Question 1

It is not uncommon for sales personnel at The Electronics Showroom to use aggressive sales tactics to encourage customers to buy Giant-Size brand televisions.Giant-Size has encouraged this behavior by using:
A) advertising allowances.
B) push money allowances.
C) stocking allowances.
D) trade-in allowances.
E) slotting allowances.

Accepted Answer

Push money (or prize money) allowances-sometimes called PMs or spiffs-are given to retailers by manufacturers or wholesalers to pass on to the retailers' salesclerks for aggressively selling certain items.

Question 2

If a producer wants title to pass to a buyer immediately-but still wants to pay the freight bill-the invoice should read:
A)F.O.B.buyer's factory.
B)F.O.B.shipping point.
C)F.O.B.delivered.
D)F.O.B.seller's factory-freight prepaid.
E)F.O.B.mill.

Accepted Answer

If the seller wants title to pass immediately but is willing to prepay freight (and then include it in the invoice), F.O.B. seller's factory-freight prepaid can be used.

Question 3

Uniform delivered pricing
A)usually results in higher delivered prices for everyone.
B)results in all buyers paying less than the actual transportation costs.
C)is most often used when transportation costs are relatively low.
D)is just an extension of F.O.B.pricing.
E)None of these alternatives is correct.
Feedback: Uniform delivered pricing is most often used when (1)transportation costs are relatively low and (2)the seller wishes to sell in all geographic areas at one price,perhaps a nationally advertised price

Accepted Answer

Uniform delivered pricing is most often used when (1) transportation costs are relatively low and (2) the seller wishes to sell in all geographic areas at one price, perhaps a nationally advertised price.

Question 4

By presenting a coupon to a retailer,the consumer is
A) given a discount off the list price.
B) allowed to sample the product.
C) offered the option of an installment payment.
D) given the right to pretest the product.
E) obligated to buy the product again in the future.

Accepted Answer

By presenting a coupon to a retailer, the consumer is given a discount off list price. The fastest-growing distribution approach is online-where consumers can search for coupons and print them out, send them to their cell phone or directly add them to their store loyalty card.

Question 5

Which of the following is true of a trade-in allowance?
A) It is a price reduction to stimulate sales of newly introduced products.
B) It allows managers to reduce the effective price without reducing the list price.
C) It forces managers to reduce the list price.
D) It is used to save old products from being removed from the market.

Accepted Answer

A trade-in allowance is a price reduction given for used products when similar new products are bought. Trade-ins give the marketing manager an easy way to lower the effective price without reducing list price.

Question 6

"Zone pricing"
A) allows a uniform delivered price to be charged to all buyers in each zone.
B) simplifies the calculation of transportation charges.
C) means making an average freight charge to all buyers within some geographic area.
D) may make it possible to compete with sellers located closer to the buyer.
E) All of these alternatives are correct.

Accepted Answer

Zone pricing means making an average freight charge to all buyers within specific geographic areas. All of the above statements about zone pricing are true.

Question 7

A seller's invoice reads: "Seller pays the cost of loading said merchandise onto a common carrier.At the point of loading,title to such products passes to the buyer,who assumes responsibility for damage in transit,except as covered by the transportation agency." This shipment has been shipped ________.
A)F.O.B.delivered
B)F.O.B.shipping point
C)F.O.B.mill,freight absorbed
D)F.O.B.buyer's factory
E)F.O.B.seller's factory-freight prepaid

Accepted Answer

F.O.B. means free on board some vehicle at some place. F.O.B. shipping point means the seller pays the cost of loading. Then, title to the products passes to the buyer who pays the freight and takes responsibility for damage in transit.

Question 8

Which of the following observations concerning F.O.B.pricing is not true?
A)Typically,it names the place.
B)F.O.B.shipping point pricing may narrow the market.
C)F.O.B.shipping point pricing complicates the seller's pricing.
D)If a firm wants to pay the freight for the convenience of customers,it can use F.O.B.delivered.
E)A firm can use F.O.B.buyer's factory if it wants to pay the freight.

Accepted Answer

F.O.B. shipping point pricing simplifies the seller's pricing but it may narrow the market.

Question 9

Which of the following geographic pricing policies would probably handicap a producer wanting to compete with other producers who are closer to a potential buyer?
A)F.O.B.mill
B)F.O.B.delivered
C)Zone pricing
D)Freight absorption
E)All of these would probably handicap a producer.

Accepted Answer

F.O.B. means free on board some vehicle at some place. This means the seller pays the cost of loading and the buyer pays the freight and takes responsibility for damage in transit. The delivered cost varies depending on the buyer's location; hence a customer located farther from the seller would pay more and might buy from a closer supplier.

Question 10

Uniform delivered pricing is most often used when ________.
A)transportation costs are relatively high
B)the seller wishes to sell in all geographic areas at one price
C)the seller does not wish to have a nationally advertised price
D)an average freight charge becomes illogical
E)F.O.B.shipping point pricing is preferred

Accepted Answer

Uniform delivered pricing is most often used when (1) transportation costs are relatively low and (2) the seller wishes to sell in all geographic areas at one price, perhaps a nationally advertised price.

Question 11

A catalog merchant divides the country into regions.Every buyer in a particular region pays the same average shipping charge.The shipping charges differ from region to region,depending on how far the region is from the catalog merchant's main warehouse facility.The catalog merchant is using ________.
A)F.O.B.pricing
B)zone pricing
C)freight absorption pricing
D)uniform delivered pricing
E)value pricing

Accepted Answer

value pricing

Question 12

A rebate is
A) a temporary discount from the price list.
B) a reduction in price to encourage buyers to pay their bills quickly.
C) a temporary price cut to attract customers.
D) a refund paid to consumers after a purchase.
E) a document detailing pricing changes.

Accepted Answer

Rebates are refunds paid to a customer after the purchase.

Question 13

Which of the following statements about rebates is True?
A) Rebates are refunds paid to consumers after a purchase.
B) Rebates ensure that the final consumer gets a producer's price reduction.
C) Many consumers purchase a product because a rebate is offered but then never request the refund.
D) Many consumers think that some sellers make it an unnecessary hassle to claim a rebate.
E) All of these statements about rebates are True.

Accepted Answer

Rebates are refunds paid to consumers after a purchase and give producers a way to be certain that final consumers actually get the price reduction. Many consumers purchase products but never request the refund. Many consumers also think that retailers make it harder to claim rebates.

Question 14

Which of the following is true of "Deal-of-the-Day" websites?
A) These websites offer customers small discounts that are barely enough to move some customers into action.
B) The bargain offers on these websites mainly come from foreign businesses.
C) The bargain offers on these websites arrive in daily e-mails to customers who sign up to receive them.
D) Customers can purchase the deal on any day following the day on which they received the offer.
E) Deals-seekers are more likely to show interest in the business offering the deal than in the next deal it offers.

Accepted Answer

Most coupons offer discounts of $.50 to $1.00-which isn't enough to move some customers to action. So "Deal-of-the-Day" websites like Groupon and Living Social offer customers real bargains-often half off or more. The bargain offers come from local businesses-usually retailers, restaurants, or service providers-and arrive in daily e-mails customers sign up to receive.

Question 15

"Push money" is most likely to be offered to
A) cosmetics salespeople at a department store.
B) salesclerks at a grocery store.
C) component materials' sales reps.
D) industrial supplies' sales reps.
E) Each of these is equally likely to receive "push money."

Accepted Answer

Push money (or prize money) allowances are given to retailers by manufacturers or wholesalers to pass on to the retailers' salesclerks for aggressively selling certain items. They are often used for pushing furniture, clothing, consumer electronics, and cosmetics.

Question 16

Careful handling of "trade-ins"-to avoid reducing the list price-is especially important for sellers of
A) expense items.
B) raw materials.
C) emergency products.
D) component materials.
E) none of these is a good answer.

Accepted Answer

A trade-in allowance is a price reduction given for used products when similar new products are bought. Handling of trade-ins is important when selling durable products.

Question 17

On the price sticker placed on the window of a new vehicle by the manufacturer,the manufacturer's suggested retail price is listed,followed by a "destination charge" for shipping the vehicle to the dealership.The destination charge is the same everywhere in the country,no matter whether the dealership is close to or far away from the manufacturing plant.This pricing practice is called
A)F.O.B.pricing.
B)zone pricing.
C)uniform delivered pricing.
D)freight absorption pricing.
E)None of these is a good answer.

Accepted Answer

Uniform delivered pricing is most often used when (1) transportation costs are relatively low and (2) the seller wishes to sell in all geographic areas at one price, perhaps a nationally advertised price.

Question 18

Which of the following give a producer a way to be certain that final consumers actually get the price reduction?
A) rebates
B) push money allowances
C) spiffs
D) trade-in allowance
E) noncumulative quantity discount

Accepted Answer

Rebates are refunds paid to consumers after a purchase and give producers a way to be certain that final consumers actually get the price reduction.

Question 19

Freight absorption pricing
A) amounts to cutting list price to appeal to new geographic markets.
B) forces all buyers to pay higher shipping costs.
C) tends to restrict firms from competing in distant markets.
D) tends to decrease competition.
E) None of these alternatives is correct.

Accepted Answer

Freight-absorption pricing means absorbing freight cost so that a firm's delivered price meets that of the nearest competitor. This amounts to cutting list price to appeal to new market segments.

Question 20

A producer in Philadelphia uses "zone pricing." It's selling widgets for $150/ton in the Eastern Zone-which includes Richmond and Baltimore.The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton.In this situation,
A) one ton of widgets costs a Baltimore buyer the same as a Richmond buyer.
B) both buyers would pay $300 for one ton of widgets.
C) one ton of widgets delivered to Richmond would cost the buyer $230.
D) one ton of widgets delivered to Baltimore would cost the buyer $220.
E) None of these alternatives is correct.

Accepted Answer

Zone pricing means making an average freight charge to all buyers within specific geographic areas.

Quiz 19: Pricing Objectives and Policies

It is not uncommon for sales personnel at The Electronics Showroom to use aggressive sales tactics to encourage customers to buy Giant-Size brand televisions.Giant-Size has encouraged this behavior by using:

If a producer wants title to pass to a buyer immediately-but still wants to pay the freight bill-the invoice should read:

Uniform delivered pricing

By presenting a coupon to a retailer,the consumer is

Which of the following is true of a trade-in allowance?

"Zone pricing"

Which of the following observations concerning F.O.B.pricing is not true?

Which of the following geographic pricing policies would probably handicap a producer wanting to compete with other producers who are closer to a potential buyer?

Uniform delivered pricing is most often used when ________.

A rebate is

Which of the following statements about rebates is True?

Which of the following is true of "Deal-of-the-Day" websites?

"Push money" is most likely to be offered to

Careful handling of "trade-ins"-to avoid reducing the list price-is especially important for sellers of

Which of the following give a producer a way to be certain that final consumers actually get the price reduction?

Freight absorption pricing

A producer in Philadelphia uses "zone pricing." It's selling widgets for $150/ton in the Eastern Zone-which includes Richmond and Baltimore.The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton.In this situation,