Deck 19: Pricing Strategies

Question 1

Lysol sanitizing wipes entered the market at a low sales price and was supported by heavy couponing.As the initial trial period passed,the pricing slowly rose and the couponing became more infrequent.This activity is an example of penetration pricing.

Answer 1

True

Question 2

Most businesses slowly change the amounts they charge customers,even when they clearly recognize strong demand.

Answer 2

True

Question 3

Skimming pricing strategies are also known as "market-plus pricing."

Answer 3

True

Question 4

Skimming is an effective strategy to use when products are distinctive or have little competition.

Question 5

Citibank offers an opportunity for credit card customers to transfer balances from competitive cards,and pay low financing for a six-month period.After the introductory period is over,the rate will increase to the normal percentage.Citibank's strategy is to penetrate the market and obtain increased market share.

Question 6

Everyday low pricing strategies are an attempt to remove pricing as a significant part of the marketing mix.

Question 7

Setting prices is a one-time decision for most products in most companies.

Question 8

Since many firms begin penetration pricing with the intention of increasing prices in the future,success depends on generating numerous trial purchases.

Question 9

Penetration pricing is likely to be utilized when demand for a good or service is highly inelastic.

Question 10

Everyday low pricing is a pricing strategy that relies on short-term cost-cutting tactics such as coupons and rebates.

Question 11

Step outs occur when a company refuses to participate in price escalation between competitors.

Question 12

A skimming pricing strategy is ineffective in marketing higher-end goods.

Question 13

Tiffany,Rolex,Gucci,and Prada represent exclusivity,meaning their prices are mostly inelastic.

Question 14

A low price is a sure sell because the demand for many goods is highly elastic.

Question 15

Increased competition in the marketplace forces an innovative company to bring down the price of a product even lower than its eventual level under a nonsequential skimming procedure.

Question 16

Few businesses want the distinction of being the first to charge higher prices.

Question 17

Penetration pricing is often used in a market in which a new product is likely to face strong competition when introduced.

Question 18

A skimming pricing strategy is commonly used as a market entry price for distinctive goods and services with high initial competition.

Question 19

Controlling demand for a new product through the skimming strategy could save a company from dissatisfied customers by matching supply to the demand.

Question 20

Retailers such as Walmart achieve everyday low pricing by negotiating better prices from suppliers and by cutting its own costs.

Question 21

Buyers of a particular new car model are being offered zero-percent financing.This is an example of a promotional allowance.

Question 22

A manufacturer's list price must incorporate the costs incurred by channel members in performing required marketing functions and expected profit margins for each member.

Question 23

Retailers achieve opening price point by pricing a quality private-label product above those of manufacturer's brands.

Question 24

A negative cash discount is an attempt by sellers to improve their liquidity positions,reduce their bad-debt losses,and cut collection expenses.

Question 25

The demand for private-label goods will be low in a tough economy.

Question 26

Most price structures are built around list prices.

Question 27

A grocery store places tags on shelves just below the products that list the product name,UPC number,a store code,and the regular price of the product.This regular price is called the market price.

Question 28

Firms using a competitive pricing strategy try to reduce the emphasis on price competition by matching other firms' prices and concentrating their own marketing efforts on the product,distribution,and promotion elements of the marketing mix.

Question 29

Most companies set prices using competitive pricing as their primary pricing strategy.

Question 30

Cumulative quantity discounts are one-time reductions in list prices.

Question 31

Rebates are usually granted to customers by retailers.

Question 32

List price is the amount the consumer actually pays for a product.

Question 33

Zone pricing completely eliminates phantom freight.

Question 34

A functional discount is a payment to a channel member or a buyer for performing marketing functions.

Question 35

When the list price of a product is discounted by the value of a used product that is turned in at the time of sale,the transaction is called a sale with a trade-in.

Question 36

In an attempt to simplify pricing structures,sellers will quote uniform prices that,in effect,spread the total shipping costs across all the customers.

Question 37

Cumulative quantity discounts tend to bind customers to a single supply source.

Question 38

Trade-ins are seldom used in sales of durable goods.

Question 39

While price offers a dramatic means of achieving competitive advantage,it is the most difficult marketing variable for competitors to match.

Question 40

In an FOB pricing policy,the seller pays all freight charges to transport the product from the manufacturer's loading dock.

Question 41

Buyers and sellers often set purchase terms through negotiated contracts for projects that require extensive research and development.

Question 42

Zone pricing helps sellers compete in distant markets.

Question 43

Marketers implement leader pricing policies to avoid violating maximum-markup regulations and to earn a maximum return on promotional sales.

Question 44

Auctions are the most complicated form of negotiated pricing.

Question 45

A leader merchandise is a product offered by retailers to customers at less than cost to attract them to stores.

Question 46

A price of $ 9.97 is less likely to appeal to customers than $ 9.95 or $ 9.99.

Question 47

A private-label product priced below the lower limit can be regarded as too cheap by potential customers.

Question 48

In the absence of other cues,price is an important indicator of a product's quality to prospective purchasers.

Question 49

Odd pricing originated as a way to force clerks to make change,thus serving as a cash-control device.

Question 50

The amount by which the average transportation charge exceeds the actual cost of shipping to a particular destination under postage stamp pricing is called phantom freight.

Question 51

Unit pricing began to be widely used during the late 1960s to make price comparisons more convenient while comparing the true prices of products packaged in different sizes.

Question 52

Negotiated pricing policies seek to eliminate the economic waste that would result from obtaining and processing bids for relatively minor purchases.

Question 53

One-price policies are more likely to be applied in marketing programs based on individual bargaining.

Question 54

Product line pricing is the practice of marketing merchandise at variable prices negotiated between buyer and seller.

Question 55

A pricing policy is a general guideline that reflects marketing objectives and influences specific pricing decisions.

Question 56

Marketers who have adopted a product-line pricing strategy have one major advantage in that they have no difficulty making price changes on individual items.

Question 57

Most buyers prefer basing-point pricing policies compared to other policies used by sellers to handle transportation costs.

Question 58

Many government and organizational procurement departments do not pay set prices for their purchases.

Question 59

Basing-point pricing policy always calculates the freight charges from the point or location from which the goods are actually shipped.

Question 60

Maintaining an artificially low price for a period of time leads consumers to expect it as a customary feature of the product.

Question 61

Bundle pricing is more prevalent in the telecommunications industry compared to other industries.

Question 62

An internal transfer price is the price for moving goods between profit centers in large-scale organizations.

Question 63

The Internet has provided more power to customers to control the prices of goods and services.

Question 64

Bots are search programs that hunt the Web for a specific vendor and then print out a list of products and their prices at that source.

Question 65

Transfer pricing typically is a simple and standardized process in most organizations.

Question 66

Marketers today are more savvy about integrating marketing channels and standardizing pricing across channels.

Question 67

A standard worldwide pricing policy is more likely to succeed in foreign markets with high marketing costs.

Question 68

Business and government purchasers often legally enter into contracts with favored suppliers instead of using competitive bidding.

Question 69

The global status of an industry will influence a firm's pricing strategies in international markets.

Question 70

Large companies set up profit centers as a control device in their newly decentralized operation.

Question 71

The government monitors transfer pricing closely because it is an easy way for companies to avoid taxes on profits.

Question 72

Firms that price their products differently for online purchases face the risk of cannibalization.

Question 73

Almost half of all eBay transactions occur at fixed prices.

Question 74

Exporters who implement dual pricing policies can make profit by selling any product in international markets.

Question 75

Flexible cost-plus global pricing allows companies to grant discounts or change prices according to shifts in the competitive environment or fluctuations in the international exchange rates.

Question 76

Responding to the weakening of their control over prices brought about by e-commerce,marketers have begun to bundle a host of additional goods and services with the tangible products they offer their customers.

Question 77

Every online marketer is inherently a global marketer who must understand the internal and external conditions that affect global pricing strategies.

Question 78

Exporters often set standard worldwide prices,regardless of their target markets.

Question 79

Exporters who adopt market-differentiated pricing seldom change the price of their products.

Question 80

A dual pricing strategy provides more flexibility to set prices with changing market conditions than a market-differentiated pricing strategy.