Question 1

Hunter's Alley is a chain of stores targeted to people who are proud of their National Rifle Association 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

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

Accepted Answer

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

Question 3

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

This is the definition of a cash discount.

Question 4

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 5

_____ occurs when a firm is customer driven and seeks to understand the attributes customers want in the goods and services they buy and the value of those attributes to customers.Thus,the price of the product is set at a level that seems to the customer to be a good price compared with the prices of other options.
A)Value-based pricing
B)Noncumulative pricing
C)CRM pricing
D)Market concept pricing
E)Price bundling

Accepted Answer

Instead of figuring prices based on costs or competitors' prices,value-based pricing starts with the customer,considers the competition,and then determines the appropriate price.

Question 6

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 7

With value-based pricing:
A)the firm is sales driven.
B)the firm is both customer driven and competitor driven.
C)increased profitability for wholesalers will increase the number of services they are willing to perform.
D)consumers are more concerned about price than quality.
E)additional long-term costs to manufacturers will increase.

Accepted Answer

The basic assumption is that the firm is customer driven,seeking to understand its customers.Because it is unlikely to be operating as a monopoly,it must also pay attention to what its competitors are doing.

Question 8

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 9

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

Accepted Answer

This is the definition of a cumulative quantity discount.

Question 10

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 11

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 12

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 a discount to wholesalers and retailers for performing channel functions.

Question 13

Toyota periodically offers customers _____,allowing purchasers to borrow money to pay for new cars without incurring an interest charge.
A)markdown money
B)zero percent financing
C)promotional allowances
D)make-up allowances
E)leader pricing reductions

Accepted Answer

This tactic creates a huge increase in sales-but not without cost to the automakers.

Question 14

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 15

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 16

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,or trade,discount is a discount to wholesalers and retailers for performing channel functions.

Question 17

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 18

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 19

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.

Question 20

_____ 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.

Quiz 20: Setting the Right Price

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

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

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.

With value-based pricing:

Quantity discounts are most often used to:

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

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?

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:

Toyota periodically offers customers _____,allowing purchasers to borrow money to pay for new cars without incurring an interest charge.

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.

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.

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:

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

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

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

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