Question 1

With which pricing strategy does the seller take responsibility for part or all of the actual freight charges in order to get the desired business?

Accepted Answer

Freight-absorption pricing is when the seller takes responsibility for part or all of the freight charges in order to entice buyers to purchase their products. This strategy is often used when the seller wants to remain competitive and attract more customers. The other options listed (FOB origin pricing, basing-point pricing, location-based pricing, and uniform-delivered pricing) do not involve the seller taking responsibility for freight charges in order to attract business.

Question 2

Which of the following would most likely lead to a company initiating a price increase?

Accepted Answer

Overdemand for a product suggests that there is high demand and customers are willing to pay more for the product. As a result, companies may initiate a price increase to increase revenue and take advantage of the situation.

Question 3

Freight-absorption pricing is used for ________.

Accepted Answer

Freight-absorption pricing is a strategy used to hold on to increasingly competitive markets. It involves pricing products at a level that includes the cost of freight or shipping, rather than charging customers separately for these costs. This can make the total cost of the product appear lower to customers and help companies remain competitive in crowded marketplaces.

Question 4

Which of the following factors would most likely lead to a company initiating a price cut?

Accepted Answer

The answer of Which of the following factors would most...

Question 5

Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.

Accepted Answer

The strategy of offering discounts to long-time customers suggests that Big Mike's Health Food Store is using dynamic pricing, which means that prices are adjusted based on individual customer behavior and circumstances. This approach allows businesses to optimize revenue and profit by tailoring prices to specific customers. Time-based pricing and seasonal pricing refer to adjusting prices based on time of purchase or season and do not apply in this situation. Promotional pricing and penetration pricing refer to short-term sales and initial low prices to attract customers, respectively, and also do not fit this scenario.

Question 6

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Accepted Answer

Motorzone uses basing-point pricing, where shipping charges are calculated from a specific location (Boston), regardless of the actual shipping origin.

Question 7

Which of the following is an adverse effect of using promotional pricing?

Accepted Answer

The answer of Which of the following is an adverse...

Question 8

Which of the following is true of price changes?

Accepted Answer

A drop in price can be associated with quality degradation, loss of exclusivity or even desperation to move unsold stock. This can adversely affect how consumers view the brand.

Question 9

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

Accepted Answer

FOB-origin pricing, also known as "free on board" pricing, requires the customer to take responsibility for the freight charges from the factory or point of origin to the destination. The seller only covers the cost of loading the product onto the transportation carrier.

Question 10

If Detroit DLX charges the same price for the delivery of its product to customers located within the Great Lakes states, but a different price to customers elsewhere, the company is using ________.

Accepted Answer

Detroit DLX is using zone pricing, where prices are determined based on geographic zones or regions. Customers within the Great Lakes states are charged the same price, while those outside of the region are charged a different price.

Question 11

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?

Accepted Answer

Uniform-delivered pricing is the form of geographic pricing in which a company charges the same rate to ship a product anywhere in the country. The other options - FOB-origin pricing, psychological pricing, zone pricing, and basing-point pricing - all involve different methods of setting prices based on geographic location.

Question 12

Which of the following is true of the bottom of the pyramid?

Accepted Answer

The bottom of the pyramid is considered a source of fresh growth opportunities for businesses.

Question 13

Which of the following involves adjusting prices to account for the physical location of customers?

Accepted Answer

Geographic pricing involves adjusting prices based on the physical location of customers. It takes into account factors such as shipping costs, taxes, and tariffs that vary by region. The goal of geographic pricing is to provide a fair and competitive price for customers, while also ensuring profitability for the company.

Question 14

The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

Accepted Answer

Dynamic pricing is the practice of adjusting prices in real-time based on changes in supply and demand. The Internet offers the perfect platform for this type of pricing strategy, as businesses can easily monitor and analyze consumer behavior to adjust their prices accordingly. This helps businesses optimize their revenue by setting prices that are most attractive to consumers at any given time.

Question 15

The "bottom of the pyramid" refers to ________.

Accepted Answer

The "bottom of the pyramid" refers to the world's poorest consumers who have little or no purchasing power.

Question 16

Which of the following is true of FOB-origin pricing?

Accepted Answer

The answer of Which of the following is true of...

Question 17

Low-interest financing and longer warranties are both examples of ________.

Accepted Answer

Both low-interest financing and longer warranties are examples of promotional pricing, which aim to increase sales or attract more customers by offering deals, discounts, or other incentives. Segmented pricing is when companies offer different prices for different groups of customers, such as students or seniors. Product bundling pricing is when companies sell multiple products or services together as a package deal. Captive product pricing is when companies sell products that require related accessories or services, such as printers that require specific ink cartridges. Product-form pricing is when companies price different versions or variations of a product differently based on factors such as size, features, or quality.

Question 18

Which of the following is a geographical pricing strategy?

Accepted Answer

Basing-point pricing is a geographical pricing strategy which involves setting the price based on the location of a particular point such as a factory, port or distribution center. The price is then determined by adding the transportation costs from the basing point to the customer's location.

Question 19

________ is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price.

Accepted Answer

Zone pricing involves dividing geographic regions and charging customers in each region the same total price. This strategy is commonly used by companies that have different shipping costs based on distance and location. By setting up zones and charging customers in each zone the same price, the company can ensure that all customers are paying a fair price while still covering their costs.

Question 20

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?

Accepted Answer

In uniform-delivered pricing, all customers pay the same amount regardless of their location, and the company absorbs the transportation costs.

Quiz 11: Pricing Strategies: Additional Considerations