Question 1

A quantity discount is a price reduction given to those who buy a large volume of the manufacturer's products.

Accepted Answer

A quantity discount is indeed a price reduction given to customers who buy a large volume of the manufacturer's products.

Question 2

When the seller receives full payment in cash and agrees to spend a substantial amount of the money in that country within a stated time period this is called offset.

Accepted Answer

Offset is a practice where the seller receives full payment in cash but agrees to spend a substantial amount of the money in the buyer's country within a stated time period. This is a way to balance trade between countries and generate economic benefits for the buyer's country.

Question 3

The best response to competitors' price changes is to panic and lower prices in order to regain market share.

Accepted Answer

Lowering prices should not be the only response to competitors' price changes. Other strategies could include improving product quality, enhancing customer service, or strengthening marketing efforts. Panicking and immediately lowering prices could lead to a price war, which could hurt both the company and the industry as a whole. It is important to carefully analyze the competitions' price changes and determine a strategic response that aligns with the company's goals and values.

Question 4

In target-return pricing, the firm determines the markup required and adds that amount to the fixed cost of the product.

Accepted Answer

In target-return pricing, the firm determines the price by adding a markup to the total cost (both fixed and variable costs) of the product to achieve a target return on investment, not just to the fixed cost.

Question 5

The key to effectively using perceived-value pricing is to always to deliver the same or equal value as your competitors.

Accepted Answer

Perceived-value pricing is about setting prices based on the perceived value to the customer rather than the cost of the product or what competitors are charging, focusing on the value the product provides over competitors, not matching them.

Question 6

A major circumstance provoking price increases is cost inflation.

Accepted Answer

Cost inflation refers to the increase in the cost of producing goods and services, which eventually leads to price increases for those goods and services. Therefore, a major circumstance provoking price increases is cost inflation.

Question 7

Promoting a product a sale price with reference to an inflated regular price, also known as a False Ordinary Selling Price is a perfectly legal practice in Canada.

Accepted Answer

In Canada, promoting a product at a sale price with reference to an inflated regular price, known as a False Ordinary Selling Price, is considered misleading advertising and is illegal under the Competition Act.

Question 8

Discount pricing, is when companies adjust their list prices, and give discounts and allowance for early payments, volume purchases, and off-season buying.

Accepted Answer

This statement correctly describes discount pricing, where companies offer discounts and allowances on their list prices based on various factors such as early payments, volume purchases, and off-season buying.

Question 9

One marketing strategy that can be used to avoid raising prices is to shrink the amount of product.

Accepted Answer

This strategy is known as downsizing, where the amount or size of the product is decreased, but the price remains the same. It is a way to maintain the profit margin without passing on the increased costs to the customers. However, it can be perceived negatively by the customers if they notice the decrease in size, and it may affect brand loyalty and reputation.

Question 10

An increasing number of companies are basing their pricing on perceived value, which is the value that the consumer decides the product is worth and is the same across all incomes and regions of the company.

Accepted Answer

Perceived value can vary significantly across different incomes and regions due to differences in purchasing power, cultural values, and economic conditions, affecting how consumers value a product.

Question 11

The final price charged by the company does not necessarily have to take into account the brand's quality and advertising relative to competition.

Accepted Answer

The final price charged by a company often considers the brand's quality and advertising relative to competition, as these factors can influence consumer perception and willingness to pay.

Question 12

Companies sometimes initiate price cuts in a drive to dominate the market through lower costs.

Accepted Answer

Yes, companies sometimes reduce prices with the goal of gaining a larger market share by offering products/services at lower costs than competitors.

Question 13

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

Accepted Answer

The answer of Psychological discounting involves setting an artificially high...

Question 14

A factor leading to price increases is overdemand by the market for the company's product.

Accepted Answer

When there is a high demand for a company's product, the company may increase the price to maximize their profits. This can be due to limited supply or scarcity of resources needed to manufacture the product.

Question 15

In some cases, price is not as important as quality and other benefits in the market offering.

Accepted Answer

Sometimes customers are willing to pay more for better quality or additional benefits such as convenience or superior customer service.

Question 16

Predatory pricing selling below cost with the intention of destroying competition is legal under certain conditions.

Accepted Answer

Predatory pricing is illegal under antitrust laws as it constitutes an unfair competitive practice. While certain pricing strategies such as discounts and promotions are legal, selling below cost to drive competitors out of business is not allowed.

Question 17

Cutting prices to keep customers or beat competitors often encourages customers to demand price concessions.

Accepted Answer

When a company cuts its prices, it sends a message to its customers that it is willing to compete on price. This may lead customers to expect price concessions in the future, and they may become less loyal to the company if they find a better deal elsewhere. This is why price competition can sometimes lead to a race to the bottom, where all competitors end up cutting their prices to unsustainable levels.

Question 18

EDLP pricing is a type of going-rate pricing in which the retailer sets low prices everyday on selected items.

Accepted Answer

EDLP (Everyday Low Pricing) is a pricing strategy where retailers aim to maintain a consistent low price for all items, not just selected items, without running frequent promotions or sales.

Question 19

Ensuring that customers appreciate the total value of a product or service offering is not important.

Accepted Answer

Ensuring that customers appreciate the total value of a product or service offering is important because it helps in building customer loyalty and retention. It also helps in attracting new customers through positive word-of-mouth recommendations.

Question 20

Value pricing is a matter of reengineering the company's operations to become a low-cost producer.

Accepted Answer

The answer of Value pricing is a matter of reengineering...

Quiz 14: Developing Pricing Strategies and Programs