Question 1

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.What is this discount called?

Accepted Answer

Functional (or trade) discount is the discount offered to channel intermediaries as compensation for their routine activities and services within the channel of distribution. This discount is subtracted from the base price and reflects the intermediary's "functional" role in the distribution of goods. Promotional allowance is a discount offered by manufacturers to retailers for promoting their products. Cumulative or noncumulative quantity discounts are discounts offered based on the quantity of products purchased. Rebate allowance is a refund of part of the purchase price.

Question 2

Which type of discount is a deduction from list prices that is aimed at encouraging customer loyalty?

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.There is no such term as frequent buyer discount.

Question 3

When a buyer pays a lower price for buying in multiple units or above a specified dollar amount,what is the buyer receiving?

Accepted Answer

A quantity discount is provided when a buyer purchases multiple units or buys products over a specified dollar amount. This type of discount is given to encourage larger purchases, and the buyer receives a lower price per unit. Functional discount, cash discount, and promotional discount are different types of discounts that are not related to the quantity of purchases.

Question 4

When Microsoft introduced its Windows NT network operating system,it gave buyers free Web server software.At the same time,Netscape was trying to sell similar Web server software for $4,999.Once Microsoft got a large share of the market,and Netscape's market share declined substantially,Microsoft began charging an above-market price for its Web server software.What did many people think Microsoft was guilty of?

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 5

What is the term for a price reduction that shifts the storage function forward to the purchaser and enables manufacturers to maintain steady production year-round?

Accepted Answer

A seasonal discount is a price reduction that is offered to encourage purchases during off-peak periods. By reducing the price during slower periods, manufacturers can maintain steady production year-round. This discount also shifts the storage function forward to the purchaser because they are responsible for holding the goods until they are needed.

Question 6

Toronto Blue Jays for 2006,the price of a single ticket in the infield box at a Toronto Blue Jays baseball game was $35.
-Refer to Toronto Blue Jays.If you elected to buy a season pass for the same seat,the ticket price was reduced or discounted.This $35 is an example of which type of price?

Accepted Answer

The $35 price is the general price level at which the Toronto Blue Jays intend to sell the ticket,and this price is also known as the base price.

Question 7

A June sale on Cadbury Crème Eggs,an Easter staple for many people,is an example of which of the following pricing tactics?

Accepted Answer

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

Question 8

After managers understand both the legal and the marketing consequences of price strategies,they should set the general level at which a company expects to sell a good or service.What is this type of price called?

Accepted Answer

The type of price that is set as a general level at which a company expects to sell a good or service is called a base price.

Question 9

When the salesperson from R.W.Hunt & Sons,a distributor of rifles and other items needed for hunting or target practice,calls on retail sporting goods stores,she is authorized to offer the retailers a 15 percent discount from the list price in recognition of activities retailers perform for the distributor.These activities include unpacking,floor display setup,and a repair service.What is this 15 percent reduction called?

Accepted Answer

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

Question 10

Imagine you have developed a device that can be used to tell whether uncooked meat has been irradiated.Several smaller retail chains have agreed to carry your product,but a large discount retailer has asked you to sell the device to it for a substantially lower price.What is the large discount retailer asking you to carry out?

Accepted Answer

The large discount retailer is asking for a substantially lower price which indicates price discrimination. The retailer is asking for a lower price compared to the other retail chains, which can be considered discriminatory pricing.

Question 11

Some restaurants have early bird specials early in the evening when they sell meals for less than during peak times.What is this example of?

Accepted Answer

If a seller charges different prices to different customers for the same product,price discrimination is occurring.

Question 12

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?

Accepted Answer

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

Question 13

Why are quantity discounts most often used?

Accepted Answer

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

Question 14

Toronto Blue Jays for 2006,the price of a single ticket in the infield box at a Toronto Blue Jays baseball game was $35.
-Refer to Toronto Blue Jays.The effective value of a season pass for the same seat was $2,735,but the buyer was charged $2,241.What were season ticket buyers rewarded with?

Accepted Answer

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 noncumulative quantity discount.

Question 15

The U.S.Department of Justice has charged that Samsung,the world's largest DRAM (dynamic RAM)maker,Hynix Semiconductor,Inc. ,Infineon Technologies AG,and Micron Technology,Inc.all conspired to set prices of computer memory between 1999 and 2002.This means the companies did which of the following?

Accepted Answer

Price fixing is an agreement between two or more firms on the price they will charge for a product.

Question 16

When a customer of the Majestic Sign Company chooses to pay immediately on delivery rather than wait to be billed in 30 days,the buyer receives a 5 percent discount.What is this discount an example of?

Accepted Answer

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

Question 17

Companies frequently offer a reduction from the base price to customers who pay immediately,or within a specified time period.What is this called?

Accepted Answer

This is called a cash discount, as it applies to customers who pay in cash or within a specified time period. A quantity discount is typically offered for larger volume purchases, a base discount is not a common term, and a promotional discount might refer to a sale or temporary reduction in price for promotional purposes.

Question 18

South Africa's Competition Commission accused South African Airways of conspiring with its partner,Germany's Lufthansa,to set prices on flights between Cape Town,Johannesburg,and Frankfurt.As a result,what were the two airlines charged with?

Accepted Answer

Price fixing is an agreement between two or more firms on the price they will charge for a product.

Question 19

Razer-Edge makes machines for sharpening the blades used by butchers to slice meat.When Razer-Edge priced its Primary Sharpener,its salespeople were told that it would be sold for $1,700,but that there would be room for discounts and flexibility.What type of price is the $1,700 price for the Primary Sharpener?

Accepted Answer

The $1,700 price is the general price level at which the company intends to sell the product,and this price is also known as the base price.

Question 20

K&G Restaurant Supplies sells paper products and commodity items like flour to for-profit businesses.It charges a substantially lower price to companies that operate multiple locations such as a restaurant chain.It charges a higher price to small or independent operations because they are less profitable customers.What is K&G Restaurant Supplies engaging in?

Accepted Answer