Question 1

A firm is using a(n)strategy when it introduces a product at a very low price to encourage rapid product adoption.

Accepted Answer

Penetration pricing is a strategy where a firm introduces a product at a low price to quickly attract customers and gain market share.

Question 2

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.

Accepted Answer

A skimming price strategy involves setting a high initial price for a new product to maximize profits from early adopters before gradually lowering the price to attract a broader customer base.

Question 3

When consumers are unable to judge the quality of a product through examination or prior experience,they usually do which of the following and assume that the higher- priced product is the higher- quality product?

Accepted Answer

Consumers often make a price-quality inference, assuming that a higher-priced product is of higher quality when they cannot judge the quality through examination or prior experience.

Question 4

Which of the following is a set price or price range in consumers' minds that they refer to in evaluating a product's price?

Accepted Answer

An internal reference price is the price or price range that consumers have in their minds when evaluating the price of a product, based on their past experiences and knowledge.

Question 5

Swatch surveyed the market and identified an unserved segment of watch buyers.Using these results,they created a watch at a price consumers were willing to pay.The unorthodox order of this marketing mix decision is an example of .

Accepted Answer

Target costing involves designing a product to meet a specific cost and price point that consumers are willing to pay, which aligns with Swatch's approach of identifying a market segment and creating a product to fit that segment's price expectations.

Question 6

The average price Xerox charged when it introduced the first stand- alone fax machine was $12,700.This premium price was a way for Xerox to recoup some of the research and development costs that went into production.Xerox used .

Accepted Answer

Xerox used a skimming price strategy, which involves setting a high initial price to recover R&D costs and target early adopters willing to pay more.

Question 7

Which of the following occurs when price is inelastic?

Accepted Answer

When demand is inelastic, a price increase leads to a smaller percentage decrease in quantity demanded, resulting in an increase in total revenue.

Question 8

is the value customers give up to obtain a desired product.

Accepted Answer

Price is the value customers give up to obtain a desired product.

Question 9

Which of the following should be true for a skimming price to be successful?

Accepted Answer

For skimming pricing to be successful, there should be little chance that competitors can quickly enter the market, allowing the company to maximize profits from early adopters willing to pay a higher price.

Question 10

A new product carries a low price for a limited period of time to attract customers in what type of pricing strategy?

Accepted Answer

Trial pricing involves offering a new product at a low price for a limited time to encourage customers to try it.

Question 11

Which of the following occurs when manufacturers or wholesalers attempt to force retailers to charge a certain price for their products?

Accepted Answer

Vertical price fixing occurs when manufacturers or wholesalers attempt to control the retail prices of their products by forcing retailers to charge a certain price.

Question 12

Consumers usually perceive higher- priced products as .

Accepted Answer

Consumers often associate higher prices with higher quality due to the perception that more expensive products are made with better materials or craftsmanship.

Question 13

Joe Bergerson makes and sells maple racks for cooling cakes and cookies.Joe knows that it costs $15 to make one rack,and he wants to earn a 25 percent profit on each rack.Which approach to pricing is Joe most likely to use?

Accepted Answer

Joe is likely to use cost-plus pricing, where he adds a 25% profit margin to the cost of making each rack to determine the selling price.

Question 14

A business using price lining is doing which of the following?

Accepted Answer

Price lining involves setting a limited number of price points for products in a product line, allowing customers to choose based on price levels.

Question 15

With an understanding of price elasticity,sellers should know that the less elastic the demand for their product is,the more advantageous it is for them to .

Accepted Answer

When demand is less elastic, consumers are less sensitive to price changes, so raising the price can lead to higher revenue without a significant drop in sales.

Question 16

Savings for You,a discount retail chain,is highly competitive.When entering a new market,Savings for You often cuts prices so deeply that it sells below costs,effectively pushing smaller companies with less purchasing power out of the market.Savings for You is most at risk of being accused of _.

Accepted Answer

Predatory pricing involves setting prices low with the intent to eliminate competition, which aligns with Savings for You's strategy of cutting prices below costs to push out smaller companies.

Question 17

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

Accepted Answer

Federal legislation, such as the Sherman Antitrust Act, prohibits price-fixing agreements among competitors, which means sellers must set their prices independently and without communication with competitors to avoid collusion.

Question 18

Which of the following statements about price is true?

Accepted Answer

The answer of Which of the following statements about price...

Question 19

When setting prices,a company must consider factors in its pricing environment.,including factors such as boom or recession,inflation,and interest rates,can have a strong impact on the firm's pricing strategies.

Accepted Answer

Economic trends such as boom, recession, inflation, and interest rates directly affect a company's pricing strategies.

Question 20

When a beverage maker came out with a new drink and priced it at half price for a month to attract buyers,the company was using a _ _ strategy.

Accepted Answer

The answer of When a beverage maker came out with...

Quiz 11: Pricing the Product

A firm is using a(n) strategy when it introduces a product at a very low price to encourage rapid product adoption.