Question 1

Which of the following is true of FOB-origin pricing?
A) It is a strategy in which the company charges the same price plus freight to all customers.
B) It is a costly option for customers who are located near the company.
C) It charges all customers the freight cost from a base city to the customer location.
D) It is an expensive alternative for customers in distant locations.
E) It is a strategy in which the seller absorbs all or part of the freight charges.

Accepted Answer

FOB-origin pricing means the buyer pays the freight costs from the shipping point, making it more expensive for customers located far from the seller.

Question 2

Hearth & Home, a store which sells household products, has announced a one-week sale on its new carpet line. This is an example of ________.
A) promotional pricing
B) seasonal pricing
C) by-product pricing
D) product bundle pricing
E) time-based pricing

Accepted Answer

Promotional pricing involves temporarily reducing prices to increase short-term sales, which is what Hearth & Home is doing with its one-week sale.

Question 3

What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency?
A) segmented pricing
B) international pricing
C) reference pricing
D) promotional pricing
E) basing-point pricing

Accepted Answer

This type of pricing is known as promotional pricing, which is used to create buying excitement and urgency. It is a common strategy used by companies to increase short-term sales and attract new customers. Through promotional pricing, companies offer temporary price reductions, deals, or discounts to entice customers to make a purchase.

Question 4

________ is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price.
A) Freight-absorption pricing
B) Zone pricing
C) Uniform-delivered pricing
D) FOB-origin pricing
E) Basing-point pricing

Accepted Answer

Zone pricing is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price. This strategy is used to account for differences in shipping and handling costs based on location. The company charges different prices for the same product in different zones, based on the cost of doing business in each zone.

Question 5

If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ________.
A) psychological pricing
B) promotional pricing
C) zone pricing
D) reference pricing
E) uniform-delivered pricing

Accepted Answer

Detroit DLX is using zone pricing, which involves charging different prices based on geographic locations. In this case, the company charges the same price for customers in states near the Great Lakes, indicating that it has created a pricing zone for that particular region. This allows the company to adjust prices based on local market conditions and competition, while still maintaining consistency within each pricing zone.

Question 6

A supermarket places its store brand of blackberry jam priced at $5 per jar in the fruit preserves aisle, alongside the jam jars of a better known brand-whose products are priced at $8 apiece. Store managers reason that customers are more likely to choose the store brand instead of the better-known brand when they realize the price difference. What price adjustment strategy is evident in the supermarket's reasoning?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) psychological pricing
E) seasonal pricing

Accepted Answer

The strategy used by the supermarket is psychological pricing, as they are using the perceived value of the price difference ($5 vs $8) to influence customer behavior and encourage them to choose the store brand over the better-known brand.

Question 7

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) dynamic pricing
E) FOB-origin pricing

Accepted Answer

FOB-origin pricing, also known as free on board pricing, means the buyer takes responsibility for the transportation costs from the factory to the final destination. This is a common pricing strategy for large, heavy or expensive goods where the cost of shipping is a significant portion of the total product cost. It allows the buyer to have control over the shipping arrangements and cost, which can be beneficial for budgeting and logistics planning.

Question 8

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?
A) uniform-delivered pricing
B) psychological pricing
C) zone pricing
D) FOB-origin pricing
E) basing-point pricing

Accepted Answer

Uniform-delivered pricing charges the same rate for shipping a product to any location within a country or market. This means that the price for shipping is independent of the distance or location of the buyer, and is consistent for all buyers regardless of their location within the United States.

Question 9

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.
A) FOB-origin
B) basing-point
C) zone
D) uniform-delivered
E) freight-absorption

Accepted Answer

Motorzone is most likely practicing basing-point pricing, where shipping charges are based on the distance from a designated basing point (in this case, Boston), rather than the actual shipping location.

Question 10

Which of the following involves adjusting prices to account for the physical location of customers?
A) location-based pricing
B) geographical pricing
C) domestic pricing
D) interior pricing
E) captive pricing

Accepted Answer

Geographical pricing involves adjusting prices to account for the physical location of customers. This is often done to reflect differences in shipping or transportation costs, as well as local market conditions or competitive pressures. Location-based pricing is a similar concept, but may also take into account factors such as population density, demographic characteristics, or other local conditions. Domestic pricing and captive pricing do not necessarily involve geographic factors, and interior pricing is not a commonly used term in pricing strategy.

Question 11

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?
A) uniform-delivered pricing
B) zone pricing
C) FOB-origin pricing
D) location-based pricing
E) reference pricing

Accepted Answer

Uniform-delivered pricing charges the same price to all customers, regardless of their location. This pricing strategy is often used when the delivery cost is not significantly affected by distance.

Question 12

Which of the following is NOT a cue to consumers about whether a price is high or low?
A) price-matching guarantees
B) prices of surrounding, similar products
C) signs such as "Clearance"
D) "Coming Soon!" signs
E) location in the store, especially at the entry

Accepted Answer

"Coming Soon!" signs are not a cue to consumers about whether a price is high or low, as they do not provide any information about the price itself.

Question 13

Which term refers to prices that buyers carry in their minds and check with when they look at a given product?
A) product line prices
B) reference prices
C) location-based prices
D) product form prices
E) time-based prices

Accepted Answer

Reference prices are prices that buyers carry in their minds as a point of reference while considering the purchase of a product. This can include previous prices paid for similar products or a general idea of what they expect a product to cost based on market trends or advertising.

Question 14

La Belle released a cut glass bottle of perfume at $299 per item, even though its major competitor prices its signature scent at $99 per item. La Belle reasons that customers in search of luxury goods will prefer its product because they are likelier to believe that high price indicates superior quality. What price adjustment strategy is evident in its reasoning?
A) seasonal pricing
B) time-based pricing
C) captive product pricing
D) psychological pricing
E) location-based pricing

Accepted Answer

La Belle is using psychological pricing strategy, where they are setting a higher price for their perfume to create an impression of high quality and luxury among customers who are willing to pay a premium price to have a higher perceived value.

Question 15

Which of the following is a geographical pricing strategy?
A) basing-point pricing
B) segmented pricing
C) dynamic pricing
D) Internet pricing
E) location-based pricing

Accepted Answer

The answer of Which of the following is a geographical...

Question 16

With which pricing strategy does the seller take responsibility for part or all of the actual freight charges in order to acquire the desired business?
A) FOB origin pricing
B) freight-absorption pricing
C) basing-point pricing
D) location-based pricing
E) uniform-delivered pricing

Accepted Answer

Freight-absorption pricing is a pricing strategy in which the seller takes responsibility for part or all of the actual freight charges in order to acquire the desired business. This strategy is beneficial for the seller in attracting customers who are sensitive to shipping costs, as the seller absorbs the cost of shipping to make their product more affordable for the customer.

Question 17

Which of the following is true of promotional pricing?
A) It leads to 'deal-prone' customers who buy products only during sales.
B) It fortifies the brand's image in the eyes of customers if relied upon extensively.
C) It simplifies shopping for customers if used simultaneously by multiple stores.
D) It makes balancing short-term sales incentives against long-term brand building unnecessary.
E) It is extremely beneficial for the brand's profitability if practiced repeatedly.

Accepted Answer

Promotional pricing can create a sense of urgency and encourage customers to make purchases, but it can also lead to a reliance on sales and make customers less willing to pay full price for products. This can create a challenge for brands to balance short-term sales incentives with long-term brand building.

Question 18

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

Accepted Answer

Low-interest financing and longer warranties are both examples of promotional pricing, which is a strategy used to temporarily lower prices or offer additional value to customers in order to increase sales. This type of pricing is intended to stimulate demand and generate interest in a product or service. Segmented pricing involves offering different prices to different groups of customers, while product bundling involves combining multiple products or services into a single package. Captive product pricing involves setting a low price for a product in order to generate demand, while charging a higher price for complementary products or services that are necessary to use the original product. Product form pricing involves setting different prices for different variations of the same product based on factors such as quality, size, or design.

Question 19

Which of the following is an adverse effect of using promotional pricing?
A) It makes shopping stressful if used by multiple stores simultaneously.
B) It erodes the value of competing brands in the eyes of customers.
C) It gives pricing secrets away to competitors.
D) It creates "deal-immune" customers if used often.
E) It delays the company's focus on short-term strategies.

Accepted Answer

The answer of Which of the following is an adverse...

Question 20

________ are formed by noting current prices, remembering past prices, or assessing the buying situation.
A) Product line prices
B) Seasonal prices
C) Reference prices
D) Time-based prices
E) Product bundle prices

Accepted Answer

Reference prices are formed by noting current prices, remembering past prices, or assessing the buying situation. These mental references help consumers evaluate whether a current price is a good deal or not.

Quiz 11: Pricing Strategies: Additional Considerations

Which of the following is true of FOB-origin pricing?

Hearth & Home, a store which sells household products, has announced a one-week sale on its new carpet line. This is an example of ________.

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

________ is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price.

If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ________.

Under which type of geographic pricing strategy does each customer take responsibility for the freight charges for the product from the factory to its destination?

Which form of geographic pricing is a company using when it charges the same rate to ship a product anywhere in the United States?

Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.

Which of the following involves adjusting prices to account for the physical location of customers?

In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations?

Which of the following is NOT a cue to consumers about whether a price is high or low?

Which term refers to prices that buyers carry in their minds and check with when they look at a given product?

Which of the following is a geographical pricing strategy?

With which pricing strategy does the seller take responsibility for part or all of the actual freight charges in order to acquire the desired business?

Which of the following is true of promotional pricing?

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

Which of the following is an adverse effect of using promotional pricing?

________ are formed by noting current prices, remembering past prices, or assessing the buying situation.