Question 1

_____ pricing is a policy in which the retailer sets prices for goods and services,with the intent to maintain those prices over an extended period of time.
A) Leader
B) Variable
C) Flexible
D) Customary
E) Status quo

Accepted Answer

Customary pricing is a policy where the retailer follows traditional or customary pricing practices which do not fluctuate much over time. The retailer sets prices according to the industry standards or customer's expectations, and these prices tend to remain constant for a longer period.

Question 2

_____ pricing is used when differences in demand and cost force the retailer to change prices in a fairly predictable manner.
A) Unbundled
B) Uncustomary
C) Variable
D) Flexible
E) Leader

Accepted Answer

Variable pricing is used when the demand and cost of a product can change, and the retailer has to adjust prices accordingly. This can happen due to changes in market conditions, competition, or seasonality, among other factors. By varying the prices, the retailer can maximize profits and respond to changes in customer demand. The other options (unbundled, uncustomary, flexible, and leader pricing) do not fit this description as closely.

Question 3

A(n)_____ pricing policy is likely to occur when a retailer's sales staff offers the same products and quantities to different customers at different prices.
A) flexible
B) customary
C) one-price
D) leader
E) variable

Accepted Answer

Flexible pricing policy allows sales staff to adjust prices based on customer interactions, leading to different prices for different customers.

Question 4

A _____ objective is a pricing objective that states a specific level of profit,such a as percentage of sales or a return on capital invested,as an objective.
A) profit maximization
B) target-return
C) percentage-of-sales
D) competition-oriented
E) skimming

Accepted Answer

The target-return objective is the one that states a specific level of profit, such as a percentage of sales or a return on capital invested, as an objective. Profit maximization objective seeks to maximize the profit without considering the cost, percentage-of-sales objective aims to achieve a target profit margin, competition-oriented objective focuses on adjusting the price to match the competitors, while skimming objective aims to set a high price for an innovative or unique product. Therefore, B is the best choice.

Question 5

McDonald's and Burger King are sometimes forced to drop prices by promoting "value meals" in the face of mounting competition.This is an example of a ______ objective.
A) target
B) status quo
C) competitive
D) comparable
E) market share

Accepted Answer

This is an example of a status quo objective, where the goal is to maintain current market share and meet the competition's prices to avoid losing customers to competitors. Dropping prices through "value meals" is a strategy to keep prices comparable with competitors, thus maintaining the status quo in the market.

Question 6

Which of the following is NOT a characteristic of a retailer that prices below the market?
A) Provides minimal customer services
B) Low sales volume
C) Stocks closeout merchandise
D) Stocks fast-selling merchandise
E) Occupies modest facilities in a low-rent location

Accepted Answer

Retailers that price below the market are typically able to generate high sales volume by offering extremely low prices on a particular product or product category. Therefore, low sales volume would be atypical of a retailer that prices below the market. The other four characteristics are often associated with retailers that use a low-price strategy.

Question 7

A _____ is least apt to use an above-market pricing policy.
A) small neighborhood drugstore
B) top-of-line apparel retailer, such as Neiman Marcus
C) mom-and-pop grocery store
D) warehouse club
E) fast-food restaurant located on a turnpike

Accepted Answer

Warehouse clubs typically use a below-market pricing strategy to attract customers with the promise of bulk savings and lower prices compared to traditional retail stores.

Question 8

An example of a _____ pricing policy is when movie theaters give discounts to special groups,such as seniors.
A) customary
B) variable
C) leader
D) specified
E) flexible

Accepted Answer

Flexible pricing allows businesses to adjust prices for different customer groups, such as offering discounts to seniors at movie theaters.

Question 9

Which of the following conditions does NOT allow a retailer to price above the market?
A) Offering an exclusive merchandise line
B) Maintaining extended hours of operation
C) Having a competitor with similar merchandise lines located next door
D) Having outlets in accessible and convenient locations
E) Providing "extra" services

Accepted Answer

If a retailer has a competitor with similar merchandise lines located next door, they may not be able to price above the market because consumers have the option to go to the competitor for a lower price. The other options (A, B, D, and E) all provide some sort of added value that may allow the retailer to justify pricing above the market.

Question 10

The rules of action or guidelines that ensure uniformity of pricing decisions within a retail operation are know as the retailer's pricing:
A) tactics.
B) rules.
C) policies.
D) strategies.
E) objectives.

Accepted Answer

The rules or guidelines that ensure uniformity of pricing decisions within a retail operation are commonly referred to as pricing policies. Pricing tactics are the specific methods or approaches used to implement these policies, while pricing strategies are the broader plans that guide pricing decisions over the long term. Objectives refer to the goals that a retailer sets for its pricing efforts. Therefore, the best choice is C, policies.

Question 11

As a rule,if a retailer wants to attract customers from a greater it must_____ its merchandise.
A) lower the prices of
B) double both its prices and promotion of
C) deemphasize the services it provides with
D) increase the services provided the customer and reduce the promotional activities associated with
E) reduce the promotional activities associated with

Accepted Answer

Lowering prices is a common strategy to attract customers from a greater area as it makes the retailer's merchandise more affordable and competitive with other retailers in the surrounding areas. This can help to increase foot traffic, sales, and overall customer loyalty.

Question 12

A skimming strategy will work best for a retailer when:
A) competition is high because it "skims" right above the retailer's costs.
B) revenues are equal to expenses.
C) the retailer has a temporary monopoly with its product line.
D) the retailer has excess capacity in its building.
E) demand is less than supply.

Accepted Answer

A skimming strategy is most effective when a retailer has a temporary monopoly with its product line, allowing them to charge a higher price due to limited competition. This allows the retailer to "skim" profits before competition enters the market. In scenarios where competition is already high or demand is low, a skimming strategy may not be as effective.

Question 13

All of the following are typical pricing objectives EXCEPT:
A) target-return.
B) sales maximization
C) status quo.
D) profit maximization
E) sales-oriented.

Accepted Answer

The answer of All of the following are typical pricing...

Question 14

An example of a retailer using customary pricing would be:
A) a local barber shop maintaining the price of a haircut at $9.00.
B) a local hardware store promising to undersell the competition by at least 1 percent.
C) Wal-Mart promising to always have the lowest prices in town.
D) setting a price at $4.99 instead of $5.00.
E) charging different consumers different prices.

Accepted Answer

Customary pricing refers to the practice of maintaining the same price for a product or service over a period of time. A local barber shop maintaining the same price for a haircut is an example of customary pricing.

Question 15

_____ is a pricing objective that seeks to obtain as much profit as possible.
A) Profit maximization
B) Target-return
C) Percentage-of-sales
D) Competition-oriented
E) Skimming

Accepted Answer

Profit maximization is the pricing objective that seeks to obtain as much profit as possible. When a company uses this pricing objective, it sets its price at the level that will maximize its profits. Other pricing objectives, such as target-return and percentage-of-sales, may also factor in profit considerations but are not solely focused on maximizing profits. Competition-oriented pricing aims to match or beat competitors' prices, while skimming involves setting a high price to capitalize on early adopters' willingness to pay.

Question 16

You have decided that one of the goals of your retail expansion is to establish a loyal customer base before the competition is able to do so.Therefore,when you enter a new trading area with a new product or service,you should use a _____ price strategy.
A) late markdown
B) penetration
C) status quo
D) skimming
E) cost-plus

Accepted Answer

A penetration pricing strategy involves setting prices low initially to attract a large customer base quickly. This allows the retailer to establish brand loyalty and gain a competitive advantage over other retailers who may try to enter the market. This strategy is effective in establishing a loyal customer base before the competition can do so, as stated in the question. Therefore, penetration pricing would be the best choice in this scenario.

Question 17

Flowers tend to be priced higher when demand is greatest,around Mother's Day and Valentine's Day.This is an example of _____ pricing.
A) flexible
B) dynamic
C) psychological
D) variable
E) customary

Accepted Answer

The answer of Flowers tend to be priced higher when...

Question 18

A _____ is a range of prices for a specific merchandise line that appeals to customers in a certain demographic group.
A) price zone
B) odd price
C) price line
D) price point
E) price range

Accepted Answer

A price zone is a range of prices for a specific merchandise line that appeals to customers in a certain demographic group.

Question 19

A(n)_____ pricing policy is a policy that regularly discounts merchandise from the established market price in order to build store traffic,generate high sales,and enhance gross margin dollars per square foot of selling space.
A) above-market
B) flexible
C) odd-pricing
D) below-market
E) loss leader

Accepted Answer

A below-market pricing policy regularly discounts merchandise from the established market price, which can attract shoppers and increase sales. This strategy can also help a retailer edge out competitors, but it risks lowering the perceived value of the merchandise and potentially lowering the retailer's profit margins.

Question 20

The relationship between a retailer's pricing decisions and the other (i.e.merchandise selection,promotion,location)decision areas can best be described as:
A) independent.
B) competitive.
C) separate.
D) counter-related.
E) interactive.

Accepted Answer

Pricing decisions interact with other decision areas such as merchandise selection, promotion, and location. For example, if a retailer decides to offer a discount promotion, their pricing decision will impact the merchandise selection that can be included in this promotion or the location where this promotion can occur. Additionally, merchandise selection may impact the pricing decision, as certain items may require a higher or lower price point. Therefore, pricing decisions are interconnected with other decision areas and are not independent, separate, or counter-related.

Quiz 10: Merchandise Pricing

_____ pricing is a policy in which the retailer sets prices for goods and services,with the intent to maintain those prices over an extended period of time.

_____ pricing is used when differences in demand and cost force the retailer to change prices in a fairly predictable manner.

A(n) _____ pricing policy is likely to occur when a retailer's sales staff offers the same products and quantities to different customers at different prices.

A _____ objective is a pricing objective that states a specific level of profit,such a as percentage of sales or a return on capital invested,as an objective.

McDonald's and Burger King are sometimes forced to drop prices by promoting "value meals" in the face of mounting competition.This is an example of a ______ objective.

Which of the following is NOT a characteristic of a retailer that prices below the market?

A _____ is least apt to use an above-market pricing policy.

An example of a _____ pricing policy is when movie theaters give discounts to special groups,such as seniors.

Which of the following conditions does NOT allow a retailer to price above the market?

The rules of action or guidelines that ensure uniformity of pricing decisions within a retail operation are know as the retailer's pricing:

As a rule,if a retailer wants to attract customers from a greater it must_____ its merchandise.

A skimming strategy will work best for a retailer when:

All of the following are typical pricing objectives EXCEPT:

An example of a retailer using customary pricing would be:

_____ is a pricing objective that seeks to obtain as much profit as possible.

You have decided that one of the goals of your retail expansion is to establish a loyal customer base before the competition is able to do so.Therefore,when you enter a new trading area with a new product or service,you should use a _____ price strategy.

Flowers tend to be priced higher when demand is greatest,around Mother's Day and Valentine's Day.This is an example of _____ pricing.

A _____ is a range of prices for a specific merchandise line that appeals to customers in a certain demographic group.

A(n) _____ pricing policy is a policy that regularly discounts merchandise from the established market price in order to build store traffic,generate high sales,and enhance gross margin dollars per square foot of selling space.

The relationship between a retailer's pricing decisions and the other (i.e.merchandise selection,promotion,location) decision areas can best be described as: