Question 1

A manufacturer of tablet computers has designed a unique new product that can network with satellites to access streaming video and television channels.This device does not need a Wi-Fi connection and can be accessed anywhere in the world by logging onto the site.Besides serving as a portable computer,this device bypasses the need for a consumer to purchase cable or personal satellite dish access.Which approach to pricing makes the most sense for the company to use first? ​
A)​set the price extremely high until competing products are developed
B)​set the price to match the manufacturing of the device under a private label
C)​set the price extremely low in order to capture more of the current market share
D)​set the price to match other computer and television devices sold by competitors
E)​set the price extremely low in order for consumers to purchase it without needing a coupon

Accepted Answer

Setting the price extremely high initially allows the company to capitalize on the unique features and lack of competition, maximizing profits before competitors enter the market.

Question 2

A smartphone manufacturer introduced a new device into the marketplace with pricing set according to the skimming approach.The CEO of the company reviews financial reports from the device and notes that the pricing approach used is not cost-effective for the company.How should the CEO adjust the pricing strategy for this device? ​
A)​drop the price
B)​increase the price
C)​offer an everyday low price option
D)​remarket the device under a private label
E)​match the price to the competitions' price

Accepted Answer

The most appropriate choice for the CEO is to drop the price of the device. The skimming pricing approach may have resulted in initial high profits, but if it was not cost-effective for the company, it needs to be revised. Dropping the price would make the device more affordable and attractive for consumers, which could increase demand and ultimately lead to higher profitability.

Question 3

A step out is a pricing practice in which a firm:
A)maintains a high price for a product throughout its life cycle.
B)offers an extremely low price on a single product purchase to reach the mass market quickly and capture a large market share.
C)markets a product at a low price compared to competitive offerings to secure market acceptance.
D)raises the price of a product and then waits to see if others follow suit.

Accepted Answer

A step out is a pricing strategy where a firm raises the price of a product to see if competitors will follow, testing the market's reaction to higher prices.

Question 4

The manufacturer of safety wallets is determining the retail price to charge for each unit sold.Which approach should the manufacturer use that supports the psychological pricing strategy? ​
A)​set the price at $24.97
B)​set the price at $25.00 for the first item and $5 for the second
C)​set the price according to the number of unrelated products sold
D)​set the price according to the number of variations of the wallet style
E)​set the first unit sold at full price and the second purchased at half price

Accepted Answer

Setting the price at $24.97 is an example of psychological pricing, where prices are set just below a round number to make them appear cheaper to consumers.

Question 5

Basing-point pricing policy always calculates the freight charges from the point or location from which the goods are actually shipped.

Accepted Answer

Basing-point pricing policy calculates freight charges from a predetermined location, not necessarily from where the goods are actually shipped.

Question 6

The manager of an electronics and appliance store is challenged by the corporate office to increase the use of repair and replacement policies for these products.Which approach should the manager consider to meet the corporate office's expectation? ​
A)​increase the price of the policies until the market adjusts
B)​install shop bots for customers to research product policies
C)​bundle the repair and replacement policies as part of the sale price of the products
D)​strategize for new product policies to be introduced alongside high-volume sale items
E)​reduce the prices of popularly sold items and charge a higher fee for the repair policies

Accepted Answer

Bundling the repair and replacement policies as part of the sale price of the products will increase the likelihood of customers purchasing the policies. This approach also provides transparency and simplicity for customers, as they will not have to worry about the extra cost of policies when shopping. Additionally, by including the policies in the sale price, the store can still compete on price with other stores that do not offer policies.

Question 7

_____ pricing occurs when a company offers two or more complementary products and sells them for a single price.
A)Psychological
B)Bundle
C)Protective
D)Combination

Accepted Answer

Bundle pricing occurs when a company offers two or more complementary products and sells them for a single price. This strategy is used to increase sales and create a higher perceived value for customers, as they are receiving multiple products for one price.

Question 8

Almost half of all eBay transactions occur at fixed prices.

Accepted Answer

According to eBay's 2020 annual report, approximately 48% of gross merchandise volume on the platform was generated through "fixed price" transactions, as opposed to bidding or other transaction types.

Question 9

Exporters who adopt market-differentiated pricing seldom change the price of their products.

Accepted Answer

Market-differentiated pricing involves adjusting prices based on various factors such as market conditions, competition, and consumer demand, leading to frequent price changes.

Question 10

A firm that manufactures TVs sells them at prices of $750,$1,000,and $1,250.The manufacturer will return $75,$100,or $125 respectively,by mail,to those who purchase its brand of TV.This reduction in price is an example of a:
A)promotion allowance.
B)trade-in.
C)rebate.
D)quantity discount.

Accepted Answer

A rebate is a discount offered by a manufacturer or distributor that is returned to the buyer in the form of cash or credit. In this case, the $75, $100 or $125 reduction in price is returned by mail to those who purchase the TV, making it a rebate. A promotion allowance is a reduction in price given by a seller to a buyer for advertising or participating in promotional activities. A trade-in is an allowance given for an old or used item traded in for a new item. A quantity discount is a reduction in price given for a large purchase of goods or services. None of these options fit the scenario described.

Question 11

A cosmetics company offers incentives to its retailers for advertising its new shampoo by placing it in a special display unit near the billing counters.This incentive offered by the manufacturer is an example of a _____.
A)rebate
B)promotional allowance
C)cash discount
D)trade-in

Accepted Answer

The offer of incentives to retailers for advertising the new shampoo through a special display unit is an example of a promotional allowance. This is a common practice in the industry where manufacturers offer incentives to retailers for promoting their products over competitors. A promotional allowance is a form of trade promotion that offers retailers financial incentives or other benefits for promoting the manufacturer's products in their stores. Rebates, cash discounts, and trade-ins are other forms of trade promotions but do not apply to this scenario.

Question 12

A Swedish telephone maker transfers phones costing $10 to produce to its U.S.subsidiary for a transfer price of $20.The U.S.subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expense.The U.S.subsidiary:
A)makes $10, on which it pays U.S. taxes.
B)makes $15, all of which is taxable in the United States.
C)breaks even on the deal because it spends all its revenues.
D)makes a total of $25 on the deal because the phones are effectively free.

Accepted Answer

The answer of A Swedish telephone maker transfers phones costing...

Question 13

Every online marketer is inherently a global marketer.​
Indicate the answer choice that best completes the statement or answers the question.

Accepted Answer

Since the internet is a global platform where people across the world can connect, every online marketer has the potential to target a global audience. Therefore, it can be concluded that every online marketer is inherently a global marketer.

Question 14

Which of the following pricing systems is sometimes referred to as postage-stamp pricing since it resembles the pricing structure for mail service?
A)Zone pricing
B)Freight absorption pricing
C)Uniform-delivered pricing
D)The basing-point system

Accepted Answer

The uniform-delivered pricing system is sometimes referred to as postage-stamp pricing since it resembles the pricing structure for mail service. In this method, a single price is charged for delivery to all customers, regardless of their location.

Question 15

A credit allowance given for a used item when a customer purchases a new item is known as a _____.
A)rebate
B)trade-in
C)functional discount
D)cash discount

Accepted Answer

A trade-in is when a customer turns in a used item and receives a credit allowance that is applied towards the purchase of a new item. Rebates, functional discounts, and cash discounts are all different types of pricing incentives that may be offered to customers but do not involve a trade-in of a used item.

Question 16

A firm that permits variable prices for different customers is adopting _____.
A)promotional pricing
B)price flexibility
C)odd pricing
D)product-line pricing

Accepted Answer

Price flexibility refers to the practice of allowing different prices for different customers or under different conditions. This could include volume discounts, negotiated pricing with individual customers, or dynamic pricing based on supply and demand factors. This approach can help firms capture more value from different customer segments and respond to market conditions in real-time.

Question 17

Marketers offer rebates in order to:
A)cover the costs spent by the retailers on advertising the products.
B)reward the retailer for prompt payment of bills.
C)reward a retailer who agrees not to advertise products below set prices.
D)reduce the price paid for a product by customers.

Accepted Answer

Marketers offer rebates to reduce the price paid for a product by customers. Rebates are a type of sales promotion technique and are often used to incentivize customers to make a purchase by offering them a discount on the product. The discount is given to the customer after they have made the purchase, and they typically need to submit a form or provide proof of purchase to receive the rebate.

Question 18

A(n)_____ is a general guideline that reflects marketing objectives and influences specific pricing decisions.
A)MAP
B)pricing policy
C)leader pricing strategy
D)EDLP

Accepted Answer

A pricing policy is a general guideline that reflects marketing objectives and influences specific pricing decisions. MAP stands for minimum advertised price, which is the minimum price a manufacturer requires retailers to sell their products for. Leader pricing strategy is a pricing tactic where a product is sold at a lower-than-normal price to attract customers into a store. EDLP stands for everyday low pricing, which is a pricing strategy where a retailer sets prices at a consistently low level with few or no temporary price discounts. None of these options fit the definition of a general guideline that influences pricing decisions, except for pricing policy.

Question 19

Retailers achieve opening price point by pricing a quality private-label product above those of manufacturer's brands.

Accepted Answer

Opening price point refers to the lowest-priced product in a particular category. Retailers typically achieve this by offering a private-label product that is priced lower than those of manufacturer's brands, not higher. This strategy is used to attract price-sensitive customers who may not be willing to pay premium prices for well-known brands.

Question 20

Maintaining an artificially low price for a period of time leads consumers to expect it as a customary feature of the product.

Accepted Answer

This phenomenon is known as "price anchoring" and can lead to disappointment and potential loss of customers if the price is raised to its actual market value.

Quiz 19: Pricing Strategies

A step out is a pricing practice in which a firm:

The manufacturer of safety wallets is determining the retail price to charge for each unit sold.Which approach should the manufacturer use that supports the psychological pricing strategy?

Basing-point pricing policy always calculates the freight charges from the point or location from which the goods are actually shipped.

The manager of an electronics and appliance store is challenged by the corporate office to increase the use of repair and replacement policies for these products.Which approach should the manager consider to meet the corporate office's expectation?

_____ pricing occurs when a company offers two or more complementary products and sells them for a single price.

Almost half of all eBay transactions occur at fixed prices.

Exporters who adopt market-differentiated pricing seldom change the price of their products.

A firm that manufactures TVs sells them at prices of $750,$1,000,and $1,250.The manufacturer will return $75,$100,or $125 respectively,by mail,to those who purchase its brand of TV.This reduction in price is an example of a:

A cosmetics company offers incentives to its retailers for advertising its new shampoo by placing it in a special display unit near the billing counters.This incentive offered by the manufacturer is an example of a _____.

A Swedish telephone maker transfers phones costing $10 to produce to its U.S.subsidiary for a transfer price of $20.The U.S.subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expense.The U.S.subsidiary:

Every online marketer is inherently a global marketer. Indicate the answer choice that best completes the statement or answers the question.

Which of the following pricing systems is sometimes referred to as postage-stamp pricing since it resembles the pricing structure for mail service?

A credit allowance given for a used item when a customer purchases a new item is known as a _____.

A firm that permits variable prices for different customers is adopting _____.

Marketers offer rebates in order to:

A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions.

Retailers achieve opening price point by pricing a quality private-label product above those of manufacturer's brands.

Maintaining an artificially low price for a period of time leads consumers to expect it as a customary feature of the product.

Quiz 19: Pricing Strategies

A step out is a pricing practice in which a firm:

The manufacturer of safety wallets is determining the retail price to charge for each unit sold.Which approach should the manufacturer use that supports the psychological pricing strategy? ​

Basing-point pricing policy always calculates the freight charges from the point or location from which the goods are actually shipped.

The manager of an electronics and appliance store is challenged by the corporate office to increase the use of repair and replacement policies for these products.Which approach should the manager consider to meet the corporate office's expectation? ​

_____ pricing occurs when a company offers two or more complementary products and sells them for a single price.

Almost half of all eBay transactions occur at fixed prices.

Exporters who adopt market-differentiated pricing seldom change the price of their products.

A firm that manufactures TVs sells them at prices of $750,$1,000,and $1,250.The manufacturer will return $75,$100,or $125 respectively,by mail,to those who purchase its brand of TV.This reduction in price is an example of a:

A cosmetics company offers incentives to its retailers for advertising its new shampoo by placing it in a special display unit near the billing counters.This incentive offered by the manufacturer is an example of a _____.

A Swedish telephone maker transfers phones costing $10 to produce to its U.S.subsidiary for a transfer price of $20.The U.S.subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expense.The U.S.subsidiary:

Every online marketer is inherently a global marketer.​ Indicate the answer choice that best completes the statement or answers the question.

Which of the following pricing systems is sometimes referred to as postage-stamp pricing since it resembles the pricing structure for mail service?

A credit allowance given for a used item when a customer purchases a new item is known as a _____.

A firm that permits variable prices for different customers is adopting _____.

Marketers offer rebates in order to:

A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions.

Retailers achieve opening price point by pricing a quality private-label product above those of manufacturer's brands.

Maintaining an artificially low price for a period of time leads consumers to expect it as a customary feature of the product.

The manufacturer of safety wallets is determining the retail price to charge for each unit sold.Which approach should the manufacturer use that supports the psychological pricing strategy?

The manager of an electronics and appliance store is challenged by the corporate office to increase the use of repair and replacement policies for these products.Which approach should the manager consider to meet the corporate office's expectation?

Every online marketer is inherently a global marketer. Indicate the answer choice that best completes the statement or answers the question.