Question 1

Hunter's Alley is a chain of stores targeted to people who are proud of their NRA membership.It has agreed to set up a special display of Swartklip ammunition near its rifle and shotgun aisles and also to run an advertisement in newspapers in communities where its stores are located.Swartklip has agreed to supply the display material free and to pay for half the cost of the advertisement.This is an example of a:
A) bundled pricing tactic
B) functional discount
C) promotional allowance
D) quantity discount
E) direct allowance

Accepted Answer

A promotional allowance may be used to offer free goods or displays to a retailer in return for promotion of a manufacturer's products,or it may pay for some or all of the advertising costs.

Question 2

After managers understand both the legal and the marketing consequences of price strategies,they should set a _____ price-the general level at which a company expects to sell a good or service.
A) functional
B) zone
C) demand
D) leader
E) base

Accepted Answer

One the base price is set,then the marketer fine-tunes it using discounts,allowances,rebates,and value-based pricing.

Question 3

An Internet picture frame manufacturer offers retailers reduced prices on any combination of size or style frames purchased.The discount is shown as they shop and adjusted as the quantity of frames purchased increases.What common form of purchase discount is the frame manufacturer using?
A) rebate
B) cash discount
C) quantity discount
D) promotional allowance
E) functional discount

Accepted Answer

Quantity discounts offer lower prices for buying in multiple units or above a specified dollar amount.

Question 4

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market is called:
A) price discrimination
B) predatory pricing
C) price fixing
D) price manipulation
E) anti-competitive pricing

Accepted Answer

Firms using predatory pricing charge very low prices,and once competitors have been driven out,the firm raises its prices.

Question 5

_____ are cash refunds given for the purchase of a product during a specific period.
A) Rebates
B) Loss leaders
C) Reciprocal allowances
D) Demand discounts
E) Promotional allowances

Accepted Answer

This is the definition of a rebate.

Question 6

Quantity discounts are most often used to:
A) reward the buyer who pays in cash
B) encourage large orders
C) increase supply for a specific raw material
D) reward a channel intermediary for performing some service
E) shift the storage function backward to the supplier

Accepted Answer

Quantity discounts encourage wholesalers or retailers to buy in larger amounts.

Question 7

When a buyer pays a lower price for buying multiple units or above a specified dollar amount for a single order,the buyer is receiving a _____ discount.
A) promotional
B) quantity
C) frequent buyer
D) functional
E) cumulative

Accepted Answer

A quantity discount is a price deduction offered to customers buying in multiple units or making a purchase above a specified dollar amount.

Question 8

Ace Hardware's spring snowblower sale is an example of which of the following pricing tactics?
A) Quantity discount
B) Seasonal discount
C) Temporal discount
D) Promotional allowance
E) Functional discount

Accepted Answer

A seasonal discount is a price reduction for buying merchandise out of season.

Question 9

Apple's "Back to School" program offered students who purchased an iMac computer and an iPod Touch MP3 player a $250 refund.The $250 check was essentially a:
A) rebate
B) reciprocal allowance
C) cash discount
D) functional discount
E) trade promotion

Accepted Answer

Rebates are cash refunds.

Question 10

All of the following are tactics for fine-tuning the base price EXCEPT:
A) functional discounts
B) markdown money
C) rebates
D) quality discounts
E) quantity discounts

Accepted Answer

Additional tactics include cash discounts,seasonal discounts,promotional allowances,zero percent financing,and value-based pricing.

Question 11

A(n)_____ discount is a deduction from list prices that applies to the buyer's total purchases made during a specific period and intended to encourage customer loyalty.
A) cumulative quantity
B) noncumulative quantitative
C) functional
D) cash
E) integrated

Accepted Answer

Because quantity discounts are allowed to be achieved over time,customers become locked into buying from a single supplier to qualify for a discount.

Question 12

When Microsoft introduced its Zune MP3 player,many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor,like the Apple iPod,would be unable to compete.If Microsoft had used this approach it have been would be guilty of _____.
A) predatory pricing
B) unfair trade practices
C) channel manipulation pricing
D) price fixing
E) price discrimination

Accepted Answer

Predatory pricing is the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market.

Question 13

Last year,a single infield box ticket for an Atlanta Braves baseball game cost $40,but fans who bought a season pass for the same seat got a reduced price.This $40 price was a _____ price.
A) base
B) zone
C) demand
D) channel leader
E) functional

Accepted Answer

The base price is the general price level at which a company intends to sell its product.

Question 14

A discount off the base price to customers who pay immediately,or within a specified time period,is called a:
A) functional discount
B) quantity discount
C) base discount
D) cash discount
E) promotional allowance

Accepted Answer

Prompt payment saves the seller carrying charges and billing expenses and allows the seller to avoid bad debt.

Question 15

When the salesperson from Affiliated Food Inc. ,a grocery distributor,calls on a grocery store,she is authorized to offer a 15 percent discount from the list price in recognition of activities (such as unpacking items and stocking shelves)that retailers perform for the distributor.This 15 percent discount is a:
A) quantity discount
B) promotional allowance
C) functional discount
D) seasonal discount
E) channel allowance

Accepted Answer

A functional,or trade,discount is the customary discount from list price that is offered to intermediaries in recognition of functions they perform in the selling of the product.

Question 16

All of the following elements must be present for a pricing practice to be considered discriminatory under the Robinson-Patman Act EXCEPT:
A) The seller must charge different prices to different customers for the same product.
B) The seller must make two or more actual sales within a reasonably short time.
C) The transaction must occur in interstate commerce.
D) The products sold must not be commodities.
E) There must be significant competitive injury.

Accepted Answer

The products sold must be commodities or other tangible goods.

Question 17

Redline Editorial Services sent a $1,000 invoice to a customer for copyediting a booklet.According to the terms of the invoice,the customer would receive a 3 percent discount on the invoice price if the invoice was paid within 15 days.This is an example of a:
A) quantity discount
B) cash discount
C) rebate
D) functional discount
E) promotional allowance

Accepted Answer

A cash discount is offered to those who pay immediately or within a specified time frame.

Question 18

When a channel intermediary is compensated for the ordinary services and tasks performed within the channel of distribution,the compensation usually comes in the form of a discount from base price.This discount is called a:
A) seasonal discount
B) promotional allowance
C) cumulative or noncumulative quantity discount
D) functional (or trade)discount
E) rebate or refund

Accepted Answer

A functional discount (trade discount)is a discount to wholesalers and retailers for performing channel functions.

Question 19

A _____ is a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round.
A) functional discount
B) base allowance
C) promotional allowance
D) quantity discount
E) seasonal discount

Accepted Answer

A seasonal discount is a price reduction for buying merchandise out of season.

Question 20

Which type of quantity discount is a deduction from the list price that applies to a single order?
A) Base discount
B) Cumulative discount
C) Noncumulative discount
D) Cash discount
E) Functional discount

Accepted Answer

A noncumulative discount applies to one order and is intended to encourage orders in large quantities.

Quiz 20: Setting the Right Price

After managers understand both the legal and the marketing consequences of price strategies,they should set a _____ price-the general level at which a company expects to sell a good or service.

An Internet picture frame manufacturer offers retailers reduced prices on any combination of size or style frames purchased.The discount is shown as they shop and adjusted as the quantity of frames purchased increases.What common form of purchase discount is the frame manufacturer using?

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market is called:

_____ are cash refunds given for the purchase of a product during a specific period.

Quantity discounts are most often used to:

When a buyer pays a lower price for buying multiple units or above a specified dollar amount for a single order,the buyer is receiving a _____ discount.

Ace Hardware's spring snowblower sale is an example of which of the following pricing tactics?

Apple's "Back to School" program offered students who purchased an iMac computer and an iPod Touch MP3 player a $250 refund.The $250 check was essentially a:

All of the following are tactics for fine-tuning the base price EXCEPT:

A(n) _____ discount is a deduction from list prices that applies to the buyer's total purchases made during a specific period and intended to encourage customer loyalty.

When Microsoft introduced its Zune MP3 player,many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor,like the Apple iPod,would be unable to compete.If Microsoft had used this approach it have been would be guilty of _____.

Last year,a single infield box ticket for an Atlanta Braves baseball game cost $40,but fans who bought a season pass for the same seat got a reduced price.This $40 price was a _____ price.

A discount off the base price to customers who pay immediately,or within a specified time period,is called a:

All of the following elements must be present for a pricing practice to be considered discriminatory under the Robinson-Patman Act EXCEPT:

Redline Editorial Services sent a $1,000 invoice to a customer for copyediting a booklet.According to the terms of the invoice,the customer would receive a 3 percent discount on the invoice price if the invoice was paid within 15 days.This is an example of a:

When a channel intermediary is compensated for the ordinary services and tasks performed within the channel of distribution,the compensation usually comes in the form of a discount from base price.This discount is called a:

A _____ is a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round.

Which type of quantity discount is a deduction from the list price that applies to a single order?