Question 1

Since it involves the use of a high price relative to prices of competing products or services,the skimming pricing strategy is sometimes referred to as _____ pricing.
A)penetration
B)competitive
C)market-plus
D)functional

Accepted Answer

The skimming pricing strategy is referred to as market-plus pricing because it sets a high price relative to the prices of competing products or services, aiming to maximize profits by targeting consumers willing to pay more.

Question 2

If foreign marketing costs are so low they do not impact overall costs,the pricing strategy to recommend is:
A)promotional pricing.
B)dual pricing.
C)market-differentiated pricing.
D)standard worldwide pricing.

Accepted Answer

If foreign marketing costs are so low they do not impact overall costs, standard worldwide pricing would be the recommended pricing strategy. This means that the same price would be charged for the product in all markets irrespective of domestic or foreign markets. This pricing strategy is simple and easy to manage and helps in establishing a global brand identity.

Question 3

Which of the following pricing policies began to be widely used during the late 1960s to make price comparisons more convenient between products packaged in different sizes?
A)Odd pricing
B)Promotional pricing
C)Unit pricing
D)Product-line pricing

Accepted Answer

Unit pricing began to be widely used during the late 1960s to make price comparisons more convenient between products packaged in different sizes. This pricing policy involves displaying the price of a unit (such as per ounce or per pound) along with the total price to help consumers compare prices regardless of the size of the product.

Question 4

Aken Laboratories,a chemical manufacturer,exports its products to various countries in Asia.The company does not alter the prices of its products in these countries.Aken is adopting a _____ pricing strategy.
A)market-differentiated
B)variable
C)standard worldwide
D)dual

Accepted Answer

Aken Laboratories is using a standard worldwide pricing strategy, which means that the company maintains the same price across all countries where it exports its products.

Question 5

Which of the following statements best describes allowances?
A)Allowances are used in conjunction with quantity and cash discounts.
B)Allowances are the same as transfer prices.
C)Allowances are offered only to marketing channel members in order to increase sales.
D)Allowances result in reduction of the list price quoted on a product.

Accepted Answer

Allowances result in a reduction of the list price quoted on a product. It is a promotional tactic used to stimulate sales by reducing the price of the product for a limited time. Examples of allowances include trade-in allowances and promotional allowances. Allowances are not the same as transfer prices and are not necessarily used in conjunction with quantity and cash discounts. While they can be offered to marketing channel members, they can also be offered to end consumers.

Question 6

Firms with high fixed costs often expand their markets,quoting the same prices to all customers regardless of shipping expenses,under the plan called:
A)zone pricing.
B)freight absorption pricing.
C)uniform-delivered pricing.
D)the basing-point system.

Accepted Answer

Freight absorption pricing is when firms with high fixed costs quote the same price to all customers regardless of shipping expenses. This helps the firm to expand their markets by absorbing the shipping expenses as a cost of doing business. This is a common strategy used by firms with high fixed costs, such as manufacturers of large products like furniture or appliances.

Question 7

Charles Schwab,an equity investment company,will face the risk of cannibalization from its e-tail channel,Schwab.com,if:
A)it attempts to lure customers within the Schwab database.
B)it branches out into mutual funds and tax-deferred investments.
C)it makes price cuts and creates competition with the parent company.
D)it allots all its best personnel to work at the online firm.

Accepted Answer

If Schwab.com makes price cuts and creates competition with the parent company, it could cannibalize its own business by attracting customers who would have otherwise chosen the traditional equity investment services offered by Charles Schwab. This could result in a loss of revenue for the parent company and create a conflict between the two channels. Therefore, option C represents the scenario where Charles Schwab faces the highest risk of cannibalization.

Question 8

A penetration pricing strategy is called _____ pricing when it implements the premise that a lower-than-market price will attract buyers and move a brand from an unknown newcomer to brand-recognition or brand-preference stage.
A)market-plus
B)market-minus
C)EDLP
D)FOB

Accepted Answer

Market-minus pricing is the strategy where prices are set lower than the prevailing market prices to attract customers and increase brand recognition or preference, especially for new entrants in the market.

Question 9

​Oscar Mayer has recently developed a new snack product that's targeted to kids and young adults as a healthy,protein-based after-school or pre-dinner snack.They expect the product to complement their Lunchables product line and appeal to teen-age or college-age consumers who think of Lunchables as just for younger kids.In order to promote product trial and subsequent adoption,the company plans to use a relatively low entry price compared to the competition.What type of pricing strategy does Oscar Mayer plan to utilize?
A)​penetration
B)​everyday low pricing
C)​skimming
D)​competitive pricing

Accepted Answer

The company plans to use a relatively low entry price to promote product trial and subsequent adoption, which is a characteristic of penetration pricing strategy. This strategy involves setting a low price for a new product in order to attract customers and gain market share quickly. By doing so, Oscar Mayer hopes to encourage teen-age or college-age consumers to try the new product, which will complement their Lunchables product line.

Question 10

Sherwin Williams develops strong relationships with contractors and facility managers to develop loyalty and encourage them to purchase a majority of their paint and supplies from the store.Sherwin Williams provides incentives to contractors and bases prices according to the volume of paint a contractor purchases within a given quarter.Sherwin Williams includes the cumulative volume purchased on each invoice so each contractor can track their purchases and estimate the amount of rebate or refund they could earn at the end of each quarter.Sherwin Williams is utilizing a(n): ​
A)​cumulative quantity discounts
B)​trade discount
C)​promotional allowance
D)​cash discount

Accepted Answer

Sherwin Williams is utilizing cumulative quantity discounts by offering incentives to contractors based on the volume of paint they purchase. The cumulative volume purchased is included on each invoice so contractors can track their purchases and estimate potential rebates/refunds at the end of each quarter.

Question 11

A major problem facing company decision makers when setting transfer prices is:
A)how to determine the product-service attributes of the transfer.
B)when to complete the transfer.
C)how to assign the controllable costs to the profit centers.
D)what price to actually charge the receiving profit center.

Accepted Answer

The main problem facing company decision makers when setting transfer prices is determining the appropriate price to charge the receiving profit center. This pricing decision can have a significant impact on the performance of the individual profit centers and the overall profitability of the company. Factors that need to be considered when setting transfer prices include the market price for the product or service, the cost of producing the product or service, and the impact on the performance of the receiving profit center.

Question 12

Any part of an organization to which revenue and controllable costs can be assigned is termed a(n):​
A)​profit center
B)​business entity
C)​small business unit
D)​division

Accepted Answer

A profit center is a part of an organization that is accountable for its own revenue and costs, making it the best choice for this question. A business entity refers to a legally registered company or organization, while a small business unit is not a common term. A division may also work, but profit center is a more precise and commonly used term.

Question 13

The global pricing strategy that allows the greatest flexibility in setting prices to reflect local marketplace conditions is:
A)standard worldwide pricing.
B)dual pricing.
C)market-differentiated pricing.
D)everyday low pricing.

Accepted Answer

Market-differentiated pricing allows for different pricing strategies in different markets, taking into account local conditions and consumer behaviors. This provides the greatest flexibility in setting prices, as it can vary based on factors such as competition, demand, and purchasing power. Standard worldwide pricing (A) is not flexible and does not account for market differences. Dual pricing (B) can create confusion and ethical concerns. Everyday low pricing (D) is a fixed pricing strategy rather than a flexible one.

Question 14

Before a multi-state computer company can charge for onsite computer repairs for the business's computer equipment,the company needs to establish __________. ​
A)​cost centers
B)​terms of service
C)​negotiated prices
D)​auction accounts
E)​market-plus pricing

Accepted Answer

The answer of Before a multi-state computer company can charge...

Question 15

A retailer wants to increase the number of customers shopping in her store.Which of the following has the greatest potential for success?
A)Promotional pricing
B)Price flexibility
C)Prestige pricing
D)Unit pricing

Accepted Answer

Promotional pricing is a strategy that involves temporarily lowering prices to attract customers and increase sales. This can be particularly effective in attracting new customers who may not have shopped at the store before. By offering a discount or other promotion, the retailer is giving customers an incentive to try out the store and hopefully become repeat customers. Price flexibility, prestige pricing, and unit pricing may all have some impact on customer behavior, but they are less likely to have as significant an impact as promotional pricing when it comes to increasing the number of customers in a store.

Question 16

Consumers have a certain range within which their product-quality perceptions vary directly with price.This range reflects the concept of price:
A)limits.
B)variations.
C)controls.
D)resistance.

Accepted Answer

The concept described in the question is the limit to which consumers' perception of product quality varies with the price. This means that there is a maximum and minimum price range within which the perception of quality is directly linked to the price. Therefore, the best choice is A) limits.

Question 17

An example of odd pricing would be:
A)a buy-two-get-one-free promotion.
B)selling a radar detector for $129.99 instead of $130.
C)subtracting trade-ins from the list price.
D)rebates that lower total price.

Accepted Answer

Odd pricing refers to pricing a product a few cents or dollars below a round number. In this case, the price of the radar detector is $129.99 instead of a rounded $130. This pricing strategy is used to make the product appear more affordable and to encourage impulse buying.

Question 18

Which of the following is one of the most important aspects of a government or organizational procurement?
A)The bidder's profit on the product
B)The payment schedule for the product
C)Provisions for deflation or inflation
D)Development of accurate descriptions of products to buy.

Accepted Answer

Developing accurate descriptions of products to buy is one of the most important aspects of procurement as it ensures that the organization or government obtains the desired product with the required specifications. This helps in avoiding any discrepancies or misunderstandings with the supplier and ensures that the product meets the organization's needs. The bidder's profit, payment schedule, and provisions for deflation or inflation are also important considerations, but developing accurate descriptions of the products is the most crucial aspect.

Question 19

In order to recover research and development costs rapidly and earn high initial profits,SenseTV is setting a high price for its plasma TVs.The pricing strategy SenseTV is using is called _____ pricing strategy.
A)market-minus
B)skimming
C)penetration
D)competitive

Accepted Answer

Skimming pricing strategy is used when companies want to recover their research and development costs quickly and earn high initial profits. It involves setting a high price for the product initially and then gradually lowering it over time. This strategy is commonly used for innovative products and technologies, such as SenseTV's plasma TVs. Market-minus pricing strategy is not a commonly used strategy, penetration pricing strategy involves setting low initial prices to quickly gain market share, and competitive pricing strategy involves setting prices based on those of competitors.

Question 20

In the absence of other cues:
A)many buyers interpret low prices as signals of high-quality products.
B)price offers no clue of a product's quality to prospective purchasers.
C)price is an important indicator of product quality to consumers.
D)the relationship between price and quality holds true only in declining economies.

Accepted Answer

In the absence of other cues, consumers often rely on price as an important indicator of a product's quality, assuming that higher prices are associated with higher quality. This is a common heuristic used in decision-making when other information is not available.

Quiz 19: Pricing Strategies

Since it involves the use of a high price relative to prices of competing products or services,the skimming pricing strategy is sometimes referred to as _____ pricing.

If foreign marketing costs are so low they do not impact overall costs,the pricing strategy to recommend is:

Which of the following pricing policies began to be widely used during the late 1960s to make price comparisons more convenient between products packaged in different sizes?

Aken Laboratories,a chemical manufacturer,exports its products to various countries in Asia.The company does not alter the prices of its products in these countries.Aken is adopting a _____ pricing strategy.

Which of the following statements best describes allowances?

Firms with high fixed costs often expand their markets,quoting the same prices to all customers regardless of shipping expenses,under the plan called:

Charles Schwab,an equity investment company,will face the risk of cannibalization from its e-tail channel,Schwab.com,if:

A penetration pricing strategy is called _____ pricing when it implements the premise that a lower-than-market price will attract buyers and move a brand from an unknown newcomer to brand-recognition or brand-preference stage.

A major problem facing company decision makers when setting transfer prices is:

Any part of an organization to which revenue and controllable costs can be assigned is termed a(n) :

The global pricing strategy that allows the greatest flexibility in setting prices to reflect local marketplace conditions is:

Before a multi-state computer company can charge for onsite computer repairs for the business's computer equipment,the company needs to establish __________.

A retailer wants to increase the number of customers shopping in her store.Which of the following has the greatest potential for success?

Consumers have a certain range within which their product-quality perceptions vary directly with price.This range reflects the concept of price:

An example of odd pricing would be:

Which of the following is one of the most important aspects of a government or organizational procurement?

In order to recover research and development costs rapidly and earn high initial profits,SenseTV is setting a high price for its plasma TVs.The pricing strategy SenseTV is using is called _____ pricing strategy.

In the absence of other cues: