Question 1

Demand-backward pricing
A)starts with an acceptable final consumer price and works backward to what producers can charge.
B)ignores demand estimates.
C)is only sensible when the channel captain is a large retailer.
D)is an average-cost pricing approach.
E)None of these answers is correct.

Accepted Answer

Demand-backward pricing is setting an acceptable final consumer price and working backward to what a producer can charge.

Question 2

The idea that people will pay extra for "quality" and status is the idea behind
A)price lining.
B)average-cost approaches to pricing.
C)penetration skimming.
D)prestige pricing.
E)psychological pricing.

Accepted Answer

Prestige pricing is setting a rather high price to suggest high quality or high status.

Question 3

Which type of pricing involves setting one price for a set of products?
A)price lining
B)odd-even pricing
C)product bundle pricing
D)bait pricing
E)price leading

Accepted Answer

Product-bundle pricing is setting one price for a set of products.The overall price is usually set so that it's cheaper for the customer to buy the products at the same time than separately.

Question 4

Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to compare.This is
A)prestige pricing.
B)penetration pricing.
C)price lining.
D)odd-even pricing.
E)value in use pricing.

Accepted Answer

Price lining is setting a few price levels for a product line and then marking all items at these prices.This approach assumes that customers have a certain reference price in mind that they expect to pay for a product.

Question 5

When Nintendo sets a relatively low price on its game units to stimulate more demand for its game cartridges,it is using
A)complementary product pricing.
B)product-bundle pricing.
C)price lining.
D)bait pricing.
E)cost-plus pricing.

Accepted Answer

Complementary product pricing is setting prices on several products as a group.This may lead to one product being priced very low in order to increase the profits from another product,thus increasing the product group's total profits.

Question 6

What is the main advantage of price lining?
A)It is quite similar to prestige pricing.
B)It can simplify both buying and selling.
C)It tends to reduce turnover rates.
D)It results in larger inventories.
E)It confuses customers.

Accepted Answer

The main advantage of price lining is simplicity,for both salespeople and customers.

Question 7

Fly-Right Travel Agency arranges vacation packages to Disney World in Florida.The price includes airfare,a rental car,deluxe accommodations,and tickets to Disney World and other attractions.Fly-Right is using
A)product-bundle pricing.
B)complementary product pricing.
C)full-line pricing.
D)bid pricing.
E)demand-backward pricing.

Accepted Answer

Product-bundle pricing is setting one price for a set of products.

Question 8

The Roulette Corporation,a video game manufacturer,sets a single price for a set of 5 video games,a video game console,and a pair of speakers.This pricing strategy is called
A)full-line pricing.
B)complementary product pricing.
C)product-bundle pricing.
D)bid pricing.
E)psychological pricing.

Accepted Answer

Product-bundle pricing involves setting one price for a set of products.Firms that use product-bundle pricing usually set the overall price so that it's cheaper for the customer to buy the products at the same time than separately.

Question 9

In a down economy,a local florist surveys her customers to determine the amount they feel comfortable spending for a bouquet of flowers.Then she displays bouquets costing that exact amount in her refrigerated case.This is an example of
A)reference pricing.
B)line pricing.
C)bundle pricing.
D)leader pricing.
E)demand-backward pricing.

Accepted Answer

Demand-backward pricing is setting an acceptable final consumer price and working backward to what a producer can charge.

Question 10

________ is setting a few price levels for a product line and then marking all items at these prices.
A)Price following
B)Bait pricing
C)Odd-even pricing
D)Price lining
E)Price leading

Accepted Answer

Price lining is setting a few price levels for a product line and then marking all items at these prices.

Question 11

When Best Buy advertises one price for the cost of a computer and a monitor,it is using
A)complementary product pricing.
B)flexible pricing.
C)product-bundle pricing.
D)a one-price policy.
E)bait pricing.

Accepted Answer

Product-bundle pricing is setting one price for a set of products.

Question 12

CenturyLink attracts residential customers by setting one monthly fee for high-speed Internet,cable TV,and long-distance phone services that is $40 less than the price of purchasing these three services separately.This is an example of
A)reference pricing.
B)price lining.
C)bundling
D)leader pricing
E)demand-backward pricing

Accepted Answer

Product-bundle pricing,or bundling,is setting one price for a set of products.

Question 13

In order to stand apart,the airline Fly High Air offers low airfares and heavy seasonal discounts.However,it charges its passengers for in-flight meals,water,and baggage service,while its competitors offer these services for free.Fly High Air is following a(n)________ pricing strategy.
A)odd-even
B)unbundled
C)negotiated
D)bid
E)markup

Accepted Answer

Fly High Air is using an unbundled pricing strategy.It successfully differentiates its offering from other airlines by unbundling the services most airlines offer.Fly High Air sells deeply discounted airfares,and then charges customers for water,in-flight meals,and baggage service-all extras fliers usually receive for "free" on other airlines.

Question 14

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while but then actually bends back to the left at lower prices?
A)psychological pricing
B)prestige pricing
C)average-cost pricing
D)bait pricing
E)penetration pricing

Accepted Answer

Target customers who respond to prestige pricing give the marketing manager an unusual demand curve.Instead of a normal down-sloping curve,the curve goes down for a while and then bends back to the left again.

Question 15

Good Health Co.has set a suggested retail list price of $40 on its new vitamin tablets on the assumption that its target market will find the product attractive at this price.From this suggested retail list price,Good Health has subtracted its usual chain of markups for wholesalers and retailers to obtain its own selling price of $17.This is
A)demand-backward pricing.
B)full-line pricing.
C)average-cost pricing.
D)odd-even pricing.
E)prestige pricing.

Accepted Answer

Demand-backward pricing is setting an acceptable final consumer price and working backward to what a producer can charge.

Question 16

When consumers decide to purchase a music CD from Amazon.com,the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately.Amazon.com is using
A)product-bundle pricing.
B)complementary product pricing.
C)full-line pricing.
D)bid pricing.
E)demand-backward pricing.

Accepted Answer

Product-bundle pricing is setting one price for a set of products.

Question 17

Setting relatively high prices to suggest high quality or high status is called
A)odd-even pricing.
B)price lining.
C)leader pricing.
D)psychological pricing.
E)prestige pricing.

Accepted Answer

Prestige pricing is setting a rather high price to suggest high quality or high status.

Question 18

Regarding full-line pricing,which of the following statements is true?
A)A good marketing manager usually tries to price products in a line so that the prices will seem logically related and make sense to target customers.
B)The marketing manager should try to cover all costs on the whole product line.
C)Most customers seem to feel that prices in a product line should be somewhat related to cost.
D)Not all companies that make a line of products must use full-line pricing.
E)All these statements are true.

Accepted Answer

Full-line pricing is setting prices for a whole line of products.

Question 19

Some consumers maintain a price-quality association,meaning that if a product has a high price,they assume the product must have high quality.This price-quality association is the basis for the use of
A)odd-even pricing.
B)prestige pricing.
C)leader pricing.
D)reference pricing.
E)price lining.

Accepted Answer

Prestige pricing is setting a rather high price to suggest high quality or high status.

Question 20

If Macy's department store prices its men's ties at $10 intervals between $38 and $68,it is an example of
A)reference pricing.
B)price lining.
C)bundle pricing.
D)leader pricing.
E)bait pricing.

Accepted Answer

Price lining is setting a few price levels for a product line and then marking all items at these prices.This approach assumes that customers have a certain reference price in mind that they expect to pay for a product.

Quiz 18: Price Setting in the Business World

Demand-backward pricing

The idea that people will pay extra for "quality" and status is the idea behind

Which type of pricing involves setting one price for a set of products?

Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to compare.This is

When Nintendo sets a relatively low price on its game units to stimulate more demand for its game cartridges,it is using

What is the main advantage of price lining?

Fly-Right Travel Agency arranges vacation packages to Disney World in Florida.The price includes airfare,a rental car,deluxe accommodations,and tickets to Disney World and other attractions.Fly-Right is using

The Roulette Corporation,a video game manufacturer,sets a single price for a set of 5 video games,a video game console,and a pair of speakers.This pricing strategy is called

In a down economy,a local florist surveys her customers to determine the amount they feel comfortable spending for a bouquet of flowers.Then she displays bouquets costing that exact amount in her refrigerated case.This is an example of

________ is setting a few price levels for a product line and then marking all items at these prices.

When Best Buy advertises one price for the cost of a computer and a monitor,it is using

CenturyLink attracts residential customers by setting one monthly fee for high-speed Internet,cable TV,and long-distance phone services that is $40 less than the price of purchasing these three services separately.This is an example of

In order to stand apart,the airline Fly High Air offers low airfares and heavy seasonal discounts.However,it charges its passengers for in-flight meals,water,and baggage service,while its competitors offer these services for free.Fly High Air is following a(n) ________ pricing strategy.

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while but then actually bends back to the left at lower prices?

When consumers decide to purchase a music CD from Amazon.com,the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately.Amazon.com is using

Setting relatively high prices to suggest high quality or high status is called

Regarding full-line pricing,which of the following statements is true?

Some consumers maintain a price-quality association,meaning that if a product has a high price,they assume the product must have high quality.This price-quality association is the basis for the use of

If Macy's department store prices its men's ties at $10 intervals between $38 and $68,it is an example of