Question 1

Typically,producers who use captive- product pricing set the price of the main product and set on the supplies necessary to use the product.
A)high;high markups
B)low;high markups
C)low;low markups
D)moderately;moderate markups
E)high;low markups

Accepted Answer

Captive-product pricing involves setting a low price for the main product in order to attract customers, but charging high markups on the supplies necessary to use the product. This encourages customers to continue purchasing from the same producer for convenience, despite the higher cost of supplies. Therefore, option B - low main product price with high markups on supplies - is the best choice.

Question 2

A marketer must be familiar with the five major product mix pricing situations.Which of the following is NOT one of them?
A)captive product pricing
B)by- product pricing
C)optional product pricing
D)unbundled product pricing
E)product line pricing

Accepted Answer

The five major product mix pricing situations are captive product pricing, by-product pricing, optional product pricing, product line pricing, and product bundle pricing. Unbundled product pricing is not one of them.

Question 3

All of the following are typical ways a buyer might form a reference price EXCEPT .
A)being influenced by sellers
B)identifying perceived value
C)remembering past prices
D)noting current prices
E)assessing the buying situation

Accepted Answer

Identifying perceived value is not a way to form a reference price; it is more about evaluating the worth or benefit of a product rather than comparing it to a reference price.

Question 4

When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers,Pepsi was using .
A)market- skimming pricing
B)value- added pricing
C)market- penetration pricing
D)new- product pricing
E)discount pricing

Accepted Answer

Market-penetration pricing is a strategy in which a company sets a low price for its new product to attract a large number of buyers quickly and gain a large market share. This is exactly what Pepsi did when it introduced Pepsi Blue and priced it at half the cost of its regular Pepsi. It aimed to penetrate the market quickly and gain market share by offering the product at a lower price, enticing consumers to try it.

Question 5

Brown Baby Tanning Salon offers weekly tanning sessions for $15 and season passes with unlimited tanning for $150.Brown Baby Tanning Salon is offering pricing.
A)product bundling
B)psychographic
C)discount
D)by- product
E)captive product

Accepted Answer

The pricing strategy being used is a discount, as the cost of a weekly session is reduced to $15 and the season pass provides unlimited tanning for a flat rate of $150.

Question 6

Big Mike's Health Food Store sells nutritional energy- producing foods.The price of the products sold varies according to individual customer accounts and situations.For example,long- time customers receive discounts.This strategy is an example of _.
A)dynamic pricing
B)everyday low pricing
C)cost- plus pricing
D)price elasticity
E)penetration pricing

Accepted Answer

Dynamic pricing involves adjusting prices based on individual customer situations and accounts, which is exactly what Big Mike's Health Food Store is doing. The other pricing strategies listed do not take into account individual customer situations and accounts.

Question 7

Consumers usually perceive higher- priced products as .
A)having a higher quality
B)being in the introductory stage of the product life cycle
C)popular brands
D)having low profit margins
E)being in the maturity stage of the product life cycle

Accepted Answer

Consumers tend to associate higher prices with higher quality, assuming that the manufacturer has invested more in the product's development and production. This is known as the price-quality heuristic.

Question 8

Low- interest financing and longer warranties are both examples of .
A)discounts
B)product- form pricing
C)promotional pricing
D)allowances
E)segmented pricing

Accepted Answer

Low-interest financing and longer warranties are examples of promotional pricing strategies used to encourage customers to purchase by offering additional value or incentives.

Question 9

Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m.when accompanied by a paying customer.This is an example of .
A)promotional pricing
B)discounts and allowances
C)product bundle pricing
D)location- based pricing
E)by- product pricing

Accepted Answer

This is an example of promotional pricing, where the company is offering a freebie to a specific group of customers (seniors over 60) during a certain time period (prior to 4:00 pm) to attract more business.

Question 10

Which of the following is a reason for a company to raise its prices?
A)to balance out decreasing costs
B)to win a larger share of the market
C)to address the issue of overdemand for a product
D)to use excess capacity
E)to boost sales volume

Accepted Answer

Raising prices can help manage overdemand by reducing the number of customers willing to purchase at the higher price, thereby balancing supply and demand.

Question 11

Refer to the scenario below to answer the following questions.
Quills,Inc.is a manufacturer of ballpoint pens,pencils,and stationery.The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains.Charles Powell,CEO of Quills,had hoped to manufacture and sell in large enough quantities that prices could be held low.However,in the first several months,the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets.
-By offering a set of pens packaged with stationery and matching envelopes,Quills is using .
A)price fixing
B)by- product pricing
C)dynamic pricing
D)optional product pricing
E)product bundle pricing

Accepted Answer

Quills is using product bundle pricing by offering a set of pens packaged with stationery and matching envelopes. This pricing strategy involves packaging multiple products together and offering them at a discounted price compared to purchasing each item separately.

Question 12

A firm is using when it charges a high,premium price for a new product with the intention of reducing the price in the future.
A)prestige pricing
B)market- penetration pricing
C)value pricing
D)trial pricing
E)price skimming

Accepted Answer

This describes price skimming, where a high price is initially charged to maximize profits from early adopters, and is eventually lowered to capture a larger market share.

Question 13

Refer to the scenario below to answer the following questions.
Quills,Inc.is a manufacturer of ballpoint pens,pencils,and stationery.The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains.Charles Powell,CEO of Quills,had hoped to manufacture and sell in large enough quantities that prices could be held low.However,in the first several months,the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets.
-Why might have Charles Powell have avoided using market- skimming pricing at Quills?
A)The quality and image of the products would not have likely supported the high initial price.
B)The costs of producing a larger volume of the firm's products were too high.
C)It was difficult for competitors to enter the market.
D)A high price was likely to produce more market growth.
E)The market for the products was not highly price sensitive.

Accepted Answer

The scenario states that Quills aimed to cater to a number of markets and experiment with the price portion of its marketing mix. This indicates that the company wanted to keep its prices competitive to appeal to a wider range of customers. Market-skimming pricing involves setting a high initial price for a product and gradually reducing it over time, which may not have been a suitable strategy for Quills if the quality and image of its products did not support such a high price. Therefore, A is the best choice.

Question 14

pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.
A)Value- based
B)Market- skimming
C)Below- market
D)Leader
E)Market- penetration

Accepted Answer

Market penetration pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.

Question 15

The New Age Gallery has three admission prices for students,adults,and seniors.All three groups are entitled to the same services.This form of pricing is called .
A)customer- segmented pricing
B)location pricing
C)revenue management pricing
D)time pricing
E)generational pricing

Accepted Answer

Customer-segmented pricing involves charging different prices to different customer groups based on factors such as age, income, or education level. In the case of the New Age Gallery, they have different prices for three specific customer groups: students, adults, and seniors. This approach allows the gallery to capture a range of customers who have different levels of willingness to pay, while still providing the same services to all customers.

Question 16

When product managers at Schwinn make decisions about which types of bicycle seats,handle bars,and saddlebags to offer customers on their bikes,they are engaged in _.
A)cost- based pricing
B)by- product pricing
C)captive product pricing
D)product line pricing
E)optional product pricing

Accepted Answer

Product managers at Schwinn are deciding on additional features or accessories (like bicycle seats, handle bars, and saddlebags) that can be offered with the main product (bikes), which is an example of optional product pricing.

Question 17

Trade or functional discounts are offered by manufacturers to .
A)other channel members that agree to exclusive distribution contracts
B)intermediaries such as financing institutions as a cost of doing business with them
C)the government market and other organizations that require bid proposals
D)channel members who perform tasks that the manufacturer would otherwise have to perform
E)consumers who earn a price reduction for buying in bulk

Accepted Answer

Trade or functional discounts are typically offered to channel members who perform tasks that the manufacturer would otherwise have to perform themselves. For example, if a manufacturer offers a discount to a retailer for taking on the responsibility of displaying and promoting their products in-store, this is a trade or functional discount.

Question 18

Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass- market share.As a consultant,you should recommend a _ pricing strategy.
A)market- penetration
B)captive- product
C)loss- leader
D)market- skimming
E)zone

Accepted Answer

Market-penetration pricing strategy aims to quickly gain market share by setting a low price for the new product. This will attract customers away from competitors and encourage them to try the new product. Johnson Boats' goal of quickly gaining mass-market share is well-suited to this strategy. It can be an effective way to rapidly gain market share in mature markets, such as the highly developed countries Johnson Boats is targeting.

Question 19

When a competitor cuts its price,a company is most likely to decide to _ if it believes it will not lose much market share or would lose too much profit by cutting its own price.
A)increase its marketing budget to raise the perceived value of the product
B)maintain its current prices and profit margin
C)increase its production costs to improve the quality of the product
D)reduce its marketing costs
E)stabilize its production costs

Accepted Answer

If a company believes that cutting its price will result in losing too much profit, it is best to maintain its current prices and profit margin. This may involve focusing on other factors such as quality, product features, or customer service to differentiate itself from the competitor instead of engaging in a price war. Increasing marketing budget or production costs may not necessarily be effective or feasible in this scenario, and reducing marketing costs may result in reduced brand awareness and customer engagement. Stabilizing production costs may be important for long-term planning, but it may not be the immediate solution to responding to a competitor's price cut.

Question 20

Valeo Fashions has just introduced a new line of fashion dresses for teens.It will initially enter the market at high prices in a pricing strategy.
A)demographic
B)psychological
C)market- skimming
D)competitive market
E)market- penetration

Accepted Answer

Market-skimming pricing strategy involves setting high initial prices for new products or services with the intention of targeting consumers who are willing to pay a premium price. This strategy is often used for innovative, high-quality products or services where there is little or no competition. Therefore, Valeo Fashions' decision to introduce its new line of fashion dresses for teens at high prices indicates that it is using a market-skimming pricing strategy.

Quiz 11: Additional Pricing Considerations

Typically,producers who use captive- product pricing set the price of the main product and set on the supplies necessary to use the product.

A marketer must be familiar with the five major product mix pricing situations.Which of the following is NOT one of them?

All of the following are typical ways a buyer might form a reference price EXCEPT .

When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers,Pepsi was using .

Brown Baby Tanning Salon offers weekly tanning sessions for $15 and season passes with unlimited tanning for $150.Brown Baby Tanning Salon is offering pricing.

Big Mike's Health Food Store sells nutritional energy- producing foods.The price of the products sold varies according to individual customer accounts and situations.For example,long- time customers receive discounts.This strategy is an example of _.

Consumers usually perceive higher- priced products as .

Low- interest financing and longer warranties are both examples of .

Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m.when accompanied by a paying customer.This is an example of .

Which of the following is a reason for a company to raise its prices?

A firm is using when it charges a high,premium price for a new product with the intention of reducing the price in the future.

pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.

The New Age Gallery has three admission prices for students,adults,and seniors.All three groups are entitled to the same services.This form of pricing is called .

When product managers at Schwinn make decisions about which types of bicycle seats,handle bars,and saddlebags to offer customers on their bikes,they are engaged in _.

Trade or functional discounts are offered by manufacturers to .

Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass- market share.As a consultant,you should recommend a _ pricing strategy.

When a competitor cuts its price,a company is most likely to decide to _ if it believes it will not lose much market share or would lose too much profit by cutting its own price.

Valeo Fashions has just introduced a new line of fashion dresses for teens.It will initially enter the market at high prices in a pricing strategy.