Question 1

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 awhile--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 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

_____ 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

Setting relatively high prices to suggest high-quality or high-status is:
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 5

"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 alternatives is correct.

Accepted Answer

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

Question 6

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 7

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, 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 8

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 of these statements about "full-line pricing" are TRUE.

Accepted Answer

Full-line pricing is setting prices for a whole line of products. And all of the above given statements about full-line pricing are true.

Question 9

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 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 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 so that the profits from another product will increase, thus increasing the product group's total profits.

Question 12

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.
A) Price lining
B) Odd-even pricing
C) Product bundle pricing
D) Bid pricing
E) Price leading

Accepted Answer

Bid pricing means offering a specific price for each possible job rather than setting a price that applies for all customers.

Question 13

If a service firm sets a specific price for each possible job--rather than setting a price which applies for all potential customers--it is most likely using:
A) product-bundle pricing.
B) a one-price policy.
C) price lining.
D) average-cost pricing.
E) bid pricing.

Accepted Answer

Bid pricing means offering a specific price for each possible job rather than setting a price that applies for all customers.

Question 14

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 15

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this 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.

Question 16

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 17

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 price
B) Line price
C) Bundle price
D) Leader price
E) Demand-backward price

Accepted Answer

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

Question 18

Price lining:
A) is quite similar to prestige pricing.
B) can simplify both buying and selling.
C) tends to reduce turnover rates.
D) results in larger inventories.
E) All of these alternatives are correct.

Accepted Answer

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

Question 19

When 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 price
B) Price line
C) Bundle price
D) Leader price
E) Demand-backward price

Accepted Answer

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

Question 20

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.

Quiz 17: Price Setting in the Business World

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 awhile--but then actually bends back to the left at lower prices?

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

_____ involves setting one price for a set of products.

Setting relatively high prices to suggest high-quality or high-status is:

"Demand-backward" pricing:

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 Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

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

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

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

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

If a service firm sets a specific price for each possible job--rather than setting a price which applies for all potential customers--it is most likely using:

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:

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

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:

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:

Price lining:

When 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:

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: