Question 1

The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo is an application of ____, where ____ prices are often used to _____.

Accepted Answer

The use of even prices is an application of odd-even pricing, where even prices are often used to give a product an upscale or exclusive image.

Question 2

If REVO sets the price for its sunglasses at $240, it is most likely using _____pricing to convey ______.

Accepted Answer

REVO is most likely using psychological pricing to convey prestige by setting a relatively high price point for its sunglasses. This pricing strategy can generate the perception of quality and exclusivity among consumers, which could further enhance the brand's image and appeal to certain target segments. Product-line pricing, on the other hand, would involve offering different products at different price points within the same category, while price-skimming would imply setting a high price at launch and then gradually reducing it over time.

Question 3

Which of the following pricing strategies often results in a retailer losing money on the product?

Accepted Answer

Price leader strategy involves setting a low price to attract customers, often resulting in the retailer losing money on that product to drive traffic and increase sales of other items.

Question 4

A product is a price leader when

Accepted Answer

The answer of A product is a price leader when
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Question 5

Chris is planning three sales during the third quarter of the year at Toys "R" Us. The first is at the beginning of the school year, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to be

Accepted Answer

These sales are being planned around specific events (beginning of school year, Halloween, Black Friday), making them special-event pricing.

Question 6

When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package, their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an example of the use of

Accepted Answer

This situation describes bundle pricing, where multiple products or services are packaged together and sold at a discounted price compared to buying them individually. Mia and Shane are being offered a bundle that includes meals, theater tickets, a rental car, airfare, and a hotel room, which may be more appealing and cost-effective for them compared to buying each element separately.

Question 7

Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called

Accepted Answer

The answer of Showing a product's price along with its...

Question 8

All of the following are psychological techniques except

Accepted Answer

Price skimming is a pricing strategy used by companies when introducing new products, where the price is initially set high and may be lowered over time, not a psychological technique aimed at influencing consumer perception directly like the others listed.

Question 9

The manager at Target puts a sign up next to a Samsung audio system that reads, "Only $299.99! $60 less than at Best Buy." This is an example of what type of pricing strategy?

Accepted Answer

The pricing strategy being used by the manager at Target is comparison discounting, where the product is priced lower in comparison to a specific competitor. In this case, the Target price for the Samsung audio system is compared to the Best Buy price, which is $60 higher.

Question 10

What type of pricing strategy is used in a situation where the seller has an ethical responsibility not to overcharge the client and the fees do not relate directly to the time and/or effort spent in specific cases?

Accepted Answer

Professional pricing is used in situations where the seller has an ethical responsibility not to overcharge the client and the fees do not relate directly to the time and/or effort spent in specific cases. This type of pricing strategy is commonly used by professionals such as doctors and lawyers who charge a fee based on their expertise rather than the amount of time spent on a particular case. The fee is typically based on industry standards and is set to ensure that the professional is fairly compensated while also providing a reasonable price for the client.

Question 11

A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting to accomplish?

Accepted Answer

The manager is attempting to use a reference pricing strategy by positioning a lower-priced private label pair of jeans next to a higher-priced national brand to create a perception of value and encourage customers to purchase the private label option.

Question 12

Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using ______, which usually results in a ______.

Accepted Answer

Multiple-unit pricing is when products are priced based on the quantity purchased, usually resulting in a lower per unit price. This is commonly seen with products such as light bulbs, canned soft drinks, and ice cream sandwiches.

Question 13

Bundle pricing may be perceived to be of value by customers because

Accepted Answer

Customers perceive bundle pricing to be of value because it saves them time, effort, and perhaps money by allowing them to purchase a combination of bundled products in a single transaction. They prefer the convenience of purchasing complementary products together. While they may not always pay a lower price per item than they would have if they bought each item separately, the perceived value comes from the convenience and efficiency of the bundled offer.

Question 14

Pricing strategies and methods

Accepted Answer

Pricing strategies and methods help direct and structure the selection of a final price for a product. They are an important decision that requires careful planning and consideration by management. The pricing strategy may differ depending on the product, target audience, competition, and other factors. Therefore, pricing decisions may not be the same for all of a company's products. It is also not the last decision made for a new product as the pricing strategy should be planned out in advance before the product launch.

Question 15

Odd-even pricing is

Accepted Answer

Odd-even pricing is a psychological pricing strategy that involves setting prices ending in odd numbers (such as $9.99) or even numbers (such as $10.00) to create the perception of a lower price. It is commonly used by retailers and is based on the idea that customers perceive prices ending in .99 as lower than the next whole number.

Question 16

To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called

Accepted Answer

This pricing strategy is known as price leader pricing, where a product is priced extremely low to attract customers who are likely to make additional purchases while in the store.

Question 17

If Kroger food stores advertise 2-liter bottles of Pepsi for 89 cents to generate store traffic so that shoppers will purchase other items at regular prices, the grocer is using

Accepted Answer

Kroger is using a price leader strategy by advertising the 2-liter bottles of Pepsi at a very low price to attract customers to the store. The idea behind this strategy is that customers who come to the store to buy the cheap Pepsi will also buy other items at regular prices, resulting in increased sales for the store.

Question 18

Reference pricing is

Accepted Answer

The answer of Reference pricing is
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Question 19

Services that are performed by lawyers, dentists, or doctors are typically priced using ____; sometimes these prices are not based on the amount of time that is spent in each situation, but are based on a flat fee regardless of the difficulty involved.

Accepted Answer

These professions typically follow professional pricing, which takes into account factors such as the complexity of the service, the level of expertise required, and the market demand for the service. Flat fees are also sometimes used instead of hourly rates.

Question 20

Price leaders, comparison discounting, and special-event pricing are applications of

Accepted Answer

Price leaders, comparison discounting, and special-event pricing are all different strategies under promotional pricing, which aims to attract customers through temporary sales or special offers. Psychological pricing refers to strategies that play on consumers' emotions, such as pricing products at $9.99 instead of $10. Professional pricing involves setting prices based on factors such as costs, profit margins, and industry standards. Product-line pricing involves offering multiple products at different price points within a product line. Bait-and-switch refers to a deceptive pricing strategy where a product advertised at a low price is substituted for a more expensive product when the customer arrives in-store.

Quiz 20: Setting Prices

The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo is an application of , where prices are often used to _.

If REVO sets the price for its sunglasses at $240, it is most likely using _pricing to convey __.