Question 1

penetration pricing policy is MOST LIKELY to be effective when: (1)__________; (2)unit production and marketing costs fall dramatically as production volume increases; and (3)many segments of the market are price sensitive.

Accepted Answer

The answer of penetration pricing policy is MOST LIKELY to...

Question 2

skimming pricing policy is likely to be most effective when: (1)lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (2)when the high initial price does not attract competitors; (3)customers interpret high price as signifying high quality; and (4)__________.

Accepted Answer

Skimming pricing policy is effective when the market has a segment of customers who are willing to buy immediately at the high initial price. This segment is typically made up of early adopters who place a premium on being the first to own the latest product. If enough customers are willing to pay the high price, skimming pricing can create a feeling of exclusivity and luxury, which can drive the perception of high quality. Moreover, a skimming pricing policy works best when lowering the price has only a minor effect on increasing sales volume and reducing unit costs, making it less vulnerable to price competition.

Question 3

skimming pricing policy is likely to be most effective when: (1)enough customers are willing to buy immediately at the high initial price; (2)when the high initial price does not attract competitors; (3)customers interpret high price as signifying high quality; and (4)__________.

Accepted Answer

Skimming pricing policy is a strategy where a product is initially introduced in the market at a high price, and later the price is gradually decreased. This policy is effective when lowering the price does not have a significant impact on increasing sales volume and reducing unit costs. In this case, the company can maximize profits by selling the product at a high price at the beginning of its life cycle, before competitors enter the market, and before the product becomes a commodity. Therefore, option B is the best choice.

Question 4

Apple iPhone was introduced at an initial price of $600.People waited in line overnight so they could be one of the first to own this unique smartphone.Which pricing strategy did Apple use to help recoup its research and development costs for the smartphone?

Accepted Answer

Skimming pricing is a pricing strategy that involves setting a high initial price for a new product to recoup the costs of research and development, and then gradually lowering the price over time as the product becomes more established in the market. This is the strategy that Apple used when they introduced the iPhone at an initial price of $600, which was considered very high at the time. By setting such a high price, Apple was able to recoup its research and development costs quickly, and then gradually lowered the price of the iPhone over time as it became more popular and established in the market.

Question 5

penetration pricing policy is MOST LIKELY to be effective when: (1)a low initial price discourages competitors from entering the market; (2)unit production and marketing costs fall dramatically as production volume increases; and (3)__________.

Accepted Answer

Penetration pricing is effective when many segments of the market are price sensitive, as it allows the company to capture a large market share quickly by offering a low price.

Question 6

skimming pricing policy is likely to be most effective when

Accepted Answer

Skimming pricing policy involves setting a high price initially and gradually lowering it over time. This strategy is effective when customers are willing to pay a high price for a product when it is first introduced. Therefore, choice D is the best option because it describes a scenario where customers are willing to buy immediately at the high initial price, making the skimming pricing policy effective.

Question 7

pricing strategy that is almost the exact opposite of skimming pricing is

Accepted Answer

Penetration pricing is the pricing strategy that is almost opposite of skimming pricing. While skimming pricing sets high prices initially before gradually lowering them over time, penetration pricing sets low prices initially in order to attract a large number of customers and gain market share. This strategy is often used when entering a new market or introducing a new product to the market.

Question 8

Penetration pricing is considered to be a __________ approach to pricing.

Accepted Answer

The answer of Penetration pricing is considered to be a...

Question 9

skimming pricing policy is likely to be most effective when: (1)enough customers are willing to buy immediately at the high initial price; (2)lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (3)when the initial high prices do not attract competitors; and (4)__________.

Accepted Answer

Skimming pricing policy is most effective when customers interpret high prices as a sign of high quality, which may justify the higher price point. This is particularly true when introducing new products or technology into the market. Customers are likely to be willing to pay a premium if they perceive the product or technology to be innovative and of high quality. Therefore, the option that best fits the blank is (C).

Question 10

penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

Penetration pricing is most effective when it discourages competitors from entering the market by offering a low initial price. This allows the company to gain a foothold and establish market share before competitors enter with their own pricing strategies.

Question 11

skimming pricing policy is likely to be most effective when: (1)enough customers are willing to buy immediately at the high initial price; (2)lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (3)customers interpret high price as signifying high quality; and (4)__________.

Accepted Answer

Skimming pricing is effective when the high initial price does not attract competitors, allowing the company to maximize profits from early adopters without immediate competitive pressure.

Question 12

penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

Penetration pricing is a strategy of setting a low initial price to quickly penetrate the market and capture a significant market share. This strategy is most effective when the unit production and marketing costs fall dramatically as production volumes increase. This allows the company to maintain profitability despite the low initial price. As the sales volume increases, the company can reduce unit costs through economies of scale, which can lead to higher profits in the long run. Therefore, option A is the most appropriate choice.

Question 13

manufacturer of a digital video recorder (DVR)is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue AGAINST using a skimming pricing strategy for the DVR?

Accepted Answer

Skimming pricing strategy is suitable for products that have limited competition or have high initial costs such as research and development, advertising, and market research. However, if increasing volume reduces production costs substantially, then it would be unwise to use skimming pricing strategy as it may discourage potential customers from buying the product. They may wait for competitors to introduce lower-priced alternatives or may choose other options altogether. Therefore, using a penetration pricing strategy would be more appropriate.

Question 14

first Apple iPad was introduced in 2010 at an initial price of $650 for the 16 GB version.People waited in line overnight so they could be one of the first to own this unique tablet device.Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

Accepted Answer

Apple used skimming pricing, which involves setting a high price for a new product to recoup initial research and development costs and cater to early adopters who are willing to pay a premium. This pricing strategy allows the company to gradually lower the price over time as the product becomes more widely adopted. In this case, Apple's initial price of $650 for the first iPad was higher than later models, which suggests skimming pricing was used.

Question 15

penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

Penetration pricing is most effective when there are price-sensitive consumers in the market who are willing to try a new product at a lower price. This strategy is used to attract customers, gain market share, and create brand awareness. By setting a lower price, the company can also discourage potential competitors from entering the market. However, if lowering the price has only a minor effect on increasing sales volume and reducing unit costs, penetration pricing may not be effective.  Additionally, if customers perceive a high initial price as a sign of high quality, a penetration pricing strategy could backfire.

Question 16

Hallmark was the official supplier of flowers at the last Winter Olympics.Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch.Consumers were able to buy a smaller version of this same bouquet at the Hallmark website for $74.95.The Olympic bouquet that consumers could buy contained two dozen yellow roses,yet you could buy the same two dozen yellow roses for less than $35 at most supermarkets.If Hallmark is treating the Olympic bouquet as an innovative product,then it is using which demand-oriented pricing approach?

Accepted Answer

Skimming pricing involves setting a high price for a new, innovative product to capture the target market's willingness to pay. Hallmark is treating the Olympic bouquet as an innovative product by designing it to resemble the Olympic torch and presenting it to Olympic winners. By pricing the bouquet at $74.95 on their website, Hallmark is using skimming pricing to capture the demand and willingness to pay of consumers who desire the Olympic-themed product.

Question 17

microwave ovens were in the introduction stage of their product life cycle,some consumers were willing to pay exorbitant prices for these innovative ovens.Taking advantage of this strong consumer desire,marketers set the price for microwave ovens at the highest initial price possible.Marketers of microwave ovens used a __________ pricing strategy.

Accepted Answer

The marketers of microwave ovens used a skimming pricing strategy by setting the highest possible initial price to take advantage of strong consumer desire during the introduction stage of the product life cycle. This allowed them to "skim" profits off the top before competitors entered the market and prices were eventually lowered.

Question 18

Penetration pricing is intended to appeal to which market?

Accepted Answer

The answer of Penetration pricing is intended to appeal to...

Question 19

Penetration pricing refers to

Accepted Answer

Penetration pricing involves setting a low initial price to quickly attract a large number of customers and gain market share. The goal is to encourage mass adoption of the product, which can lead to long-term success and higher profits through repeat purchases and potential price increases in the future.

Question 20

Which of the following statements about penetration pricing is most accurate?

Accepted Answer

Penetration pricing is a pricing strategy where a product is introduced at a low price to gain market share, and then the price is increased once the product is established. This approach is effective in price-sensitive markets where consumers are more likely to choose cheaper options. By pricing low, a business can attract customers away from competitors and establish themselves in the market. Therefore, option D is the most accurate statement.

Quiz 14: Arriving at the Final Price

penetration pricing policy is MOST LIKELY to be effective when: (1) __________; (2) unit production and marketing costs fall dramatically as production volume increases; and (3) many segments of the market are price sensitive.

skimming pricing policy is likely to be most effective when: (1) enough customers are willing to buy immediately at the high initial price; (2) when the high initial price does not attract competitors; (3) customers interpret high price as signifying high quality; and (4) __________.

Apple iPhone was introduced at an initial price of $600.People waited in line overnight so they could be one of the first to own this unique smartphone.Which pricing strategy did Apple use to help recoup its research and development costs for the smartphone?

penetration pricing policy is MOST LIKELY to be effective when: (1) a low initial price discourages competitors from entering the market; (2) unit production and marketing costs fall dramatically as production volume increases; and (3) __________.

skimming pricing policy is likely to be most effective when

pricing strategy that is almost the exact opposite of skimming pricing is

Penetration pricing is considered to be a __________ approach to pricing.

penetration pricing policy is MOST LIKELY to be effective when

penetration pricing policy is MOST LIKELY to be effective when

manufacturer of a digital video recorder (DVR) is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue AGAINST using a skimming pricing strategy for the DVR?

first Apple iPad was introduced in 2010 at an initial price of $650 for the 16 GB version.People waited in line overnight so they could be one of the first to own this unique tablet device.Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

penetration pricing policy is MOST LIKELY to be effective when

Penetration pricing is intended to appeal to which market?

Penetration pricing refers to

Which of the following statements about penetration pricing is most accurate?