Question 1
L.L. Bean charges all customers the same flat freight rate. It uses _____.
a. zone pricing
b. freight absorption pricing
c. FOB origin pricing
d. uniform delivered pricing
e. basing-point pricing
Question 2
Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Its owner does not have the cash to pay the current loan installment due on the building and inventory so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can be classified as:
a. market share maximization
b. satisfactory profits
c. sales maximization
d. asset maximization
e. target ROI
Question 3
Which of the following would imply demand would be elastic?
a. price is low relative to purchasing power
b. nondurable product
c. low inflation rate
d. many substitute products
e. all of these choices
Question 4
Which of the following pricing methods can be used to build market share during a recession?
a. resale price maintenance
b. bundling
c. variable pricing
d. price lining
e. psychological pricing
Question 5
The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case we would say that the designer uses:
a. marginalizing
b. keystoning
c. target ROI pricing
d. double sourcing
e. break-even pricing
Question 6
A 16-ounce bottle of Prairie Herb vinegar sells for $4.95, and a 16-ounce bottle of Heinz vinegar costs $1.05. Prairie Herb vinegar is new to the market, perceived to be of higher quality, and provides a unique flavor to foods even though it is used in the same way as Heinz vinegar. Prairie Herb vinegar is most likely using a _____ policy.
a. penetration pricing
b. geodemographic pricing
c. price-skimming
d. bundling cost pricing
e. status quo pricing
Question 7
Yield management systems are used to:
a. determine whether it is financially more feasible to buy a new product or repair a broken one
b. predict necessary service levels to achieve revenue goals
c. create elastic demand for low-involvement products
d. determine the availability of product substitutes in complex industries that are experiencing rapid change
e. profitably fill unused capacity
Question 8
When using _____, price is not set on the product until the item is either finished or delivered.
a. escalator pricing
b. two- pricing
c. price shading
d. bid pricing
e. delayed-quotation pricing
Question 9
The manager of a souvenir shop in Florida graphed the demand per week for fresh orange juice. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of juice demanded increases as:
a. supply increases
b. price decreases
c. supply decreases
d. cost increases
e. price increases
Question 10
Why are marketing managers finding it more difficult to set prices in today's environment?
a. Buyers are less informed and are less price-sensitive.
b. Marketing managers are finding it difficult to compare prices between suppliers.
c. Fewer dealer and generic brands are available because the competition has been eliminated.
d. The high rate of new-product introductions has led to careful reevaluation by consumers.
e. Inflationary and recessionary periods have made customers less price-sensitive.
Question 11
When Microsoft introduced its Zune MP3 player, many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor, like the Apple iPod, would be unable to compete. If Microsoft had used this approach it have been would be guilty of _____.
a. price fixing
b. channel manipulation pricing
c. price discrimination
d. predatory pricing
e. unfair trade practices
Question 12
When Apple Inc. originally introduced its iPhone it was priced at what many believed to be about as high as the market would allow. Within weeks Apple lowered the price of the iPhone. It appears that Apple Inc. entered the market with a _____ approach to pricing the iPhone.
a. market share pricing
b. status quo pricing
c. profit maximization
d. demand-oriented
e. sales maximization
Question 13
Post makes several varieties of cereals. In promoting this product line, Post offers a 50-cents-off coupon that can be used to purchase any of its cereals. Therefore, Post must consider _____ when pricing its cereals.
a. factorial costs
b. differential costs
c. bundling costs
d. joint costs
e. potential (or basing) costs
Question 14
Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:
a. private-label cannibalization
b. brand cutting
c. price pressurization
d. illegal pricing
e. selling against the brand
Question 15
For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish remover, sterilized equipment, laundry service for the towels, and the beverages given to customers, are all examples of _____ costs.
a. promotional
b. variable
c. marginal
d. fixed
e. liquidity
Question 16
Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement y. Not wanting to make a poor choice, she is likely to:
a. avoid making a decision by not attending the y
b. buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality
c. research the product and buy the least expensive frozen quiche she can find
d. buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality
e. intuitively make the right choice
Question 17
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. functional discount
b. quantity discount
c. promotional allowance
d. seasonal discount
e. channel allowance
Question 18
In 2008 United Airlines and American Airlines disclosed settlements in a class-action lawsuit over allegations of airfreight price fixing. This means the companies _____.
a. used uniform geographic pricing
b. tried to charge fees for air fright that were below costs
c. agreed on the price they would charge customers for air freight
d. created an artificial demand for shipping
e. charged customers different amounts for the same shipments
Question 19
Business-to-business salespeople often use _____ to heighten the demand for certain items in a product line. It is a discounting practice that is often done routinely without much forethought.
a. consumer discounts
b. price lining
c. decremental pricing
d. price shading
e. devaluation
Question 20
Pharmacies are a new addition to Sam's Clubs. They could exert a greater influence on the marketplace for prescription drugs than their newness indicates. Sam's has a stated philosophy of marking up merchandise a maximum of 14 percent. When that philosophy is applied to prescription drugs, especially generics, warehouse club prices can be dramatically lower than those of conventional drugstores, supermarkets, or discount store pharmacies. Sam's is using a _____ strategy to convince consumers to use its pharmacies rather than its competitors.
a. price elasticity
b. cost bundling
c. price-insensitive demand
d. price-skimming
e. penetration pricing