Question 1

Which of the following strategies assumes that demand is inelastic for groups or sets of products?

Accepted Answer

Price lining assumes that demand is inelastic for groups or sets of products, as it involves setting prices for products within a specific range to appeal to different customer segments.

Question 2

The Dan-Eco Company utilises a special strategy to sell its EcoShirt line.Its basic promotional tool is the discount.These discounts offered to middlemen for performing certain channel activities are referred to as __________ discounts.

Accepted Answer

The discounts offered to middlemen for performing certain channel activities are referred to as trade discounts.

Question 3

What type of discount is given to a business purchaser for performing activities such as transporting, storing and selling?

Accepted Answer

Trade discounts are given to buyers who perform specific activities such as transporting, storing and selling. This is a common practice in the retail industry where retailers receive trade discounts from manufacturers and wholesalers for their services.

Question 4

Laura Spangler of North Novelties reduces the prices of games sold to Robertson's Entertainment by 10 per cent to allow for expenses associated with Robertson's promoting the games to consumers.This is an example of a __________ discount.

Accepted Answer

This is an example of a trade discount, which is a reduction in the list price offered by manufacturers to wholesalers and retailers as an incentive for them to sell the products to consumers. In this case, North Novelties is offering a discount to Robertson's Entertainment, which is a retailer, to encourage them to promote their games to consumers. This type of discount is common in business-to-business transactions.

Question 5

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 theatre and a hire car, in addition to airfare and hotel.This is an example of the use of:

Accepted Answer

The situation described is an example of bundle pricing, where multiple products or services are packaged together for a single price. In this case, the travel agent is offering a special package that includes airfare, hotel, meals, theatre tickets, and hire car for a single price. This strategy is often used to create greater value for the customer and incentivize them to purchase the entire bundle rather than individual items.

Question 6

Bundle pricing is perceived by customers to be of value because:

Accepted Answer

Bundle pricing saves time, effort and perhaps money for customers who prefer buying a combination of bundled products in a single transaction. Customers perceive this as value because it simplifies the buying process and provides convenience.

Question 7

When a company attempts to influence a consumer's perception of price to make a product's price more attractive and reduce sticker shock, it is using a __________ pricing strategy.

Accepted Answer

A psychological pricing strategy is used to influence a consumer's perception of price by using tactics such as odd-number pricing (ex: pricing something at $9.99 instead of $10.00), bundle pricing (ex: offering a discount for buying multiple items together), or prestige pricing (ex: pricing a product high to give the perception of luxury and exclusivity). These strategies can make a product's price more attractive and reduce sticker shock.

Question 8

Which of the following is not a discount provided to business customers?

Accepted Answer

All of the other options listed are common types of discounts provided to business customers. Differentiated discounts are not as common and typically refer to customized pricing plans based on individual customer needs and purchase history, rather than a standard percentage or amount off the list price.

Question 9

Which of the following is a requirement for setting pricing objectives?

Accepted Answer

The answer of Which of the following is a requirement...

Question 10

A manager at Myer designs the casual clothing department so that Myer's private-label jeans, priced at $29.99, are displayed next to a national brand of jeans, such as Levi's, priced at $37.99.Which pricing strategy is the manager attempting to use?

Accepted Answer

The manager is attempting to use reference pricing by displaying Myer's private-label jeans next to a national brand that is priced higher. This draws attention to the fact that Myer's jeans are priced lower than the reference price of the national brand, making them seem like a better value.

Question 11

If local Shell service stations look at BP and Caltex service stations' prices as the primary method of determining their own prices, Shell is using:

Accepted Answer

Shell is using competition-based pricing because they are looking at their competitors' prices as the primary factor in determining their own prices. This pricing strategy focuses on staying competitive with other companies in the market and takes into account the prices of their competitors. It also considers the costs involved in providing the product or service, but places more emphasis on the prices offered by other companies in the industry.

Question 12

When an organisation sets a number of different prices for selected groups of merchandise, this strategy is commonly referred to as:

Accepted Answer

The strategy of setting different prices for selected groups of merchandise is called price lining. This involves offering different levels of quality or features of a product at different price points to appeal to different segments of the market.

Question 13

Marketers must take steps to make sure that the pricing objectives they set are consistent with the organisation's __________objectives and __________objectives

Accepted Answer

Pricing objectives must align with the overall objectives of the organization, such as maximizing profits, increasing market share, or satisfying customers. Marketing objectives are more specific goals related to promoting the product or service, while promotional objectives are focused on communicating the benefits of the product or service to consumers. While advertising and revenue are important elements of pricing strategies, they are not the primary concern when setting pricing objectives.

Question 14

Officeworks has just adjusted its price levels so that it can increase its sales volume to match its expenses.Officeworks is most likely employing a __________ objective

Accepted Answer

The objective of matching sales volume to expenses to ensure the business can continue operating is typically aligned with a survival objective.

Question 15

If Ralph Lauren offers to reduce the price of its women's blazers when retailers buy over 100 pieces, the designer is offering a __________ discount.

Accepted Answer

The discount offered by Ralph Lauren is based on the quantity of blazers purchased, making it a quantity discount.

Question 16

Research has shown that an isolation effect occurs with consumers, meaning that an alternative is less attractive when viewed alone than when viewed alongside other alternatives.Which pricing strategy takes this effect into consideration?

Accepted Answer

Reference pricing takes the isolation effect into consideration by providing a comparison point, making an alternative appear more attractive when viewed alongside other options.

Question 17

In business markets, a(n) __________ is a concession in price to achieve a desired goal.

Accepted Answer

The answer of In business markets, a(n) __________ is a...

Question 18

When establishing prices, a marketer's first step is to:

Accepted Answer

Before setting prices, a marketer should establish pricing objectives. This involves determining what they hope to accomplish through their pricing strategy, such as gaining market share or maximizing profits. Once these objectives are set, the marketer can then develop a pricing policy, evaluate competitors' prices, and determine the most appropriate pricing method based on the product, market, and target audience. But establishing pricing objectives should come first.

Question 19

To attract and keep effective resellers, producers often offer discounts that compensate resellers for performing certain functions such as transportation or storage.This type of discount is called a(n):

Accepted Answer

Trade discounts are offered to resellers to compensate them for performing specific functions like transportation or storage.

Question 20

The three primary bases for developing prices are:

Accepted Answer

The three primary bases for developing prices are demand, value and/or competition, and cost. Profit, supply, marketing objectives, markup, and negotiation are all factors that may be considered when developing prices, but they are not the primary bases. The primary bases for developing prices are the factors that play the most significant role in determining what price will effectively balance supply and demand while also covering costs.

Quiz 10: Pricing Decisions