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| 1 | |
Which of the following statements describes a company that uses a value-pricing strategy? |
| | A) | Its advertising has to provide more information and fewer emotional appeals. |
| | B) | The company probably had to slash its expenses while at the same time protecting its profits. |
| | C) | It had to strengthen its relationship with its customers to generate repeat sales. |
| | D) | The company is one of many that implemented value pricing during the 1990s. |
| | E) | All of the above statements describe a business that uses a value-pricing strategy. |
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| 2 | |
According to the text, the best approach to nonprice competition is to: |
| | A) | design its advertising to present more information and fewer emotional appeals |
| | B) | build unassailable brand equity for the product |
| | C) | use frequent-buyers programs |
| | D) | offer products at prices as low as possible |
| | E) | assume price is not an element of the marketing mix |
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| 3 | |
When Intel first introduced its 1-gigahertz processor chip, it set the price at $1,299. The price was set this high level because Intel assumed it had a large number of consumers ready to buy the latest computer technology innovations. Intel also used this _____ to recoup some of its research and development costs. |
| | A) | value-pricing |
| | B) | leader pricing |
| | C) | cost-plus pricing |
| | D) | market-skimming pricing |
| | E) | contribution margin pricing |
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| 4 | |
When Intel introduced its 1.4-gigahertz process chip, it set the price at $352. The low price was due to the pricing strategy used by Intel's major competition--AMD. A year earlier when Intel priced its processor at $1,299, AMD had introduced a similar product at a much lower price. The $352 price indicates that Intel used _____ to enter the market rapidly and take back market share from AMD. |
| | A) | prestige pricing |
| | B) | cost-plus pricing |
| | C) | penetration pricing |
| | D) | comparative pricing |
| | E) | trickle up pricing |
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| 5 | |
Saffron is the world's most expensive spice. If you purchase one gram of saffron from Spices, etc., a catalog retailer, you will pay $5.50. If you order 4 grams, it costs $19.50. From this information, you know that Spices, etc. gives customers a _____ discount on purchases of saffron. |
| | A) | noncumulative quantity |
| | B) | seasonal |
| | C) | functional |
| | D) | cumulative quantity |
| | E) | cash |
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| 6 | |
After other discounts have been applied, the buyer of a walk-in freezer owes $12,600. On the freezer invoice dated March 9 is written, "3/15, n/30." This notation means: |
| | A) | the buyer gets to take a cash discount whenever he or she pays the invoice |
| | B) | the buyer is given a discount in exchange for marketing functions he or she will perform |
| | C) | the buyer will pay $12,600 if he or she pays the invoice on April 3 |
| | D) | the buyer will pay $12,978 if he or she does not pay before March 24 |
| | E) | the buyer will receive a quantity discount if he or she orders more merchandise before the end of March |
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| 7 | |
The two types of rebates are: |
| | A) | on-package and on-advertising |
| | B) | coupon and sample |
| | C) | trade and functional |
| | D) | check-out and at-home |
| | E) | coupon and mail-in |
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| 8 | |
The Robinson-Patman Act is most closely associated with the suppression of illegal: |
| | A) | functional discounts |
| | B) | competitive pricing |
| | C) | new-product introductory pricing |
| | D) | price discrimination |
| | E) | flat-rate pricing |
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| 9 | |
Which of the following statements about FOB factory pricing is true? |
| | A) | The FTC considers FOB factory pricing to be illegal. |
| | B) | FOB factory pricing is typically used when freight costs are a small part of the seller's total costs. |
| | C) | FOB factory pricing divides a seller's market into a limited number of broad geographic zones and then sets a uniform delivered price for each zone. |
| | D) | FOB factory pricing is also called freight-absorption pricing. |
| | E) | Under FOB factory pricing, the seller nets the same amount on each sale of similar quantities. |
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| 10 | |
Spices, etc. is a catalog retailer of spices and other seasonings for cooking. It ships orders in the United States through UPS. If the order is to be shipped anywhere else in the world, it adds a $3 charge to help defray shipping costs. From this information, you know the retailer uses which forms of geographic pricing? |
| | A) | FOB factory pricing and flat-rate pricing |
| | B) | uniform delivered pricing and flexible pricing |
| | C) | zone-delivered pricing and uniform pricing |
| | D) | freight-absorption pricing and FOB factory pricing |
| | E) | zone-delivered pricing and point-of production pricing |
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| 11 | |
Freight-absorption pricing is particularly useful for a firm that: |
| | A) | has high variable costs per unit |
| | B) | has high fixed costs |
| | C) | has limited capacity |
| | D) | spends only a limited amount on shipping when compared to the seller's total costs |
| | E) | only wants to sell to nearby customers |
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| 12 | |
Which of the following retailers is most likely to use price lining? |
| | A) | a women's clothing store |
| | B) | a book store |
| | C) | a store that sells everything for $1 |
| | D) | a supermarket |
| | E) | a hair salon |
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| 13 | |
At Halloween, Eckerd's and other similar retailers often offer bags of candy at prices below the store's cost to generate store traffic. This strategy is called: |
| | A) | market penetration pricing |
| | B) | market-skimming pricing |
| | C) | pricing lining |
| | D) | leader pricing |
| | E) | flat-rate pricing |
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| 14 | |
Why do some manufacturers use resale price maintenance? |
| | A) | to protect the images of their brands |
| | B) | to eliminate problems associated with geographic pricing |
| | C) | to eliminate the use of price lining |
| | D) | to cope with seasonal product demands |
| | E) | for all of the above reasons |
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| 15 | |
When Intel introduced its l-gigahertz processor, it priced the hardware at $1,299. This high price led Intel's major competitor AMD to use a price-cutting strategy to earn market share. AMD had planned on backing off its low prices as soon as its chips gained market acceptance. When Intel lowered its prices to better compete with AMD, it forced AMD to continue offering low prices. This was an example of a: |
| | A) | loss leader dispute |
| | B) | distribution channel conflict |
| | C) | VMS conflict |
| | D) | loss of industry synergy |
| | E) | price war |
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