marketing management chapter 11

A company has set a low price on a new product it introduced. They want to maximize their market share and attract a large number of buyers quickly. Which new product pricing strategy should the company​ use?

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Part 1

A.

Psychological pricing

B.

​Market-skimming pricing

C.

​Market-penetration pricing

D.

​Captive-product pricing

E.

Optional product pricing

C.

​Market-penetration pricing

Which of the following would NOT be a condition that supports a​ market-skimming pricing​ strategy?

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Part 1

A.

The costs of producing a smaller volume cannot be so high they cancel the higher price.

B.

Production and distribution costs must decrease as sales volume increases.

C.

The​ product's image must support the higher price.

D.

The product should be differentiated so competitors cannot undercut the higher price.

E.

The brand must be sufficiently strong with​ price-conscious consumers who will wait for the price to drop.

Your answer is not correct.

B.

Production and distribution costs must decrease as sales volume increases.

Which of the following statements is true concerning new product pricing​ strategies?

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Part 1

A.

A​ market-penetration strategy should be used if the market is not highly price sensitive.

B.

For a​ market-penetration strategy to​ work, production and distribution costs must increase as sales volume increases.

C.

For a​ market-skimming strategy to be​ successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

D.

If competitors can easily enter the​ market, a​ market-skimming strategy should be used.

E.

When using a​ market-skimming strategy, marketers do not need to focus on the​ product's quality and image.

C.

For a​ market-skimming strategy to be​ successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

One major objective of a​ market-penetration pricing strategy is to​ __________.

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Part 1

A.

attract buyers willing to pay a higher price

B.

prevent customer dissatisfaction

C.

skim off small but profitable segments

D.

set a high price to gain profits

E.

win a large market share

E.

win a large market share

Whirlpool washers and dryers are offered in many different models. Whirlpool will use​ __________ pricing to determine the price steps between the different models.

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Part 1

A.

product line

B.

​two-part pricing

C.

​captive-product

D.

​product-bundle

E.

​optional-product

A.

product line

Purdue Farms has found a lucrative market in China for chicken​ feet, which are not typically consumed by Americans. Which type of pricing would Purdue Farms use in this​ case?

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Part 1

A.

​By-product pricing

B.

​Captive-product pricing

C.

Product bundle pricing

D.

​Two-part pricing

E.

Product line pricing

A.

​By-product pricing

What is the overall goal of product mix pricing​ strategies?

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Part 1

A.

The firm looks for a set of prices to sell its​ by-products.

B.

The firm looks for a set of prices that will maximize profits on the total product mix.

C.

The firm looks for a set of prices that minimize costs.

D.

The firm looks for a set of prices that will maximize profits for each item in the mix.

E.

The firm looks for a set of prices to minimize the price steps between the product versions.

B.

The firm looks for a set of prices that will maximize profits on the total product mix.

Which of the following is NOT a product mix pricing​ strategy?

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Part 1

A.

Dynamic pricing

B.

Product bundle pricing

C.

​Captive-product pricing

D.

​By-product pricing

E.

​Optional-product pricing

A.

Dynamic pricing

Poultry processors such as Perdue Farms once​ couldn't give chicken feet away and even had to pay to dispose of them.​ However, they have now discovered a huge demand in China for the chicken feet. What pricing strategy are these poultry producers​ using?

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Part 1

A.

​Product-bundle pricing

B.

​Two-part pricing

C.

​By-product pricing

D.

Product line pricing

E.

​Optional-product pricing

C.

​By-product pricing

Many personal care companies combine toothpaste with a toothbrush at a reduced price. This is an example of​ __________ pricing.

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Part 1

A.

​captive-product

B.

​two-part

C.

product line

D.

​by-product

E.

product bundle

E.

product bundle

When a college or university charges more for​ out-of-state students than​ in-state students, it is practicing​ ________ pricing.

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Part 1

A.

​time-based

B.

product form

C.

​location-based

D.

promotional

E.

​customer-segment

C.

​location-based

UPS charges different prices for shipping depending on which region of the United States the item is being shipped to. The more distant the city the package is being shipped​ to, the higher the price UPS charges. Which geographic pricing method is UPS​ using?

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Part 1

A.

FOB origin

B.

Zone pricing

C.

​Uniform-delivered pricing

D.

​Freight-absorption pricing

E.

​Base-point pricing

B.

Zone pricing

Roshika has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about​ wine, she will likely use the price of the wines as​ a(n) ________.

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Part 1

A.

type of segmented pricing

B.

indicator of the cost of production

C.

indicator of quality

D.

indicator of geographic pricing

E.

​limited-time offer

C.

indicator of quality

________ pricing is the opposite of free onboard pricing.​ Here, the company charges the same price plus freight to all​ customers, regardless of their location.

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Part 1

A.

​Freight-absorption

B.

​Uniform-delivered

C.

​Destination-based

D.

​Origin-based

E.

Zone

B.

​Uniform-delivered

When a retailer temporarily prices a few select items below cost to create excitement and pull consumers into the​ store, it is practicing​ ________ pricing.

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Part 1

A.

promotional

B.

segmented

C.

geographical

D.

​optional-product

E.

psychological

A.

promotional

Which of the following statements is true regarding initiating price​ cuts?

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Part 1

A.

Cutting price has no effect on costs.

B.

Firms never cut​ prices, they only raise them.

C.

Cutting prices in an industry with excess capacity may lead to price wars.

D.

If faced with excess capacity a firm should not cut its price.

E.

When faced with falling​ demand, firms should not cut prices.

C.

Cutting prices in an industry with excess capacity may lead to price wars.

In which of the following circumstances should a company NOT consider lowering​ prices?

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Part 1

A.

A strong economy

B.

Excess inventory

C.

To boost sales

D.

Falling demand with strong price competition

E.

To gain market share

A strong economy

When would a competitor most likely react to a​ firm's price​ change?

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Part 1

A.

When buyers are not well informed about prices

B.

When the product is differentiated

C.

When buyers are not well informed about the product

D.

When the number of firms involved is large

E.

When the number of firms involved is small

E.

When the number of firms involved is small

Which of the following statements regarding initiating price increases is​ correct?

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Part 1

A.

Companies do not need to communicate reasons for price increases.

B.

Price increases do not impact profits.

C.

The company should consider ways to meet higher costs or demand without raising prices.

D.

Prices should be increased when there is a lack of demand.

E.

Cost inflation is not a factor in price increases.

C.

The company should consider ways to meet higher costs or demand without raising prices.

Of the​ following, which is true about​ pricing?

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Part 1

A.

Price competition is a core element of our​ free-market economy.

B.

Federal law is the overriding authority on pricing.

C.

Companies do not need to communicate reasons for price increases to customers.

D.

Companies usually are free to charge whatever prices they wish.

E.

Companies have no obligation to consider broader societal pricing concerns.

A.

Price competition is a core element of our​ free-market economy.

Four major U.S.

airlineslong dash—​United,

​Delta, Southwest, and

Americanlong dash—agreed

to pay​ $60 million in fines to settle a class action​ lawsuit, and they remain under investigation by the Justice Department for conspiring to artificially inflate air fares to​ "reap huge​ profits." These airlines are accused of​ ________.

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Part 1

A.

​price-fixing

B.

deceptive pricing

C.

retail price maintenance

D.

predatory pricing

E.

price discrimination

A.

​price-fixing

________ is the practice of pricing products below cost to harm competitors.

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Part 1

A.

Retail price maintenance

B.

Predatory pricing

C.

Price discrimination

D.

Deceptive pricing

E.

​Price-fixing

B.

Predatory pricing

What is the purpose of the​ Robinson-Patman Act?

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Part 1

A.

To prevent predatory pricing

B.

To prevent​ price-fixing

C.

To prevent unfair price discrimination

D.

To prevent scanner fraud

E.

To prevent deceptive pricing

C.

To prevent unfair price discrimination

When, if​ ever, is price discrimination​ allowed?

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Part 1

A.

If the seller is selling via the Internet as its main​ channel, then it is legal.

B.

If the seller can prove that it is allowable in certain states and local retailing​ areas, then it is legal.

C.

If the seller can substantiate that it is distributing​ internationally, then it is legal.

D.

If the seller can prove that its costs are different when selling to different​ retailers, then it is legal.

E.

If the seller can prove that its revenue is affected when selling to similar​ retailers, then it is legal.

D.

If the seller can prove that its costs are different when selling to different​ retailers, then it is legal.D.