Question 1

When a company charges the same rate to ship a product anywhere in Asia,it is using which form of geographic pricing?
A) FOB delivered
B) FOB factory
C) FOB origin
D) uniform-delivered
E) basing-point

Accepted Answer

Uniform-delivered pricing charges the same rate to ship a product anywhere within a particular geographic region, in this case, Asia.

Question 2

Most companies that conduct international business ________ to ________.
A) adjust their prices; take local market conditions into consideration
B) use promotional pricing; create excitement in new markets
C) use geographical pricing; reduce delivery costs
D) set a uniform price; maintain a consistent product image
E) initiate price cuts; compensate for import tariffs and taxes

Accepted Answer

Adjusting prices is crucial for companies that conduct international business as different countries have different market conditions, varying levels of competition, economic stability, and consumer preferences. These factors impact a product's demand and desired price. Therefore, companies need to take into account these factors to ensure their products remain competitively priced, appeal to the local market, and remain profitable.

Question 3

Which of the following is the opposite of FOB-origin pricing?
A) basing-point pricing
B) freight-absorption pricing
C) uniform-delivered pricing
D) zone pricing

Accepted Answer

FOB-origin pricing means the buyer pays for the transportation costs from the seller's location. The opposite would be uniform-delivered pricing, where the seller includes the transportation cost in the price and delivers the goods to the buyer's location for the same price across all regions. Basing-point pricing and zone pricing both involve adjusting the price based on the distance from the seller's location, so they are not opposites. Freight-absorption pricing involves the seller paying for some or all of the transportation costs, but it is not the opposite of FOB-origin pricing as the buyer may still pay for some of the costs.

Question 4

Freight-absorption pricing is used for ________ and ________.
A) market penetration; higher profit margins
B) holding on to increasingly competitive markets; higher profit margins
C) market penetration; holding on to increasingly competitive markets
D) generating temporary higher profits; discouraging competitors
E) services; installations

Accepted Answer

Freight-absorption pricing is a strategy where the seller absorbs all or a portion of the freight costs to make the product more affordable and attractive to buyers. This pricing strategy is commonly used to penetrate a new market or to hold on to an increasingly competitive market. By absorbing the freight costs, the seller can lower the overall price and make their product more competitive in the market. This can be beneficial in both scenarios where a company wants to enter a new market or compete with other market players.

Question 5

Competitors are most likely to react to a price change when ________.
A) a large number of competitors are involved
B) the product is uniform
C) the buyers are not well informed about product features
D) buyers are not well informed about price differences
E) the market has a pure monopoly

Accepted Answer

Competitors are most likely to react to a price change when the product is uniform because it makes it easier for consumers to compare prices, leading to increased competition among sellers.

Question 6

A company that raises its prices is most at risk of being accused of which of the following?
A) high-low pricing
B) price gouging
C) predatory pricing
D) price discrimination
E) retail price maintenance

Accepted Answer

Price gouging refers to charging excessively high prices for goods or services during a time of crisis or emergency, which can lead to accusations of taking advantage of vulnerable consumers. Raising prices without a valid reason could be seen as price gouging and damage the company's reputation. High-low pricing refers to alternating between high and low prices to create a sense of value for consumers. Predatory pricing involves setting prices low to drive competitors out of business, while price discrimination refers to charging different prices based on the customer's willingness to pay. Retail price maintenance refers to setting a minimum price that resellers must adhere to.

Question 7

Under which type of geographic pricing strategy does each customer pay the freight for the product from the factory to its destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) dynamic pricing

Accepted Answer

FOB-origin pricing, also known as Free On Board pricing, is a type of geographic pricing strategy in which the buyer takes ownership of the goods at the point of origin (the factory) and pays for the transportation costs from the factory to the destination. Therefore, each customer is responsible for paying the freight for the product.

Question 8

Which of the following is a reason for a company to raise its prices?
A) to address the issue of overdemand for a product
B) to win a larger share of the market
C) to use excess capacity
D) to boost sales volume
E) to balance out decreasing costs

Accepted Answer

If a company is facing overdemand for a product, raising prices can help to limit demand and prevent stock shortages. This can also create a perception of exclusivity and increase the product's perceived value.

Question 9

Which of the following is a major factor that influences price increases?
A) cost inflation
B) surplus of raw materials
C) government intervention
D) foreign competition
E) excess capacity

Accepted Answer

Cost inflation is a major factor that influences price increases. As the costs of raw materials, labor, and other inputs increase, businesses often raise the prices of their products or services to maintain profitability. This will lead to the increase of the price of the final product.

Question 10

When faced with a competitor who has cut its product's price,which of the following is typically the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer?
A) improving the quality of the product
B) introducing a higher-priced premium brand
C) altering the company's marketing communications
D) bundling the offer with add-ons
E) distributing the product through less costly channels

Accepted Answer

Altering the company's marketing communications can effectively raise the perceived value of the offer without incurring significant costs.

Question 11

Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product?
A) reduce price
B) raise perceived value
C) improve quality and increase price
D) improve quality and decrease price
E) launch a low-price "fighter brand"

Accepted Answer

The answer of Which of the following is NOT an...

Question 12

There are many reasons why a firm might consider cutting its price.All of the following are among them EXCEPT ________.
A) excess capacity
B) falling demand in the face of strong price competition
C) a drive to dominate the market through lower costs
D) a drive to reduce market share
E) a drive to gain market share and cut costs through volume

Accepted Answer

A firm would not cut its prices with a drive to reduce its market share. Cutting prices would likely result in an increase in market share, not a decrease. Thus, option D is not a reason why a firm might consider cutting its price.

Question 13

Sawasdee Paper Company charges all customers within different identified geographical areas a single total price.The more distant the area,the higher the price.This is ________.
A) freight-absorption pricing
B) zone pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) bulk rate pricing

Accepted Answer

The pricing strategy described is zone pricing, as it charges different prices based on the distance or zone of the customer's location.

Question 14

Price escalation in international markets may result from four of these five marketing conditions.Which one will have the LEAST effect?
A) the additional cost of physical distribution
B) exchange-rate fluctuations
C) market instability
D) higher costs of selling
E) language barriers

Accepted Answer

Language barriers may cause some difficulties in international marketing, but they are not likely to directly contribute to price escalation. The other four conditions can directly increase costs and thus lead to price escalation.

Question 15

Which of the following is LEAST likely to cause price escalation in foreign markets?
A) the additional costs of product modifications
B) the additional costs of shipping and insurance
C) the additional costs of import tariffs and taxes
D) the additional costs of improving a country's infrastructure
E) exchange rate fluctuations

Accepted Answer

Improving a country's infrastructure may actually lead to cost savings in the long run and is unlikely to cause price escalation in foreign markets. On the other hand, choices A, B, C, and E can all contribute to price escalation.

Question 16

Using this pricing strategy,the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.
A) FOB origin
B) freight-absorption
C) basing-point
D) loss leader
E) zone

Accepted Answer

Freight-absorption pricing strategy involves sellers taking on part or all of the actual freight charges in order to get the desired business. This strategy is often used when the seller wants to attract customers who are sensitive to freight charges by taking on the cost of transportation.

Question 17

When a competitor cuts its price,a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.
A) stabilize its production costs
B) reduce its marketing costs
C) hold its current prices and profit margin
D) increase its marketing budget to raise the perceived value of the product
E) increase its production costs to improve the quality of the product

Accepted Answer

If a company believes that cutting its own price in response to a competitor's price cut would not result in a significant increase in market share or would harm its profit margin, it is likely to continue selling its product at the same price point, maintaining its current profit margin. This strategy is known as price stability or price leadership, which involves maintaining prices in order to reduce price competition and promote stability in the market.

Question 18

Price escalation in international markets may result from differences in market conditions or ________.
A) cultural preferences
B) selling strategies
C) regional tastes
D) customer perceptions
E) language barriers

Accepted Answer

Price escalation in international markets can result from differences in selling strategies, as companies may adopt different pricing tactics based on local competition, distribution costs, and market demand.

Question 19

The Internet offers ________,where the price can easily be adjusted to meet changes in demand.
A) captive pricing
B) dynamic pricing
C) basing-point pricing
D) price bundling
E) cost-plus pricing

Accepted Answer

Dynamic pricing is a pricing strategy in which the price of a product or service can be easily adjusted to meet changes in demand. The Internet is a perfect platform for dynamic pricing because it allows prices to be changed in real-time based on factors such as demand, competition, and inventory levels. This allows businesses to optimize their prices to maximize profits and stay competitive in a constantly changing market.

Question 20

The flexibility of the Internet allows companies to use ________.
A) captive pricing
B) segmented pricing
C) promotional pricing
D) dynamic pricing
E) geographical pricing

Accepted Answer

The flexibility of the internet allows companies to use dynamic pricing, which is the practice of adjusting prices up or down in response to market demand. This type of pricing strategy is made possible by the ability to gather and analyze large amounts of data about consumer behavior online.

Quiz 11: Pricing Products: Pricing Strategies

When a company charges the same rate to ship a product anywhere in Asia,it is using which form of geographic pricing?

Most companies that conduct international business to .

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

Freight-absorption pricing is used for and .

Competitors are most likely to react to a price change when ________.

A company that raises its prices is most at risk of being accused of which of the following?

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

Which of the following is a reason for a company to raise its prices?

Which of the following is a major factor that influences price increases?

When faced with a competitor who has cut its product's price,which of the following is typically the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer?

Which of the following is NOT an effective action that a company can take to combat a competitor's price cut on a product?

There are many reasons why a firm might consider cutting its price.All of the following are among them EXCEPT ________.

Sawasdee Paper Company charges all customers within different identified geographical areas a single total price.The more distant the area,the higher the price.This is ________.

Price escalation in international markets may result from four of these five marketing conditions.Which one will have the LEAST effect?

Which of the following is LEAST likely to cause price escalation in foreign markets?

Using this pricing strategy,the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.

When a competitor cuts its price,a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.

Price escalation in international markets may result from differences in market conditions or ________.

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

The flexibility of the Internet allows companies to use ________.