Ch. 11

1) Companies set not a single price, but a pricing ________ which covers different items in its line and changes over time as products move through their life cycles.

2) Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.

3) A market-skimming pricing strategy should NOT be used for a new product when ________.

4) When a company sets a high price for a new product with the intention of reducing the price in the future, it is using the ________ pricing strategy.

5) Midnight Magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using?

6) Which of the following is true of price skimming?

7) Companies which set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

8) A market-penetration pricing policy should LEAST likely be used for a new product when ________.

9) Which of the following is true of market-penetration pricing?

10) In a bid to attract more customers in a market which has several competitors, Barrymore's Bakery slashed the prices of all its products by 50%. Managers at the firm reasoned that lower prices would draw in even more customers, making up for the reduction in price several times over. Which of the following pricing strategies are they using?

11) Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

12) Electrowhip, a company that manufacturers blenders and electric whisks, has decided to use a market-penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?

13) Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices?

14) Tone Zone plans to introduce four mp3 player models over the next year. These models range from basic players at $99 per unit, to more sophisticated players at $399 per unit. The more features a model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of mp3 players?

15) Which of the following is true of product line pricing?

16) Which of the following companies uses product line pricing?

17) Which of the following product mix pricing strategies involves pricing additional/accessory products sold along with the main product?

18) Which of the following is true of optional product pricing?

19) Which of the following product mix pricing strategies involves pricing products that must or can only be used with the main product?

20) Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two of the firm's models share the same specifications. What type of pricing does Multiprint use?

21) Which of the following product mix pricing strategies did Polaroid use when it set the general price range of its cameras low and the markup on its film high?

22) In the case of services, captive product pricing is called ________ pricing.

23) Which of the following companies uses captive product pricing?

24) When amusement parks charge customers for admission and later for food and beverages, they are following a ________ pricing strategy.

25) Cellpoint uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed fee plus a(n) ________ rate.

26) Using ________ pricing, companies are able to turn their trash into cash, allowing them to make the price of their main product more competitive.

27) Which of the following product mix pricing strategies involves pricing multiple products to be sold together?

28) Which of the following is true of product bundle pricing?

29) Which of the following companies uses product bundle pricing?

30) Which of the following is a price adjustment strategy?

31) Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product promptly?

32) A(n) ________ is a straight reduction in price on purchases during a stated period of time or of larger quantities.

33) Solar Tanning Salon prices tanning sessions at $25 per visit. It also offers seasonal passes for $175 which permit the customer to visit the salon multiple times in a year. This is an example of a(n) ________.

34) Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly?

35) Leicestershire Renovations has a history of problems with customers who do not pay their bills on time. Leicestershire Renovations wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. Which of the following forms of pricing would most likely help the firm achieve its goal?

36) A quantity discount is a price reduction for buyers who ________.

37) A seller offers a ________ to trade-channel members who perform certain functions, such as selling, storing, and record keeping.

38) The discount offered by Glamor Gifts to customers who bought Valentine-themed merchandise the week following Valentines Day is an example of a ________.

39) A(n) ________ refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

40) ________ allowances are price reductions given for turning in an old item when buying a new one.

41) Trade-in allowances are most commonly used in the ________ industry.

42) Shoe Trends, a company that manufactures formal shoes for men and women, offers to give its customers $10 for an old pair of shoes when they buy a new pair. In essence, they're reducing the price of the new shoes by $10. What is this type of price adjustment called?

43) ________ allowances are payments or price reductions that reward dealers for participating in advertising and sales support programs.

44) In return for participating in Honda advertising and sales support programs, Honda dealerships are rewarded with payments or price reductions, which are known as ________.

45) By definition, ________ is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost.

46) The New Age Gallery has three admission prices for students, adults, and seniors, even though all three groups are entitled to the same services. This form of pricing is called ________.

47) Under ________, different versions of the product are priced differently but not according to differences in their costs.

48) Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and services offered are identical in every other aspect. This form of pricing is called ________.

49) When theaters vary their seat prices because of audience preferences for seats in coveted rows, they use ________.

50) When a firm varies its price by the season, it is using ________.

51) Segmented pricing is only effective when ________.

52) Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?

53) Consumers are less likely to use price to judge the quality of a product when they ________.

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

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

56) La Belle released a 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?

57) 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?

58) 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?

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

60) Which of the following is true of promotional pricing?

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

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

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

64) Which of the following is a geographical pricing strategy?

65) 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?

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

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

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

69) 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.

70) ________ 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.

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

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

73) Freight-absorption pricing is used for ________.

74) The Internet offers ________, where the price can easily be adjusted to meet changes in demand.

75) Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.

76) Which of the following factors would most likely lead to a company initiating a price cut?

77) Which of the following would most likely lead to a company initiating a price increase?

78) The "bottom of the pyramid" refers to ________.

79) Which of the following is true of the bottom of the pyramid?

80) Which of the following is true of price changes?

81) Competitors are most likely to react to a price change when ________.

82) When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices.

83) When faced with a competitor who has cut its product's price, which of the following is the most cost-effective way for a company to maintain its own price but raise the perceived value of its offer?

84) In response to price cuts from competitors, a cereal company with several more expensive and higher quality cereals introduced a lower-priced option to its product line. This is an example of which of the following responses to a competitor's price cut?

85) Which of the following is true of public policies and pricing?

86) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________.

87) When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.

88) A number of top fashion-modeling agencies would most likely be charged with ________ for jointly determining what commissions they charge for models.

89) Federal legislation on price fixing requires that sellers set their prices ________.

90) If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

91) Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________.

92) Which of the following would be considered predatory pricing?

93) The ________ seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given price level.

94) Price discrimination is legal when a ________.

95) Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.

96) Mark's Markers, a manufacturer of white board markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________.

97) ________ occurs when a seller states price savings that are not actually available to consumers.

98) Failure to enter the current price into a retailer's system may result in charges of ________.

Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market quickly.

99) Which of the following best supports a market-penetration strategy for Champion?

100) Noticing that the themed envelopes aren't selling well, Charles Payton decides to offer customers a special "letter writing" kit, He prices the kit—which comprises letter paper, matching envelopes, and pens—at $5, even though the combined prices of the individual items is $8. Which of the following pricing strategies is he using?

101) Pricing strategies tend to change and evolve as the average product passes through its life cycle.

102) For market skimming to be successful, the cost of producing a smaller quantity of goods should not be higher than the prices charged.

103) When The Candy Store sets a low initial price in order to get its "foot in the door" and to quickly attract a large number of buyers, the company is practicing market-skimming pricing.

104) Pricing is difficult because various products have related demand and costs, and producers face different degrees of competition.

105) In product line pricing, the price steps should account for differences in customer perceptions of the value of different features.

106) Thinking Cap Corp. prices its various cap designs at different price levels, ranging from $2.05 to $5.95. This is an example of optional product pricing.

107) In addition to its customary services, On the Spot, a house mover, also sells the boxes and padding that are used when moving household furniture. This is an example of customer-segmented pricing.

108) When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

109) Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.

110) When using product bundle pricing, sellers combine several of their products and offer the bundle at an increased price for increased profit.

111) Consumers who have no past experience with a product are especially likely to judge it by its price.

112) A seasonal discount is a price reduction to buyers who buy merchandise while the products are in season.

113) Online flash sales are used to create buying urgency and make buyers feel lucky to have gotten in on the deal.

114) If used infrequently, price promotions create "deal-prone" customers who wait until brands go on sale before buying them.

115) Constantly reduced prices can erode a brand's value in the eyes of customers.

116) In segmented pricing, the difference in prices is based on differences in costs.

117) For segmented pricing to be an effective strategy, the prices should reflect real differences in customers' perceived value.

118) Sellers cannot influence or use consumers' reference prices when setting prices.

119) Customers located close to a firm are less likely to benefit from FOB-origin pricing than customers located further away.

120) The uniform-delivered pricing strategy means that the goods sold are placed free on board a carrier with the customer paying the freight from the factory to the destination.

121) Dynamic pricing is least prevalent online.

122) Excess capacity leads to companies initiating an increase in price.

123) Launching a fighter brand is an effective way to deal with a situation in which the market segment being lost is price sensitive and will not respond to arguments of higher quality.

124) Price discrimination is permissible if if the seller manufactures different qualities of the same product for different retailers and can prove that the price difference is proportional.

125) The widespread use of scanner-based computer checkouts has eradicated complaints of retailers overcharging their customers.