Question 1

How do shopbots affect pricing strategies?
A) They encourage a more creative use of advertising.
B) They link manufacturers,suppliers,and customers.
C) They create opportunities for prestige pricing.
D) They provide a means for comparison shopping.
E) They create inelastic demand.

Accepted Answer

Shopbots provide a means for comparison shopping, which means that customers can easily compare prices across different retailers. This can make pricing strategies more competitive, as retailers try to offer the best possible price to attract customers.

Question 2

Len knows little about atlases and does not want to spend the time to learn about them.However,he needs to buy at atlas to use in a school history project.Not wanting to make a poor choice,he is likely to:
A) intuitively make the right choice
B) avoid making a decision by not buying an atlas
C) buy the most expensive atlas (perhaps paying too much),guessing that the price is related to quality
D) research the product and buy the least expensive atlas
E) buy the least expensive atlas because most consumers feel that price is not directly related to quality

Accepted Answer

Len is likely to buy the most expensive atlas, assuming that a higher price indicates better quality, since he does not want to spend time learning about atlases.

Question 3

Which of the following statements about the impact of the Internet on pricing strategy is true?
A) The promise of pricing efficiency on the Internet has been realized.
B) Setting prices on the Internet offers retailers few advantages.
C) One area where the Internet is having a major impact on pricing is the bargaining power between buyers and sellers.
D) Internet marketers have found it relatively easy to charge exactly what the market will bear.
E) Extranets are online price-comparison engines.

Accepted Answer

The internet is having a major impact on pricing in terms of the bargaining power between buyers and sellers. With the ability to easily compare prices and products from various retailers, buyers hold more power in determining prices. This has led to increased price competition and pressure on retailers to offer more competitive prices.

Question 4

The advertisements for Joy brand perfume claim that it is the most expensive perfume in the world.This is an example of _____ pricing.
A) target return
B) prestige
C) market share
D) maintained markup
E) profit maximization

Accepted Answer

Prestige pricing is a strategy where a high price is charged in order to create an image of high quality, luxury or exclusiveness. This strategy is often used for luxury products such as perfume, and Joy brand perfume is marketed as the most expensive perfume in the world, suggesting that it is a high-end, luxurious and exclusive product.

Question 5

SCENARIOS
Continental Lite
In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people."
-Refer to Continental Lite.The statement that Continental Lite had problems because "Its costs were too high,and its revenues were too low," suggests that the airline had no _____ left over after paying for airline activities.
A) ROI
B) revenue
C) profit
D) returns
E) COGS

Accepted Answer

The statement implies that the airline did not make a profit, which means that its costs exceeded its revenues. Therefore, the correct choice is profit (C).ROI refers to return on investment, revenue is the total amount of money earned from sales, returns usually refers to merchandise returned by customers, and COGS refers to the cost of goods sold, which is a component of cost. None of these choices accurately reflect the airline's financial situation described in the scenario.

Question 6

SCENARIOS
Continental Lite
In the mid-1990s,Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite,an alternative low-fare commercial airline passenger operation.Top executives at Continental had expected its no-frills operation to break even within a year of its inception,but the airline fell short of the goal.A source close to the company explained it by saying,"Its costs were too high,and its revenues were too low." Some observers criticized Continental's marketing efforts.When the no-frills service was first launched,it lacked a distinct name or identity,missing its chance to make a splash.Then Continental tried to sell three "brands" at once--Lite,a new premium service,and its more traditional long-haul domestic flights.As one rival expressed it,"You cannot be all things to all people."
-Refer to Continental Lite.Continental Lite's pricing objectives were based on gaining as much market share as possible from Southwest Airlines.This suggests that Continental Lite had _____ pricing objectives.
A) sales-oriented
B) need-oriented
C) profit-oriented
D) cost-oriented
E) status-quo

Accepted Answer

Continental Lite's pricing objectives were focused on gaining market share, which is a characteristic of a sales-oriented pricing approach. They were not solely focused on achieving profit or minimizing costs.

Question 7

Kables Optic builds quality binoculars,which has innovative components (such as water-resistance)and superior durability.Kables Optic has managed to keep its price lower than its competitors.However,Kables's sales have been disappointing.For a fast and simple remedy,Kables should:
A) reeducate the potential consumers about Kables products
B) raise prices because of consumer expectations
C) lower the quality of Kables products
D) emphasize low price in all its advertising
E) look for a different product to manufacture

Accepted Answer

The answer of Kables Optic builds quality binoculars,which has innovative...

Question 8

The dimensions of quality that are important to consumers include:
A) versatility
B) serviceability
C) performance
D) ease of use
E) all of the above

Accepted Answer

All of the above dimensions (versatility, serviceability, performance, and ease of use) are important to consumers and contribute to their perception of quality. Each of these dimensions addresses specific aspects that consumers value, such as the product's ability to perform its intended function, its ease of maintenance and repair, its adaptability to different situations, and its convenience and user-friendliness. To meet consumers' expectations for quality, companies must focus on delivering products that excel in each of these areas.

Question 9

Kroger supermarkets will place well-known brands on the shelves at high prices while offering its own Kroger brand at lower prices.This practice is an example of:
A) illegal pricing
B) selling against the brand
C) price pressurization
D) brand cutting
E) private-label cannibalization

Accepted Answer

This practice is known as "selling against the brand," where a retailer offers its own private-label products at lower prices alongside well-known brands to encourage consumers to choose the store brand.

Question 10

Albert has decided that the pricing strategy at his sporting goods store will include advertisements offering discounts on the Petzel Tikka headlamp for hunting,camping,and cave exploring.This pricing strategy clearly involves:
A) demand creation
B) managed costs
C) value-added benefits
D) intangible features
E) perceived quality

Accepted Answer

Advertising discounts on a specific product is a tactic used to create demand for that product.

Question 11

Tom likes to drink scotch whiskey.He was familiar with the Johnny Walker Black Label brand,which he purchased for around $30.When he found a bottle of Johnny Walker Black Label priced at more than $200,he was positive that it would be a much finer whiskey.For Tom,_____ indicated quality.
A) premium pricing
B) price lining
C) prestige pricing
D) exclusive pricing
E) selective pricing

Accepted Answer

Tom's perception of the Johnny Walker Black Label priced at over $200 as a much finer whiskey indicates that he associates price with prestige or status. This is characteristic of prestige pricing, where higher prices are seen as a signal of superior quality.

Question 12

Manufacturers can regain some control over the price their products are sold for at the retail level by:
A) using an exclusive distribution system
B) developing brand loyalty in consumers by delivering quality and value
C) avoiding doing business with price-cutting discounters
D) franchising
E) doing all of these

Accepted Answer

By using an exclusive distribution system, manufacturers can limit the number of retailers who sell their products and thus control the prices to some extent. Developing brand loyalty in consumers ensures that they are willing to pay a premium price for the manufacturer's products. Avoiding doing business with price-cutting discounters can help maintain the perceived value of the product. Franchising can also help control prices to an extent. Therefore, doing all of these can help manufacturers regain control over the price of their products.

Question 13

Extranets between suppliers and customers:
A) cost more than they save
B) save significant costs associated with the changing of prices
C) are still in the theoretical stage and have yet proven useful in real-life
D) cannot be used by a traditional bricks-and-mortar store
E) will someday replace marketing inventory systems

Accepted Answer

Extranets between suppliers and customers save significant costs associated with the changing of prices. By enabling both parties to access and update product information and pricing in real-time, extranets eliminate the need for costly manual processes and reduce the likelihood of errors and discrepancies. Additionally, extranets can improve communication and collaboration between suppliers and customers, leading to more efficient and effective business relationships.

Question 14

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:
A) is a signal of quality
B) is an indication that consumers are being ripped off
C) will always lead to major price discounts to wholesalers and retailers that distribute it
D) is a sign of the company's overall market share
E) is because the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth

Accepted Answer

Many consumers associate a high price with higher quality as they believe that companies would charge more for better quality products. This is known as price-quality inference.

Question 15

HeartGood Eggs decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on its new low-cholesterol eggs.This pricing strategy is designed to do all of the following EXCEPT:
A) encourage retailers to advertise this high-margin item
B) give dealers an incentive to promote the new product
C) develop wide and convenient distribution
D) maximize profit margin for the producer
E) encourage trial by consumers if priced low by retailers

Accepted Answer

The pricing strategy of offering a higher profit margin to grocery wholesalers and retailers on the new low-cholesterol eggs is aimed at increasing the product's distribution and promotion to attract more customers. However, maximizing profit margin for the producer is not the purpose of this strategy.

Question 16

How has the use of the Internet reduced "menu costs?'
A) by making it easy to adjust product prices
B) by creating mall replicas
C) by extending the life of fixed assets
D) by creating keystoned revenues
E) by maintaining real-time inventories

Accepted Answer

The use of the Internet has made it easy for businesses to adjust product prices, reducing menu costs. Traditional menu costs refer to the cost of physically printing and distributing new menus or price lists every time a price change is made. With the Internet, businesses can quickly update and display new prices on their websites or in online marketplaces without incurring additional printing or distribution costs.

Question 17

When pricing is used as part of a promotion strategy,it:
A) can be effectively used in trade promotions
B) cannot be used as a public relations tool
C) must be accompanied by personal selling
D) eliminates problems associated with the service characteristic of homogeneity
E) makes the establishment of a price to quality relationship unnecessary

Accepted Answer

Pricing can be effectively used in trade promotions as a strategy to encourage retailers or wholesalers to stock up on a particular product or increase their sales of it. This can include offering discounts, rebates, or other price-related incentives.

Question 18

Prestige pricing:
A) equalizes supply and demand
B) uses high prices to promote a high-quality product
C) is the practice of marking up prices by 100 percent
D) is also called leader pricing
E) emphasizes the monetary nature of price

Accepted Answer

Prestige pricing uses high prices to create a perception of high quality and exclusivity.

Question 19

During the off-season,Parrish Farms,a bed-and-breakfast inn,offers a 25 percent reduction on its weekend rates to entice customers to make last-minute reservations at its Web site.This is an example of pricing strategy used as a:
A) distribution tool
B) Internet enhancer
C) product strategy
D) direct sales tool
E) promotion strategy

Accepted Answer

The 25 percent reduction on weekend rates is a promotional strategy used to entice customers to make last-minute reservations at the bed-and-breakfast inn's website.

Question 20

Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n)_____ strategy.
A) profit maximization
B) market share
C) maintained markup pricing
D) prestige pricing
E) investment asset

Accepted Answer

This is a clear example of prestige pricing, where the product is priced high deliberately to create a perception of high quality and exclusivity. The goal is not to maximize profits or gain market share, but to enhance the brand image and appeal to a certain target consumer group. Maintained markup pricing and investment asset strategies are not relevant in this context.

Quiz 17: Pricing Concepts

How do shopbots affect pricing strategies?

Len knows little about atlases and does not want to spend the time to learn about them.However,he needs to buy at atlas to use in a school history project.Not wanting to make a poor choice,he is likely to:

Which of the following statements about the impact of the Internet on pricing strategy is true?

The advertisements for Joy brand perfume claim that it is the most expensive perfume in the world.This is an example of _____ pricing.

Kables Optic builds quality binoculars,which has innovative components (such as water-resistance) and superior durability.Kables Optic has managed to keep its price lower than its competitors.However,Kables's sales have been disappointing.For a fast and simple remedy,Kables should:

The dimensions of quality that are important to consumers include:

Kroger supermarkets will place well-known brands on the shelves at high prices while offering its own Kroger brand at lower prices.This practice is an example of:

Albert has decided that the pricing strategy at his sporting goods store will include advertisements offering discounts on the Petzel Tikka headlamp for hunting,camping,and cave exploring.This pricing strategy clearly involves:

Tom likes to drink scotch whiskey.He was familiar with the Johnny Walker Black Label brand,which he purchased for around $30.When he found a bottle of Johnny Walker Black Label priced at more than $200,he was positive that it would be a much finer whiskey.For Tom,_____ indicated quality.

Manufacturers can regain some control over the price their products are sold for at the retail level by:

Extranets between suppliers and customers:

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

HeartGood Eggs decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on its new low-cholesterol eggs.This pricing strategy is designed to do all of the following EXCEPT:

How has the use of the Internet reduced "menu costs?'

When pricing is used as part of a promotion strategy,it:

Prestige pricing:

During the off-season,Parrish Farms,a bed-and-breakfast inn,offers a 25 percent reduction on its weekend rates to entice customers to make last-minute reservations at its Web site.This is an example of pricing strategy used as a:

Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) _____ strategy.