Question 1

Allowances,like discounts,refer to

Accepted Answer

A)  rewards given to retailers to encourage early payment.
B)  payment extensions given to cash-strapped consumers during the current recession.
C)  list price deductions based on surges in consumer demand.
D)  list price deductions based on sudden drops in consumer demand.
E)  reductions from list or quoted prices to buyers for performing some activity.F) C) and D)
G) B) and E)

Question 2

What is experience curve pricing and how does it relate to marketing strategies?

Accepted Answer

Experience curve pricing is based on the...

Question 3

In some cases,manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Accepted Answer

A)  progressively higher markup percentages
B)  different markup percentages depending how long the item remains on their shelves
C)  above-,at-,or below-market pricing
D)  approximately the same markup percentages
E)  elasticity of demand pricing calculationsF) A) and E)
G) C) and D)

Question 4

What is the critical assumption when using target profit pricing?

Accepted Answer

A)  a higher average price will usually cause the demand to fall
B)  a higher average price will always cause the demand to fall
C)  profit is relative to the current value of the dollar so this form of pricing is extremely risky
D)  a higher average price will not cause the demand to fall
E)  if the average price is increased,all a firm's competitors will do the sameF) A) and B)
G) B) and C)

Question 5

Marginal analysis refers to

Accepted Answer

A)  a continuing,concise trade-off of incremental costs against incremental revenues.
B)  the change in total cost that results from producing and marketing one additional unit of a product.
C)  a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
D)  a continuing concise trade-off of incremental ROI and incremental ROA.
E)  a technique that analyzes the relationship between revenues,profit,and market share relative to changes in market growth rates.F) A) and B)
G) A) and C)

Question 6

A skimming pricing policy is likely to be most effective when

Accepted Answer

A)  consumers tend to be price sensitive.
B)  it will be easier to set measurable sales unit goals.
C)  a lower price will significantly lower fixed costs.
D)  consumers perceive your product to be similar to other products on the market.
E)  customers are willing to buy immediately at the high initial price.F) D) and E)
G) B) and D)

Question 7

It is relatively easy to measure the incremental cost of a new advertising campaign;what is not as easy is

Accepted Answer

A)  measuring the extra fixed cost involved.
B)  measuring the extra variable cost involved.
C)  measuring the incremental revenue generated by the new advertising campaign.
D)  determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself.
E)  determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form.F) A) and B)
G) A) and C)

Question 8

Consider the Toro ad above.What type of discount would Toro MOST LIKELY offer its channel members to carry and sell its riding lawn mowers during the winter months?

Accepted Answer

A)  noncumulative discounts
B)  cumulative discounts
C)  functional discounts
D)  seasonal discounts
E)  trade discountsF) C) and D)
G) B) and E)

Question 9

If the terms of the trade discount are listed as "20/10/5," the number "20" represents

Accepted Answer

A)  20 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit.
B)  20 percent of the suggested wholesale price that is available to the wholesaler to cover costs and provide a profit.
C)  20 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit.
D)  20 percent of the manufacturer's suggested retail price that is available to the ultimate consumer.
E)  20 percent of the suggested retail price that is the profit margin to the manufacturer.F) B) and E)
G) B) and D)

Question 10

The acronym "FOB" stands for __________.

Accepted Answer

A)  freight on board
B)  free on board
C)  freight of buyer
D)  forward onto buyer
E)  freight owner bonusF) C) and D)
G) A) and D)

Question 11

When Kroger,a national supermarket chain,uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29) ,it is attempting to

Accepted Answer

A)  drive its competition out of business.
B)  attract customers in hopes they will buy other products as well.
C)  fill its parking lot so its store will look successful.
D)  work with the local bottler to move products that are close to their expiration dates.
E)  help stimulate the local economy and generate good will with its customers.F) C) and D)
G) A) and E)

Question 12

The __________ is the ratio of profit to the investment used to earn that profit.

Accepted Answer

A)  markup
B)  selling margin
C)  return on investment
D)  return on assets
E)  markdownF) B) and E)
G) B) and D)

Question 13

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Accepted Answer

A)  demand backward pricing.
B)  target pricing.
C)  skimming pricing.
D)  yield management pricing.
E)  penetration pricing.F) B) and E)
G) A) and E)

Question 14

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world,would probably use which competition-oriented pricing approach?

Accepted Answer

A)  customary pricing
B)  above-market pricing
C)  loss-leader pricing
D)  at-market pricing
E)  penetration pricingF) D) and E)
G) B) and C)

Question 15

Which of the following is a form of dynamic pricing?

Accepted Answer

A)  odd-even pricing
B)  yield management pricing
C)  above-,at-,and below-market pricing
D)  target pricing
E)  cost-plus pricingF) B) and C)
G) A) and C)

Question 16

Target return-on-investment (ROI) is frequently used by

Accepted Answer

A)  contractors.
B)  public utilities.
C)  business-to-business markets.
D)  supermarkets.
E)  small privately owned firms.F) None of the above
G) C) and D)

Question 17

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Accepted Answer

A)  $520
B)  $1,040
C)  $1,880
D)  $2,080
E)  $10,000F) A) and C)
G) B) and C)

Question 18

Which pricing approach complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Accepted Answer

A)  cost-plus percentage-of-cost pricing
B)  cost-plus fixed-fee pricing
C)  standard markup pricing
D)  derived demand pricing
E)  experience curve pricingF) C) and D)
G) C) and E)

Question 19

A critical assumption when using target profit pricing is that

Accepted Answer

A)  a higher average price will not cause the demand for a product to fall.
B)  a higher average price will cause the demand for a product to rise.
C)  a higher average price will always cause the demand for a product to fall.
D)  this form of pricing is extremely risky because profit is tied to the current value of the dollar.
E)  being first is essential if you increase your average price since all of your competitors will do the same.F) D) and E)
G) A) and B)

Question 20

Which one of the following statements regarding bundle pricing is most accurate?

Accepted Answer

A)  Bundle pricing is intended to benefit the consumer,not the seller.
B)  Bundle pricing is really "bundle packaging" since the price charged is for two or more of the same products that are shrink-wrapped together.
C)  Bundle pricing is often associated with a skimming strategy.
D)  Bundle pricing often provides a lower total cost to buyers and lower marketing costs to sellers.
E)  Bundle pricing is based on the idea that consumers value the individual items more than they value the group contained in the package.F) A) and C)
G) B) and E)

Exam 14: Arriving at the Final Price

The acronym "FOB" stands for __________.

Correct AnswerverifiedShow Answer

What is the critical assumption when using target profit pricing?

Correct AnswerverifiedShow Answer

Which one of the following statements regarding bundle pricing is most accurate?

Correct AnswerverifiedShow Answer

It is relatively easy to measure the incremental cost of a new advertising campaign;what is not as easy is

Correct AnswerverifiedShow Answer

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Correct AnswerverifiedShow Answer

A skimming pricing policy is likely to be most effective when

Correct AnswerverifiedShow Answer

Which pricing approach complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Correct AnswerverifiedShow Answer

The __________ is the ratio of profit to the investment used to earn that profit.

Correct AnswerverifiedShow Answer

In some cases,manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Correct AnswerverifiedShow Answer

A critical assumption when using target profit pricing is that

Correct AnswerverifiedShow Answer

Allowances,like discounts,refer to

Correct AnswerverifiedShow Answer

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Correct AnswerverifiedShow Answer

Consider the Toro ad above.What type of discount would Toro MOST LIKELY offer its channel members to carry and sell its riding lawn mowers during the winter months?

Correct AnswerverifiedShow Answer

When Kroger,a national supermarket chain,uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29) ,it is attempting to

Correct AnswerverifiedShow Answer

Marginal analysis refers to

Correct AnswerverifiedShow Answer

Which of the following is a form of dynamic pricing?

Correct AnswerverifiedShow Answer

Target return-on-investment (ROI) is frequently used by

Correct AnswerverifiedShow Answer

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world,would probably use which competition-oriented pricing approach?

Correct AnswerverifiedShow Answer

If the terms of the trade discount are listed as "20/10/5," the number "20" represents

Correct AnswerverifiedShow Answer

What is experience curve pricing and how does it relate to marketing strategies?

Correct AnswerverifiedExperience curve pricing is based on the...View AnswerShow Answer

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Experience curve pricing is based on the...
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