Question 1

A smartphone manufacturer introduced a new device into the marketplace with pricing set according to the skimming approach. The CEO of the company reviews financial reports from the device and notes that the pricing approach used is not cost-effective for the company. How should the CEO adjust the pricing strategy for this device? ​

Accepted Answer

The skimming pricing strategy involves setting a high price initially and then gradually lowering it. If it's not cost-effective, dropping the price can help increase sales volume and market penetration.

Question 2

Retailers such as Home Depot and Lowe's, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing.

Accepted Answer

This strategy is known as competitive pricing, where retailers set their prices based on what their competitors are offering, with the intention to match or beat those prices to attract customers.

Question 3

A newly opened seafood restaurant advertises various deals on meal packages and special prices on dinner packages to attract customers. This is an example of _____ pricing.

Accepted Answer

Promotional pricing is a strategy where a business temporarily reduces the price of a product or service to attract customers and increase sales, which aligns with the restaurant's approach of offering deals and special prices to draw in customers.

Question 4

In the absence of other cues:

Accepted Answer

In the absence of other cues, consumers often rely on price as an important indicator of a product's quality, assuming that higher prices are associated with higher quality. This is a common heuristic used in decision-making when other information is not available.

Question 5

A pricing policy that assumes that some prices are more appealing than others is known as _____ pricing.

Accepted Answer

Psychological pricing is based on the idea that certain prices have a psychological impact. Retailers use this strategy to make items appear cheaper than they are, such as pricing something at $9.99 instead of $10, believing that customers perceive it as significantly cheaper.

Question 6

A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success?

Accepted Answer

Promotional pricing is the most effective strategy for increasing the number of customers in a store because it attracts customers by offering temporary discounts or deals, making products more appealing and encouraging purchases.

Question 7

Psychological pricing is based on the premise that:

Accepted Answer

Psychological pricing strategies suggest that certain prices have a psychological impact. The retail price is often set just below a round number, e.g., $1.99 instead of $2.00. This approach makes the price seem lower than it actually is, potentially making the product more appealing to consumers.

Question 8

Which of the following pricing strategies tries to reduce the emphasis on price as a competitive weapon?

Accepted Answer

The answer of Which of the following pricing strategies tries...

Question 9

The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy? ​

Accepted Answer

Psychological pricing strategies often involve pricing products in a way that makes them appear less expensive than they really are. Setting the price at $24.97, just below the $25 mark, is a common tactic to make the price seem significantly lower, appealing to consumers' perception of getting a better deal.

Question 10

When General Motors introduced the Saturn, it priced the SL sports sedan at $2,000 less than the Toyota Corolla DLX and $1,500 less than comparable Nissan and Honda automobiles. This is an example of the _____ pricing strategy.

Accepted Answer

Penetration pricing strategy involves setting a lower price for a new product to attract customers from competitors and gain market share quickly. By pricing the Saturn lower than its competitors, General Motors was using penetration pricing to attract customers who might otherwise purchase from Toyota, Nissan, or Honda.

Question 11

Which of the following is true of promotional pricing?

Accepted Answer

Promotional pricing involves temporarily reducing prices to increase short-term sales or market share.

Question 12

Which of the following is a disadvantage associated with product-line pricing?

Accepted Answer

Product-line pricing can limit flexibility in making price changes for individual items within the line, as changes may need to be consistent across the product line to maintain perceived value relationships among the products.

Question 13

An example of odd pricing would be:

Accepted Answer

Odd pricing refers to the strategy of setting prices just below a round number, such as pricing an item at $129.99 instead of $130, to make the price seem lower than it actually is. This practice is based on the belief that consumers perceive these prices as being significantly lower, thus making the product more attractive.

Question 14

When a men's clothing store sells suits at four price levels ($295, $455, $525, and $650), the store's retail policy is _____ pricing.

Accepted Answer

Product-line pricing is a strategy where items that are related but vary in quality and features are priced differently within a specific range. The men's clothing store selling suits at four different price levels is an example of product-line pricing, as it offers suits that likely vary in quality and features at different price points to cater to different customer segments.

Question 15

"Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, is an example of _____ pricing.

Accepted Answer

This is an example of promotional pricing, where a discount or incentive is offered to encourage customers to buy more of a product or service. In this case, the offer of a free fourth shock absorber with the purchase of three is a promotional strategy to increase sales.

Question 16

A manufacturer of tablet computers has designed a unique new product that can network with satellites to access streaming video and television channels. This device does not need a Wi-Fi connection and can be accessed anywhere in the world by logging onto the site. Besides serving as a portable computer, this device bypasses the need for a consumer to purchase cable or personal satellite dish access. Which approach to pricing makes the most sense for the company to use first? ​

Accepted Answer

Setting the price extremely high until competing products are developed makes the most sense for the company initially because it has a unique product with no direct competition, allowing it to capitalize on its novelty and exclusivity. This strategy, often referred to as price skimming, enables the company to maximize profits from early adopters willing to pay a premium for the latest technology.

Question 17

The practice of marketing merchandise at a limited number of prices is called _____ pricing.

Accepted Answer

Product-line pricing involves setting a limited number of prices for a selection of merchandise, allowing companies to simplify pricing across a range of products that may vary in cost to produce or purchase.

Question 18

Consumers today perceive that, within price limits, there is:

Accepted Answer

Consumers often perceive a direct relationship between the quality and price of a product, believing that higher-priced items are of better quality. This perception influences purchasing decisions, as many consumers are willing to pay more for products they believe to be superior.

Question 19

_____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices.

Accepted Answer

Loss leader pricing is a strategy where products are sold at a loss to attract customers to the store, with the expectation that they will purchase other items at regular prices.

Question 20

A car manufacturer has developed different models of a car to suit the pricing needs of different classes of customers. It offers a low-end version for price conscious customers and luxury cars for high-end customers. This is an example of _____ pricing.

Accepted Answer

This is an example of product-line pricing, where different versions of a product are offered at different price points to cater to different segments of the market.

Quiz 14: Pricing Strategies

Retailers such as Home Depot and Lowe's, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing.

A newly opened seafood restaurant advertises various deals on meal packages and special prices on dinner packages to attract customers. This is an example of _____ pricing.

In the absence of other cues:

A pricing policy that assumes that some prices are more appealing than others is known as _____ pricing.

A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success?

Psychological pricing is based on the premise that:

Which of the following pricing strategies tries to reduce the emphasis on price as a competitive weapon?

The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy?

When General Motors introduced the Saturn, it priced the SL sports sedan at $2,000 less than the Toyota Corolla DLX and $1,500 less than comparable Nissan and Honda automobiles. This is an example of the _____ pricing strategy.

Which of the following is true of promotional pricing?

Which of the following is a disadvantage associated with product-line pricing?

An example of odd pricing would be:

When a men's clothing store sells suits at four price levels ($295, $455, $525, and $650) , the store's retail policy is _____ pricing.

"Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, is an example of _____ pricing.

The practice of marketing merchandise at a limited number of prices is called _____ pricing.

Consumers today perceive that, within price limits, there is:

_____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices.

A car manufacturer has developed different models of a car to suit the pricing needs of different classes of customers. It offers a low-end version for price conscious customers and luxury cars for high-end customers. This is an example of _____ pricing.

Quiz 14: Pricing Strategies

Retailers such as Home Depot and Lowe's, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing.

A newly opened seafood restaurant advertises various deals on meal packages and special prices on dinner packages to attract customers. This is an example of _____ pricing.

In the absence of other cues:

A pricing policy that assumes that some prices are more appealing than others is known as _____ pricing.

A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success?

Psychological pricing is based on the premise that:

Which of the following pricing strategies tries to reduce the emphasis on price as a competitive weapon?

The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy? ​

When General Motors introduced the Saturn, it priced the SL sports sedan at $2,000 less than the Toyota Corolla DLX and $1,500 less than comparable Nissan and Honda automobiles. This is an example of the _____ pricing strategy.

Which of the following is true of promotional pricing?

Which of the following is a disadvantage associated with product-line pricing?

An example of odd pricing would be:

When a men's clothing store sells suits at four price levels ($295, $455, $525, and $650) , the store's retail policy is _____ pricing.

"Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, is an example of _____ pricing.

The practice of marketing merchandise at a limited number of prices is called _____ pricing.

Consumers today perceive that, within price limits, there is:

_____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices.

A car manufacturer has developed different models of a car to suit the pricing needs of different classes of customers. It offers a low-end version for price conscious customers and luxury cars for high-end customers. This is an example of _____ pricing.

The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy?