Question 1

Using ________,companies are able to turn their by-products into cash,allowing them to make the price of their main product more competitive.
A) product bundle pricing
B) optional product pricing
C) captive product pricing
D) by-product pricing
E) skimming

Accepted Answer

By-product pricing allows companies to sell their by-products for extra revenue, which can offset the costs of producing their main product. This allows companies to offer lower prices for their main product, making it more competitive.

Question 2

Of the following,which statement(s)would NOT support a market-skimming policy for a new product?
A) The product's quality and image support its higher price.
B) Enough buyers want the products at that price.
C) Competitors are not able to undercut the high price.
D) Competitors can enter the market easily.
E) C and D

Accepted Answer

A market-skimming policy aims to set a high price for a new product to generate high profits from early adopters willing to pay a premium price. Factors that would support a market-skimming policy include a high-quality product with an excellent image that justifies a higher price and sufficient demand from buyers who are willing to pay the premium price. Also, if competitors cannot undercut the high price due to the uniqueness of the product or other reasons, it would support the implementation of a market-skimming policy. However, if competitors can easily enter the market, they may undercut the high price, reducing the profitability of the market-skimming strategy. Therefore, statement D, "Competitors can enter the market easily," would not support a market-skimming policy.

Question 3

A challenge for management in product line pricing is to decide on the price steps between the ________.
A) various products in a line
B) product mixes
C) product groupings
D) product lines
E) channel partners

Accepted Answer

Product line pricing involves setting prices for different products in a line, and a challenge for management is determining the appropriate price steps between these products to reflect their differences in features and value. Therefore, the correct choice is A. The other options are not directly related to product line pricing.

Question 4

A company sets not a single price,but rather a ________ that covers different items in its line that change over time as products move through their life cycles.
A) pricing by-product
B) pricing structure
C) pricing loop
D) pricing cycle
E) pricing bundle

Accepted Answer

A pricing structure refers to the pricing strategy of setting different prices for different products within a company's product line. This structure can change over time as products move through their life cycles, with some products being discounted or phased out and new products being introduced at different price points.

Question 5

Southeast Telephone Company uses two-part pricing for its long-distance call charges.Because this is a service,the price is broken into a fixed fee plus a(n)________.
A) fixed usage rate
B) variable usage rate
C) standard usage rate
D) market usage rate
E) optional usage rate

Accepted Answer

Two-part pricing involves a fixed fee and a usage rate. The usage rate, in this case for long-distance calls, would vary based on the amount of usage, making it a variable usage rate. Therefore, the best choice is B.

Question 6

A firm is using ________ when it charges a high,premium price for a new product with the intention of reducing the price in the future.
A) price skimming
B) trial pricing
C) value pricing
D) market-penetration pricing
E) prestige pricing

Accepted Answer

This pricing strategy is known as price skimming, where a high price is initially charged to gather maximum revenue from early adopters and then gradually reduces it to appeal to a broader market. This strategy is commonly used to recover the R&D costs of a new product and create a perception of exclusivity and uniqueness among customers.

Question 7

Which of the following conditions would NOT support the use of a market-penetration pricing strategy?
A) The market is highly price sensitive.
B) Production and distribution costs will fall as sales volume increases.
C) The product's quality and image support a high price.
D) A low price would help keep out the competition.
E) A and C

Accepted Answer

Market-penetration pricing strategy is when a low price is set for a product to penetrate a market quickly and deeply. However, if the product's quality and image support a high price, then a market-penetration pricing strategy may not be appropriate. Therefore, option C would NOT support the use of a market-penetration pricing strategy.

Question 8

Using product bundle pricing,sellers combine several products and offer the bundle ________.
A) as a functional unit
B) at a reduced price
C) as a complete self-service package
D) as a reward to loyal customers
E) at a premium price

Accepted Answer

Product bundle pricing involves combining several products and offering them at a reduced price compared to if each item was purchased separately. Therefore, the correct choice is B, as the bundle is offered at a reduced price.

Question 9

Companies usually develop ________ rather than ________.
A) single products; product families
B) product lines; single products
C) product families; product lines
D) product brands; product images
E) product images; product brands

Accepted Answer

Companies typically develop product lines, which consist of a group of related products, rather than focusing on single products, to cater to different customer needs and preferences and to maximize market coverage.

Question 10

Which of the following is a reason that a marketer would choose a penetration pricing strategy?
A) to ensure the company has the ability to increase prices once demand decreases
B) to focus on the rapid achievement of profit objectives
C) to appeal to different consumer segments with different levels of price sensitivity
D) to create markets for highly technical products
E) to help keep out the competition

Accepted Answer

Penetration pricing involves setting a low price to enter a competitive market and gain market share quickly, which can deter competitors from entering the market due to the low-profit margins.

Question 11

Mach 3 razor blades must be used in the Mach 3 razor.Which type of pricing is being used?
A) product line pricing
B) optional product pricing
C) captive product pricing
D) by-product pricing
E) product bundle pricing

Accepted Answer

Captive product pricing is being used when a company sells a primary product and requires a complementary product for it to work, as in this case where Mach 3 razor blades must be used in the Mach 3 razor.

Question 12

A marketer must be familiar with the five major product mix pricing situations.Which of the following is NOT one of them?
A) product line pricing
B) optional product pricing
C) captive product pricing
D) unbundled product pricing
E) by-product pricing

Accepted Answer

The five major product mix pricing situations are product line pricing, optional product pricing, captive product pricing, by-product pricing, and product bundle pricing. Unbundled product pricing is not one of the five situations.

Question 13

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.
A) market-level pricing
B) market-competitive pricing
C) market-skimming pricing
D) market-price lining
E) market-price filling

Accepted Answer

Market-skimming pricing involves setting an initially high price for a new product or service to generate significant revenue from the early adopters or those willing to pay a premium before eventually lowering the price to attract more price-sensitive customers. This strategy is often used for innovative or unique products with high demand but limited competition. In contrast, market-penetration pricing involves setting a low price to quickly gain market share and attract a large customer base. This strategy is suitable for highly competitive markets or when a company's goal is to establish brand recognition and customer loyalty. However, for companies setting prices for the first time, market-skimming pricing may be the better choice if their product or service is perceived as valuable and can command a premium price.

Question 14

Which of the following is NOT a price adjustment strategy?
A) segmented pricing
B) promotional pricing
C) free samples
D) geographical pricing
E) seasonal pricing

Accepted Answer

Free samples are not a price adjustment strategy as they do not involve any change in the actual price of the product. Rather, they are a promotional tactic aimed at allowing potential customers to try the product for free in order to generate interest and potential sales. The other options listed are all forms of price adjustment strategies, as they involve variations in the price of the product based on factors such as market demand, location, season, or promotion.

Question 15

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.
A) product bundle
B) optional product
C) captive product
D) by-product
E) skimming

Accepted Answer

Optional-product pricing involves offering optional or accessory products along with the main product at an additional cost. In this case, companies decide which items to include in the base price and which to offer as options, making it the most appropriate option out of the given choices. Product bundle pricing involves packaging two or more products together and offering a reduced price, captive-product pricing involves offering a main product that can't be used without a complementary product, by-product pricing involves selling the by-products of a production process, and skimming pricing involves setting a high price for a new product to gain maximum revenue before competitors enter the market.

Question 16

What is a major advantage of product bundle pricing?
A) It can promote the sales of products consumers might not otherwise buy.
B) It allows a company to offset the costs of disposing of by-products.
C) It combines the benefits of the other pricing strategies.
D) It creates a brand experience for consumers.
E) It offers consumers less value for the money.

Accepted Answer

Product bundle pricing can encourage customers to purchase additional products that they might not have considered before which can lead to increased sales and revenue for the company.

Question 17

When amusement parks and movie theaters charge admission plus fees for food and other attractions,they are following a(n)________ pricing strategy.
A) by-product
B) optional-product
C) two-part
D) skimming
E) penetration

Accepted Answer

A two-part pricing strategy involves charging customers a fixed fee for admission or access to a product or service, and then charging additional fees for any extra features or benefits that the customer chooses to add on. This is commonly used in amusement parks and movie theaters, where customers pay for a ticket to get in and then pay additional fees for food, souvenirs, and other activities.

Question 18

________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.
A) Market-skimming
B) Market-penetration
C) Below-market
D) Value-based
E) Leader

Accepted Answer

The approach described is market-penetration pricing, as it involves setting a low initial price in order to quickly attract a large number of buyers and gain a significant share of the market. This approach is often used by companies when introducing a new product or entering a new market, with the goal of capturing market share and gaining a foothold before competitors can do so.

Question 19

In the case of services,captive product pricing is called ________ pricing.
A) by-product
B) optional product
C) two-part
D) bundle
E) segmented

Accepted Answer

Captive pricing for services is commonly called two-part pricing, where customers pay a fixed fee for the basic service and then an additional fee for any additional services or features they may choose to add on.

Question 20

Typically,producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product.
A) low; low markups
B) high; low markups
C) low; high markups
D) high; high markups
E) moderately; moderate markups

Accepted Answer

Producers using captive-product pricing often set a low price for the main product to attract customers and then apply high markups on the necessary supplies or accessories, which are required to use the main product, to maximize profits.

Quiz 11: Pricing Products: Pricing Strategies

Using ________,companies are able to turn their by-products into cash,allowing them to make the price of their main product more competitive.

Of the following,which statement(s) would NOT support a market-skimming policy for a new product?

A challenge for management in product line pricing is to decide on the price steps between the ________.

A company sets not a single price,but rather a ________ that covers different items in its line that change over time as products move through their life cycles.

Southeast Telephone Company uses two-part pricing for its long-distance call charges.Because this is a service,the price is broken into a fixed fee plus a(n) ________.

A firm is using ________ when it charges a high,premium price for a new product with the intention of reducing the price in the future.

Which of the following conditions would NOT support the use of a market-penetration pricing strategy?

Using product bundle pricing,sellers combine several products and offer the bundle ________.

Companies usually develop rather than .

Which of the following is a reason that a marketer would choose a penetration pricing strategy?

Mach 3 razor blades must be used in the Mach 3 razor.Which type of pricing is being used?

A marketer must be familiar with the five major product mix pricing situations.Which of the following is NOT one of them?

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.

Which of the following is NOT a price adjustment strategy?

Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.

What is a major advantage of product bundle pricing?

When amusement parks and movie theaters charge admission plus fees for food and other attractions,they are following a(n) ________ pricing strategy.

________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.

In the case of services,captive product pricing is called ________ pricing.

Typically,producers who use captive-product pricing set the price of the main product and set on the supplies necessary to use the product.