Question 1

A company advertises that winter pullovers and jackets will be sold at a 50-percent discount if they are ordered before September 30.This is an example of a(n):

Accepted Answer

This is an example of a seasonal discount, as the discount is offered for winter clothing before the season starts, encouraging early purchases.

Question 2

A department store offers a 30-percent discount on Christmas trees if the trees are bought before December 1.This is an example of:

Accepted Answer

A seasonal discount is a price reduction given for purchasing goods or services out of season, such as buying Christmas trees before the holiday season begins.

Question 3

A company sells shoes at a price somewhere between the regular, nonsale price and the deep-discount sale prices that its competitors may offer.This is an example of:

Accepted Answer

Everyday low pricing is a strategy where a company consistently offers products at a price lower than the regular price but not as low as deep-discount sale prices, aiming to attract customers who seek value without waiting for sales.

Question 4

A car company introduces a new car in the market.It maintains a low introductory price, aiming at the mid-level segment.The main objective of the company is to build sales, market share, and profits quickly.This is an example of:

Accepted Answer

Market penetration pricing is a strategy where a company sets a low price for a new product to attract customers and gain market share quickly.

Question 5

A confectionery company pays a fee to a retailer to place its products near the checkout counter.By doing so, the confectionery company hopes to tempt customers to make impulse purchases.The fee paid to the retailer is an example of a(n):

Accepted Answer

A listing allowance is a fee paid by manufacturers to retailers to have their products placed in a prominent location, such as near the checkout counter, to increase visibility and impulse purchases.

Question 6

A shoe manufacturer pays a good amount to a department store to allow it to display its shoes in the store's window where they are most likely to attract the attention of customers.The money paid to the department store is an example of:

Accepted Answer

An allowance is a reduction in price given by a manufacturer to a retailer in exchange for some type of promotional activity, such as displaying the manufacturer's product prominently.

Question 7

Jared's, an exclusive delicatessen, marked down its smoked sausages from $9.99 to $6.99 in a prominently displayed poster in its smoked meats section.When consumers viewed the sale price, they were inclined to place smoked sausages in their shopping carts.This is an example of:

Accepted Answer

External reference price is the price that consumers use as a benchmark to evaluate the fairness of a current price. In this case, the consumers used the original price of $9.99 as a reference point to determine that the sale price of $6.99 was a good deal.

Question 8

A hotel chain drastically reduces the rates for its rooms during Christmas.This is done as part of a promotional offer to try to boost sales.This is an example of:

Accepted Answer

High/low pricing involves temporarily reducing prices to attract customers, which aligns with the hotel's strategy of reducing rates during Christmas as a promotional offer.

Question 9

A strategy companies use to emphasize the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer is called:

Accepted Answer

Everyday low pricing is a strategy where companies maintain consistent prices that are lower than regular prices but not as low as deep-discount sale prices, providing a stable pricing approach.

Question 10

Mike wants to buy a motorcycle helmet because the one he had was stolen.It had cost him $377.99.When he goes to buy a new one, he finds that it will cost him $450.99.He finds the price of the helmet too high.He is prepared to pay only as much as his previous helmet cost him.This is an example of:

Accepted Answer

Mike's willingness to pay only as much as his previous helmet cost is an example of an internal reference price, which is the price a consumer expects to pay based on past experiences.

Question 11

A company prices its shoes at $74.99 instead of $75.00.This is an example of a(n):

Accepted Answer

This is an example of an odd price, as it ends in an unusual number rather than a round number. This pricing strategy is often used to create the perception of a lower price and increase sales. The other options listed do not apply in this scenario.

Question 12

A pricing strategy of setting the initial price low for the introduction of a new product or service, with the objective of building sales, market share, and profits quickly is called:

Accepted Answer

Market penetration pricing involves setting a low initial price to attract customers quickly and gain market share, aiming for rapid sales growth and profitability.

Question 13

A strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay to obtain is called:

Accepted Answer

Price skimming is a strategy of selling a new product or service at a high price that innovators and early adopters are willing to pay to obtain.

Question 14

A dairy farm sells milk to a confectionery company.The dairy offers the company a discount of 10 percent on the total amount of the invoice if the company settles the amount within a period of 7 days instead of the usual 30 days.This is an example of a(n):

Accepted Answer

This is an example of a cash discount, which is a reduction in the invoice price offered to buyers to encourage early payment.

Question 15

A company has marked its refrigerators at $729.94 as the original price.The sales price has been marked at $650.99.Because the customer compares the sales price with the original price, he identifies an increased value.This is an example of:

Accepted Answer

External reference price is the price that a customer uses as a comparison to evaluate the value of a product or service. In this case, the customer is comparing the sales price of the refrigerator to the original price, which is an example of external reference pricing.

Question 16

A store that sells kids clothes drastically reduces prices during promotional sales in an effort to boost sales.This is an example of:

Accepted Answer

High/low pricing is a strategy where prices are temporarily reduced to encourage purchases, which aligns with the store's approach of drastically reducing prices during promotional sales.

Question 17

The method in which a manager must estimate how much more (or less) consumers are willing to pay for a product relative to other comparable products is called the:

Accepted Answer

The improvement value method involves estimating how much more (or less) consumers are willing to pay for a product relative to other comparable products by assessing the perceived improvements or benefits.

Question 18

A method for setting prices that determines the total cost of owning the product over its useful life is called the:

Accepted Answer

The cost of ownership method calculates the total cost of owning a product over its useful life, including purchase price, maintenance, and other associated costs.

Question 19

A laptop manufacturer introduces a new model in the market.The company is aiming to market the model to students and has therefore given it a low price.The main objective of the company is to build sales, market share, and profits quickly.This is an example of:

Accepted Answer