Question 1

Car rental agencies charge low prices to customers who book a car months in advance and high prices to customers who book a car one day in advance.Which tactic is most likely being used by car rental agencies?
A) complementary pricing
B) yield management
C) prestige pricing
D) market penetration

Accepted Answer

The tactic being used by car rental agencies is yield management. This involves adjusting prices according to demand in order to maximize revenue. By offering low prices to customers who book in advance, car rental agencies can encourage early bookings and plan their inventory accordingly. By charging higher prices to last-minute bookers, they can take advantage of customers who need a car urgently and are willing to pay more.

Question 2

Which of the following is best for the success of a skimming strategy?
A) high investments in capacity
B) high market-entry barriers
C) high economies of scale
D) high price sensitivity

Accepted Answer

High market-entry barriers will help to limit competition, allowing the company to maintain a high price point for longer and generate higher profits from the limited customer base willing to pay the premium price at the beginning of the product's lifecycle. Investing in capacity (choice A) and achieving economies of scale (choice C) are more relevant for cost leadership strategies, not skimming strategies. High price sensitivity (choice D) would make it difficult for a company to maintain a high price point and would not support a skimming strategy.

Question 3

Price is the only element in the marketing mix that produces ________.
A) variable costs
B) fixed costs
C) revenue
D) stability

Accepted Answer

Price is the only element in the marketing mix that directly generates revenue for the company. Variable and fixed costs are associated with production and distribution of the product, while stability is not a direct outcome of the pricing strategy.

Question 4

A firm sets high prices for a product innovation and lowers the price as the product moves into other stages of the product life cycle.The firm is most likely using a pricing strategy of ________.
A) market skimming
B) product positioning
C) market penetration
D) maximum current profit

Accepted Answer

The firm is using a market skimming pricing strategy, which involves setting a high price for a new or innovative product to maximize profits before competitors enter the market. As the product moves into other stages of the product life cycle and faces competition, the firm lowers the price to maintain market share.

Question 5

A manufacturing firm would most likely use a cost-volume-profit analysis to calculate how many products must be sold at a certain price in order for revenues to equal total costs.

Accepted Answer

This statement accurately describes the primary purpose and application of cost-volume-profit analysis in a manufacturing setting.

Question 6

Market skimming is a short-term price objective that involves setting a minimum price that equals direct variable costs.

Accepted Answer

Market skimming is actually a long-term price objective that involves setting a high price for a new and unique product in order to maximize profits from early adopters willing to pay a premium. The price may be lowered over time as competitors enter the market or as the product becomes more mainstream. The price set in market skimming is usually well above direct variable costs.

Question 7

Product costs set a ________ to a product's price.
A) floor
B) ceiling
C) demand curve
D) break-even cost

Accepted Answer

Product costs set a floor to a product's price, meaning that the price cannot go lower than the cost of producing the product. The cost of producing a product includes factors such as materials, labor, and overhead costs. It is important to consider product costs when setting a price, as pricing the product below the cost of production may result in losses for the company.

Question 8

Price collusion,price fixing,and price signaling are illegal pricing strategies.

Accepted Answer

The answer of Price collusion,price fixing,and price signaling are illegal...

Question 9

An advertisement for Discount Tire states,"We match all competitors' prices." This is most likely an example of ________.
A) penetration
B) skimming
C) collusion
D) signaling

Accepted Answer

This is an example of signaling, where a company communicates to competitors that it will not be undersold, potentially influencing competitors' pricing strategies.

Question 10

Which of the following is NOT a type of pricing objective?
A) survival
B) elasticity
C) market skimming
D) product positioning

Accepted Answer

Survival, market skimming and product positioning are all types of pricing objectives, while elasticity is not a specific pricing objective, but rather a concept that impacts pricing decisions.

Question 11

In a brief essay,discuss some of the short-term and long-term effects of price-based promotions.

Accepted Answer

The answer of In a brief essay,discuss some of the...

Question 12

A marketer would most likely use a penetration pricing strategy to ________.
A) ensure that the firm can increase prices once demand decreases
B) appeal to customers with low price sensitivity
C) gain long-term advantages of scale
D) minimize the risk of substitution

Accepted Answer

Penetration pricing is a strategy used to enter a market with a low initial price to attract customers quickly, build market share, and achieve cost advantages through scale. As the company sells more, it can lower production costs due to economies of scale, thus gaining long-term advantages.

Question 13

A firm has two products that must be used together.The firm sells one of the items at a very low price and profits from the sale of the second,high margin item.The firm is most likely using the ________ pricing strategy.
A) cross subsidy
B) market skimming
C) product positioning
D) market penetration

Accepted Answer

This pricing strategy involves selling one item at a low price in order to attract customers and then making up for the low price by selling the second, complementary item at a higher margin. This allows the firm to make a profit overall while still being competitive in the market for the low-priced item.

Question 14

A firm is most likely using a ________ pricing strategy when it introduces a product at a very low price to gain market share quickly.
A) razorblade
B) skimming
C) penetration
D) survival

Accepted Answer

A penetration pricing strategy involves setting a low price for a new product or service to quickly gain market share. The goal is to attract customers away from competitors and build a customer base. This can be effective for new products entering the market or for established companies looking to introduce a new product line. Skimming pricing, on the other hand, involves setting a high price initially to target a smaller market segment with more disposable income. Razorblade pricing involves selling a product at a low cost and then making up for it with high-priced consumable parts. Survival pricing is a pricing strategy used by companies in financially difficult situations where they may temporarily reduce prices to stay afloat.

Quiz 33: Note : Pricing Strategies

Car rental agencies charge low prices to customers who book a car months in advance and high prices to customers who book a car one day in advance.Which tactic is most likely being used by car rental agencies?

Which of the following is best for the success of a skimming strategy?

Price is the only element in the marketing mix that produces ________.

A firm sets high prices for a product innovation and lowers the price as the product moves into other stages of the product life cycle.The firm is most likely using a pricing strategy of ________.

A manufacturing firm would most likely use a cost-volume-profit analysis to calculate how many products must be sold at a certain price in order for revenues to equal total costs.

Market skimming is a short-term price objective that involves setting a minimum price that equals direct variable costs.

Product costs set a ________ to a product's price.

Price collusion,price fixing,and price signaling are illegal pricing strategies.

An advertisement for Discount Tire states,"We match all competitors' prices." This is most likely an example of ________.

Which of the following is NOT a type of pricing objective?

In a brief essay,discuss some of the short-term and long-term effects of price-based promotions.

A marketer would most likely use a penetration pricing strategy to ________.

A firm has two products that must be used together.The firm sells one of the items at a very low price and profits from the sale of the second,high margin item.The firm is most likely using the ________ pricing strategy.

A firm is most likely using a ________ pricing strategy when it introduces a product at a very low price to gain market share quickly.