setting a high initial price.
D)setting a low initial price.
E)setting the price at the average of competitors' prices.

Question 51

A skimming pricing policy is likely to be most effective when: (1)__________; (2)the high initial price will not attract competitors; (3)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost;and (4)customers interpret the high price as signifying high quality.

A)consumers tend to be price sensitive
B)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
C)it will be easier to set measurable sales unit goals
D)a lower price will significantly reduce unit costs
E)consumers perceive your product to be similar to other products in the market

Question 52

A skimming pricing policy is likely to be most effective when

A)consumers perceive your product to be similar to other products on the market.
B)a lower price will significantly lower fixed costs.
C)customers interpret the high price as signifying high quality.
D)consumers tend to be price sensitive.
E)it will be easier to set measurable sales unit goals.

Question 53

A manufacturer of a digital video recorder (DVR)is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue AGAINST using a skimming pricing strategy for the DVR?

A)large potential market,even at a high price
B)technological problems still exist for competitors
C)increasing volume reduces production costs substantially
D)consumers perceive a price-quality relationship
E)consumers are innovators

Question 54

The first Apple iPad was introduced in 2010 at an initial price of $650 for the 16 GB version.People waited in line overnight so they could be one of the first to own this unique tablet device.Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

A)price lining
B)penetration pricing
C)skimming pricing
D)customary pricing
E)target pricing

Question 55

Which of the following statements about penetration pricing is most accurate?

A)Penetration pricing is a profit-oriented approach to pricing.
B)Penetration pricing is a cost-oriented pricing method.
C)Penetration pricing encourages competitors to enter a market.
D)Penetration pricing is more effective in a marketplace with price-sensitive consumers.
E)Penetration pricing usually precedes a skimming pricing.

Question 56

Penetration pricing is intended to appeal to which market?

A)highly selective,quality-seeking consumers
B)price-insensitive markets
C)specialty product markets
D)the same markets as those targeted with a skimming pricing strategy
E)the mass market

Question 57

A skimming pricing policy is likely to be most effective when: (1)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable; (2)__________; (3)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost;and (4)customers interpret the high price as signifying high quality.

A)the high initial price will not attract competitors
B)consumers tend to be price sensitive
C)it will be easier to set measurable sales unit goals
D)a lower price will significantly reduce unit costs
E)consumers perceive your product to be similar to other products on the market

Question 58

A skimming pricing policy is likely to be most effective when: (1)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable; (2)the high initial price will not attract competitors; (3)__________;and (4)customers interpret the high price as signifying high quality.

A)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
B)consumers tend to be price sensitive
C)it will be easier to set measurable sales unit goals
D)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
E)consumers perceive your product to be similar to other products on the market

Question 59

A skimming pricing policy is likely to be most effective when

A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
B)consumers tend to be price sensitive.
C)it will be easier to set measurable sales unit goals.
D)a lower price will significantly lower fixed costs.
E)consumers perceive your product to be similar to other products on the market.

Question 60

The first Apple iPhone was introduced in 2007 at an initial price of $600.People waited in line overnight so they could be one of the first to own this unique smartphone.Which pricing strategy did Apple use to help recoup its research and development costs for the smartphone?

A)penetration pricing
B)experience curve pricing
C)customary pricing
D)skimming pricing
E)target pricing

Question 61

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its batteries at a low initial price to attract the mass market.In this case,Energizer used

A)penetration pricing.
B)prestige pricing.
C)skimming pricing.
D)price lining.
E)cost-plus fixed-fee pricing.

Question 62

A manufacturer using __________ is setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

A)skimming pricing
B)penetration pricing
C)price lining
D)odd-even pricing
E)prestige pricing

Question 63

In some cases,penetration pricing may follow which pricing strategy?

A)experience curve
B)target ROI
C)odd-even
D)above market
E)skimming

Question 64

A penetration pricing policy is MOST LIKELY to be effective when

A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
B)many segments of the market are price sensitive.
C)the high initial price will not attract competitors.
D)customers interpret the high price as signifying high quality.
E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

Question 65

Figure 14-3 above shows a demand curve that slopes downward and to the right,then turns back on itself to the left.Which pricing approach does Figure 14-3 depict?

A)prestige pricing
B)skimming pricing
C)penetration pricing
D)price lining
E)reflexive pricing

Question 66

Figure 14-3 above is a graph that shows which pricing strategy?

A)skimming
B)penetration
C)cost-plus
D)price lining
E)prestige

Question 67

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499,Amazon was using a __________ pricing strategy.

A)skimming
B)price lining
C)BOGO
D)penetration
E)loss-leader

Question 68

A penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)a low initial price discourages competitors from entering the market;and (3)_________.

A)unit production and marketing costs fall dramatically as production volumes increase
B)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
C)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
D)the high initial price will not attract competitors
E)customers interpret the high price as signifying high quality

Question 69

A penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)__________;and (3)unit production and marketing costs fall dramatically as production volumes increase.

A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
B)the high initial price will not attract competitors
C)customers interpret the high price as signifying high quality
D)a low initial price discourages competitors from entering the market
E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable

Question 70

In some cases,penetration pricing may follow skimming pricing.The skimming pricing would help __________ and the penetration pricing would help __________.

A)increase market share;attract price-insensitive customers
B)attract price sensitive customers;increase market share
C)recoup initial research and development costs;increase market share
D)recoup initial research and development costs;improve firm reputation
E)increase market share;attract price insensitive customers

Question 71

The movement from point B to point C in Figure 14-3 above shows

A)an increased demand for the product at a lower price.
B)derived demand.
C)that buyers see the product as a bargain and buy more.
D)that buyers become dubious about the quality and prestige and buy less.
E)a downturn in the economy.

Question 72

Prestige pricing refers to

A)charging different prices to different buyers for goods of like grade and quality.
B)setting a low initial price on a new product to appeal immediately to the mass market odd-even pricing.
C)setting a market price for a product or product class based on a subjective feel for the competitors' price or market price.
D)setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.
E)setting a price that is dictated by tradition,a standardized channel of distribution,or other competitive factors.

Question 73

Prestige pricing is considered to be a __________ approach to pricing.

A)demand-oriented
B)cost-oriented
C)profit-oriented
D)competition-oriented
E)service-oriented

Question 74

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold),the greeting card company was trying to appeal to a mass market that was price sensitive.Hallmark was using a __________ pricing strategy.

A)prestige
B)skimming
C)target ROI
D)penetration
E)experience-curve

Question 75

A penetration pricing policy is MOST LIKELY to be effective when

A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
B)the high initial price will not attract competitors.
C)a low initial price discourages competitors from entering the market.
D)customers interpret the high price as signifying high quality.
E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

Question 76

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty dessert treat?

A)The ice cream market is highly conservative.
B)Economies of scale in production would be substantial.
C)Retailers are not willing to carry new brands of ice cream in the already overcrowded category.
D)Once the initial price is set,it is nearly impossible to lower the price without alienating early buyers.
E)The ice cream market exhibits inelastic demand over a fairly broad range of prices.

Question 77

A penetration pricing policy is MOST LIKELY to be effective when

A)unit production and marketing costs fall dramatically as production volumes increase.
B)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.
C)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
D)the high initial price will not attract competitors.
E)customers interpret the high price as signifying high quality.

Question 78

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

A)skimming pricing.
B)status pricing.
C)price lining.
D)value pricing.
E)prestige pricing.

Question 79

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum-mint mojito.The introductory price was low so that it quickly created loyal customers for the flavor.In this example,Wrigley used

A)skimming pricing.
B)penetration pricing.
C)price lining.
D)odd-even pricing.
E)loss-leader pricing.

Question 80

The movement from point A to point B in Figure 14-3 above shows

A)skimming demand.
B)penetration demand.
C)that buyers see the product as a bargain and buy more.
D)that buyers become dubious about the quality and prestige and buy less.
E)a downturn in the economy.