Question 1

Vac "N" Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine. This is an example of a ________.

Accepted Answer

This is an example of a trade-in allowance, where customers receive a discount for exchanging an old product for a new one.

Question 2

Universal Appliance prices its refrigerators at five distinct price levels based on finish, style, capacity, and features. They range from $799 to $9,500. This is an illustration of price steps.

Accepted Answer

The fact that Universal Appliance prices its refrigerators at five distinct price levels indicates that they are using price steps, which involve setting prices at specific levels based on various product attributes.

Question 3

When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

Accepted Answer

By selling the by-products, the manufacturer can bring in additional revenue, which can then be used to offset the cost of producing the main product and lower its price to be more attractive to consumers.

Question 4

When Nabisco offers to cover half the cost of all local advertising for supermarkets that sell Oreo Cookies, the company is granting ________.

Accepted Answer

Nabisco is offering to cover half the cost of local advertising for supermarkets that sell Oreo Cookies. This offer is an example of a promotional allowance, which is a type of discount given by the manufacturer to the retailer for promoting or advertising the manufacturer's product.

Question 5

Which group is most likely offered functional discounts by manufacturers?

Accepted Answer

Functional discounts are offered to trade-channel members who perform certain tasks, such as sales or warehousing. Option A is the only choice that identifies a group of trade-channel members who are likely to be offered functional discounts.

Question 6

Pricing a product based on consumers' reference prices is referred to as ________ pricing.

Accepted Answer

Psychological pricing is based on consumers' reference prices and perception of value. This type of pricing takes into account the consumer's psychology and behavior. It may involve setting prices that are slightly lower or higher than competitors, using odd pricing, or offering discounts that make customers believe they are getting a good deal.

Question 7

When using product line pricing, a firm sets one price for all products in the line based on average manufacturing costs.

Accepted Answer

Product line pricing involves setting different prices for different products within a product line, based on factors such as production costs, competition, and perceived value to the customer.

Question 8

Metro Museum has different admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________ pricing.

Accepted Answer

The pricing strategy used by Metro Museum involves different prices for different customer segments (students, adults, and seniors), while providing the same services to all. Therefore, it is an example of customer-segment pricing. Time-based pricing involves different prices for different times of the day, while location-based pricing involves different prices for different locations. By-product pricing involves selling by-products of a product, while product form pricing involves pricing different versions of the same product differently.

Question 9

Movie theaters charge matinee pricing during the daytime, and resorts give weekend and seasonal discounts. This is illustrative of a ________ pricing strategy.

Accepted Answer

The pricing strategy used in both scenarios is time-based, as the price changes based on the time of day or season.

Question 10

Dynamic pricing is particularly suitable for Internet-based companies like Amazon who want to be responsive to shoppers' desires and marketplace changes.

Accepted Answer

Dynamic pricing allows online retailers like Amazon to adjust prices in real-time based on data and market changes, making it a suitable strategy for e-commerce businesses.

Question 11

What type of pricing is being used when a company temporarily prices its products below the list price to create buying excitement and urgency?

Accepted Answer

Promotional pricing is when a company temporarily lowers the price of their product to create excitement and urgency among buyers. This type of pricing is often used to promote a new product, clear out excess inventory, or compete with other companies. It is a common strategy in many industries, such as retail, hospitality, and entertainment.

Question 12

Explain product line pricing. Provide an example.

Accepted Answer

The answer of Explain product line pricing. Provide an example....

Question 13

Salon Du Jour offers special combination packages at a reduced price. Separately, a haircut is $30 and a conditioning treatment is $35. But the combo price is $50. This is referred to as ________ pricing.

Accepted Answer

The special combination package offered by Salon Du Jour at a reduced price is an example of product bundle pricing, where two or more products or services are combined and sold at a lower price than if they were purchased separately.

Question 14

Consumers rely less on price to judge the quality of a product when they ________.

Accepted Answer

Consumers who have prior experience with a product are more likely to rely on their own experiences rather than price to judge its quality, as they have firsthand knowledge about the product's performance and value.

Question 15

________ prices are carried in buyers' minds and used when looking at a given product.

Accepted Answer

Reference prices are the prices which buyers keep in their minds as a benchmark while evaluating any product or service. These reference prices are based on their past experiences, advertising, and other available market information.

Question 16

Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, even though each seat costs the same for the owners of the stadium. What is this form of pricing called?

Accepted Answer

Location-based pricing is when prices vary based on the location or section of a venue, even though the cost of producing the product or service is the same across all sections. This is a common practice in sports and entertainment venues.

Question 17

When a manufacturer offers a ________, a customer buys a product from a manufacturer's dealer within a specified time period, and the manufacturer then sends the customer a check.

Accepted Answer

A cash rebate is a form of promotion where the manufacturer offers a discount in the form of a cash rebate to customers who purchase their product within a specified time period. The customer buys the product from a dealer and then receives a check from the manufacturer.

Question 18

When using product bundle pricing, sellers combine several products and offer the bundle at an increased price for increased profit.

Accepted Answer

Product bundle pricing typically involves offering several products together at a lower price than they would cost if bought separately, aiming to increase sales volume rather than per-unit profit.

Question 19

Which pricing mix strategy should be used in relation to saleable scrap materials? How does this strategy function?

Accepted Answer

The answer of Which pricing mix strategy should be used...

Question 20

The National Tree Company offers resellers half-price reductions on artificial Christmas trees if they purchase them in July. This is an example of a ________.

Accepted Answer

The given scenario shows a seasonal discount as it is offered during a specific time of the year, in this case, in July.

Quiz 9: Pricing: Understanding and Capturing Customer Value