Question 1

By definition,is used when a firm sells a product or service at two or more prices,even though the difference in price is not based on differences in cost.

Accepted Answer

Segmented pricing is used when a firm sells a product or service at two or more prices based on differences in customers, not cost. This could be based on factors such as geographic location, age, income, or other demographics. This allows companies to target different customer segments with different pricing strategies and capture more revenue from each segment.

Question 2

Federal legislation on price fixing requires that sellers set their prices .

Accepted Answer

Federal legislation on price fixing prohibits communication between competitors about the prices they will charge. Sellers must set their own prices without collaboration or coordination with other sellers in the market.

Question 3

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

Accepted Answer

E

Question 4

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

Accepted Answer

Captive product pricing is being used as the Mach 3 razor blades can only be used in the Mach 3 razor, which creates a captive market for the blades.

Question 5

Most companies that conduct international business to .

Accepted Answer

When conducting international business, companies need to take local market conditions into consideration in order to effectively compete. This includes adjusting their prices to match local market expectations, which can vary greatly based on factors such as local competition, consumer preferences, and economic conditions. Therefore, option D is the best answer as it mentions the need for companies to adjust their prices.

Question 6

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

Accepted Answer

Optional products are the items offered by companies as additional choices or add-ons to the core or base product. Companies decide which items to include in the base price and which to offer as options, making it a strategy of pricing.

Question 7

Which of the following is an example of a cash discount?

Accepted Answer

2/10, net 30 is an example of a cash discount. It means that if the customer pays the invoice within 10 days, they will get a 2% discount, otherwise the full amount is due in 30 days. The other choices do not involve a discount for paying cash. Choice A just describes a normal transaction, choice B is a bundle or promotional offer, choice D involves giving a free item, and choice E is not relevant.

Question 8

When Circuit Town Electronics sets its televisions at three price levels of $699,$899,and $1,099,it is using _ .

Accepted Answer

Circuit Town Electronics is using product line pricing by offering three different price levels for their televisions. Product line pricing involves setting different prices for different versions of the same product line.

Question 9

A car maker's strategy of advertising a basic vehicle model with few conveniences and comforts at a low price to entice buyers and then convincing customers to buy higher- priced models with more amenities is an example of which of the following?

Accepted Answer

Optional product pricing is a pricing strategy in which a basic product is offered at a low price, and then customers are encouraged to buy additional options or features at a higher price. This is the strategy described in the question, where the car maker offers a basic vehicle model at a low price and then convinces customers to buy higher-priced models with more amenities.

Question 10

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

Accepted Answer

FOB- origin pricing means the buyer pays for the freight or shipping costs from the point of origin (typically the supplier's location) to the delivery location. The opposite of this would be uniform-delivered pricing, where the seller includes the shipping costs in the price of the product and the buyer pays the same price regardless of their location.

Question 11

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?

Accepted Answer

The answer of When faced with a competitor who has...

Question 12

results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.

Accepted Answer

Pricing methods that make it difficult for consumers to understand the actual price they are paying can lead to price confusion. This can result in distrust of the company and dissatisfaction with the product or service.

Question 13

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

Accepted Answer

Language barriers may result in some additional costs of marketing materials translation, but it's unlikely to have significant effects on price escalation compared to other conditions such as market instability, exchange rate fluctuations, additional cost of physical distribution, and higher costs of selling.

Question 14

Consumers are less likely to use price to judge the quality of a product when they .

Accepted Answer

When consumers have experience with a product, they are more likely to judge its quality based on their personal experience rather than just the price.

Question 15

Companies usually develop rather than .

Accepted Answer

Companies usually develop product lines consisting of several related products rather than just a single product. This allows them to appeal to a larger customer base and benefit from economies of scale in production and marketing. It also provides opportunities for cross-selling and up-selling to customers.

Question 16

Price discrimination may be used to match competition as long as the strategy is temporary,localized,and .

Accepted Answer

Price discrimination used to match competition should be defensive in order to prevent long-term negative effects on profitability and brand image. It should also be temporary and localized to specific regions or situations. Defensive pricing is a reactive strategy that aims to temporarily match or beat the competitors’ prices without significantly lowering overall margins. Offensive pricing, on the other hand, is a proactive strategy that aims to offer lower prices consistently to gain market share and drive out competition.

Question 17

Some companies are reversing the fixed pricing trend and using _.

Accepted Answer

Dynamic pricing is the practice of setting flexible prices for products or services based on current market demands. It allows companies to adjust prices in real-time based on factors such as supply and demand, competitor pricing, and customer behavior. This is the opposite of fixed pricing, which remains constant regardless of market conditions.

Question 18

When sellers set prices after talking to competitors and engaging in collusion,they are involved in .

Accepted Answer

Price fixing involves collusion among competing sellers to set prices at a certain level.

Question 19

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

Accepted Answer

Market-skimming pricing involves setting high prices for new and innovative products or services to maximize revenue in the short term before competitors enter the market. This strategy is suitable if the company has a significant competitive advantage, and demand for the product is relatively inelastic. Thus, it is the best choice for companies facing the challenge of setting prices for the first time. On the other hand, market-penetration pricing involves setting low prices to attract customers and gain market share quickly, which may not be suitable for a company's first pricing strategy.

Question 20

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

Accepted Answer

Cost inflation refers to an increase in the cost of production inputs, such as labor and materials, which can lead to an increase in the cost of the final product and result in price increases.

Quiz 11: Additional Pricing Considerations