Question 1

A_________ is money returned to the buyer based on a portion of the purchase price.

Accepted Answer

A rebate is a partial refund to someone who has paid too much money for tax, rent, or a utility. It is money returned to the buyer based on a portion of the purchase price.

Question 2

Retailers prefer rebates to coupons because:

Accepted Answer

Retailers incur no handling costs with rebates because the responsibility for processing and fulfilling rebates typically falls on the manufacturer, not the retailer.

Question 3

Which of the following is a benefit of price lining?

Accepted Answer

Price lining simplifies the merchandising task, encourages customers to trade up, and reduces confusion from multiple price choices, thus offering all these benefits.

Question 4

What are the limits of a rules-based approach of taking markdowns?

Accepted Answer

The answer of What are the limits of a rules-based...

Question 5

What factors do retailers need to consider to set prices to maximize long-term profits?

Accepted Answer

The answer of What factors do retailers need to consider...

Question 6

Target offered 2 six-packs of any Pepsi product for $5 last week, and the price for a single carton was $2.69. What pricing strategy was Target using?

Accepted Answer

The answer of Target offered 2 six-packs of any Pepsi...

Question 7

An appliance store wants to get customers who are buying an upright freezer to trade up to the more expensive self-defrosting model. Which of the following practices can be used by the store to achieve this goal?

Accepted Answer

Price lining involves offering a product line with several items at specific price points, encouraging customers to trade up to a higher-priced model by highlighting the added features and benefits.

Question 8

Why is there a difference between initial markup and maintained markup?

Accepted Answer

The answer of Why is there a difference between initial...

Question 9

Why is the term everyday low pricing (EDLP) somewhat of a misnomer?

Accepted Answer

The answer of Why is the term everyday low pricing...

Question 10

At the supermarket today, Nelson noticed all the canned vegetables were priced at $.39, $.49, $.59, or $.69 per can. This type of pricing is:

Accepted Answer

Odd pricing refers to the practice of setting prices that end in odd numbers, such as $.39, $.49, $.59, or $.69, which is intended to make the price seem lower than it actually is.

Question 11

Charging different prices in different stores, markets or zones is called:

Accepted Answer

Zone pricing refers to the strategy of charging different prices in different geographic areas or zones.

Question 12

What should a small retailer do when it uses the competition-oriented method for setting prices, and sees that it cannot compete with Walmart's prices?

Accepted Answer

The answer of What should a small retailer do when...

Question 13

is the practice of offering two or more different products or services for sale at one price.

Accepted Answer

Price bundling is the practice of offering two or more different products or services for sale at one price.

Question 14

What was the initial reason for odd pricing?

Accepted Answer

Odd pricing was initially used to reduce losses due to employee theft of cash, as it required cashiers to open the cash register to give change, thus recording the sale.

Question 15

Jeff wanted to increase the traffic in his convenience store. Which type of pricing strategy should Jeff consider when posting cigarette prices?

Accepted Answer

Leader pricing involves setting lower prices on popular items to attract customers into the store, which can increase overall traffic.

Question 16

How can retailers reduce price competition?

Accepted Answer

The answer of How can retailers reduce price competition?...

Question 17

Anne Marie made an effort to stop into the Irving convenience store on her way home each Friday to pick up a gallon of milk, because it was priced lower than the local Walmart. In this case, the milk is an example of Irving's use of:

Accepted Answer

Leader pricing is a strategy where a store prices a product lower than its usual price to attract customers, hoping they will purchase additional items.

Question 18

Neal was considering the use of coupons for canned vegetables at his corner grocery. He knows coupons can encourage customers to try his store, or even help them to purchase additional items as they shop, but he is concerned about:

Accepted Answer

Coupons can lead to customers stocking up on canned vegetables during the promotion, which might reduce their need to purchase these items in the future, potentially decreasing future sales.

Question 19

As Jerome was leaving Ed's Electric, he noticed a bulletin board that featured small applications that he can send to the manufacturer with his receipt and receive a portion of what he spent on his digital TV back in the mail. What is this returned money called?

Accepted Answer

A rebate is a partial refund to someone who has paid too much money for tax, rent, or a utility. In this context, it refers to the money Jerome can receive back after purchasing the digital TV.

Question 20

What can small retailers do to compete with Walmart's low prices?

Accepted Answer

The answer of What can small retailers do to compete...

Quiz 12: Retail Pricing