Question 1

Why do marketers of new and innovative products often start out with a price skimming strategy rather than a penetration strategy?

Accepted Answer

The answer of Why do marketers of new and innovative...

Question 2

When a firm colludes with other firms to control prices,it is engaging in

Accepted Answer

Price fixing is the practice of firms colluding together to control prices of goods or services, generally to increase their profits by eliminating competition.

Question 3

When members of the marketing channel collude to control the prices passed on to consumers,they are engaging in

Accepted Answer

Vertical price fixing occurs when members at different levels of the marketing channel collude to control the prices that are passed on to consumers. This is often seen between manufacturers and retailers, where the manufacturer sets a minimum resale price for the retailer to ensure that the product is sold at a certain price point. This is illegal in many countries as it restricts competition and harms consumers.

Question 4

The Clayton Act and the Robinson-Patman Act forbid certain types of

Accepted Answer

The Clayton Act and the Robinson-Patman Act are both antitrust laws that prohibit unfair methods of competition in commerce. Specifically, they both forbid price discrimination, which is the practice of charging different prices to different customers for the same product or service. This is considered unfair because it can give larger companies an unfair advantage over smaller ones, and can also harm consumers by reducing competition and leading to higher prices overall. Therefore, option A) is the correct answer.

Question 5

Explain the concept of the high/low strategy.Why is this an attractive strategy to marketers?

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Question 6

What does an everyday low pricing strategy convey to consumers?

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Question 7

__________ price fixing occurs when competitors collude to control prices,and __________ price fixing occurs within a marketing channel to control prices passed on to consumers.

Accepted Answer

Horizontal price fixing involves collusion between competitors to control prices, while vertical price fixing occurs within a marketing channel to control prices passed on to consumers. Therefore, the best choice is E, horizontal and vertical price fixing.

Question 8

John Deere farming equipment has been around for over a century and is known for its durability.Its equipment is usually priced higher than competitors' offerings,but over the long run it will eventually cost less to own than the competition.What type of value-based pricing method would be appropriate for John Deere,and why?

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The answer of John Deere farming equipment has been around...

Question 9

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

Accepted Answer

Marketers themselves have the responsibility to determine the ethical approach to setting prices so that consumers find value and the firm can make a profit. Marketers need to balance the customer’s perceived value of the product or service, the cost of producing and distributing it, and the price that the competition is offering. Marketers must ensure that they set prices that are fair to both the customers and the firm. It is their ethical responsibility to determine this balance. Other entities such as the Better Business Bureau, federal regulators, the American Marketing Association, or industry standards boards may provide guidance, but it is ultimately up to the marketers to determine the ethical approach to pricing.

Question 10

A major airline sells an aggressively low-priced ticket compared to a new low-fare airline which is trying to enter the market.The airline may be accused of engaging in the unethical practice of

Accepted Answer

The airline may be accused of engaging in the unethical practice of predatory pricing, which involves setting very low prices to drive competitors out of business or prevent new entrants from entering the market. This practice is harmful to both competitors and consumers in the long term.

Question 11

B2B quantity discounts are legal if

Accepted Answer

Quantity discounts are legal if they are available to all customers, meaning they are not discriminatory or exclusive to certain customers. This eliminates options B, D, and E. Option C is also not necessarily true, as short-term discounts may still be legal if they meet other criteria. Therefore, the best choice is A, as it is the only option that is always true in regards to B2B quantity discounts.

Question 12

Ryan is the only retailer in his market selling a new,ergonomically designed pen.What are the objectives of using a penetration pricing strategy? Why would Ryan consider using a market penetration pricing strategy?

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Question 13

Harry's Industrial Supply Company has always used cost-based pricing.Harry's son-in-law is joining the business and recommends they change.Harry enumerates the advantages of cost-based pricing,while his son-in-law points out the disadvantages.What will each of them say?

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Question 14

If all three grocery stores in town decide to charge the same price for a gallon of milk,what type of pricing tactic is being used?

Accepted Answer

All three grocery stores are colluding to charge the same price for milk, which is illegal under antitrust laws as it reduces competition and consumer choice.

Question 15

Almost every time a new-to-the-market electronic device (iPods,flat-screen TVs,digital cameras,PlayStation,etc.)has been introduced,the marketer has used a price skimming strategy.Why?

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Question 16

Explain the key difference among the three different pricing methods a firm might choose.

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Question 17

Explain the difference between the two approaches to value-based pricing methods.

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Question 18

Why would the manufacturer of custom-made yachts not use a market penetration strategy?

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Question 19

Several airlines have agreed to charge the same fare for a single route.The airlines are using

Accepted Answer

The scenario described is an example of horizontal price fixing, where competitors in the same industry agree to set the same price for a certain product or service. In this case, the airlines are agreeing to charge the same fare for a particular route, which is a violation of antitrust laws.

Question 20

Harry's Industrial Supply Company has always used cost-based pricing.Harry's son-in-law is joining the business and recommends they change to value-based pricing.Harry enumerates the disadvantages of value-based pricing,while his son-in-law points out the advantages.What will each of them say?

Accepted Answer