Question 1

Give two examples of products for which marketers might use optional-product pricing.

Accepted Answer

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Question 2

Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process of production, the company generates a great deal of scrap hardwood. How can using by-product pricing benefit the company?

Accepted Answer

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Question 3

A(n) ________ is a straight reduction in price on purchases during a stated period of time or of larger quantities.
A) allowance
B) free sample
C) discount
D) tax credit
E) quota

Accepted Answer

A discount is a reduction in price for purchases during a specific period of time or on larger quantities. This is a common sales promotion tool used by businesses to incentivize customers to make purchases. An allowance is a deduction from the list price for a defective or damaged product. A free sample is a small amount of a product given to customers to try before making a purchase. A tax credit is a reduction in the amount of taxes owed by an individual or business. A quota is a specific amount or limit of goods that can be imported or exported.

Question 4

Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs?
A) product bundle pricing
B) captive product pricing
C) product line pricing
D) dynamic pricing
E) discount and allowance pricing

Accepted Answer

Discount and allowance pricing involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs. Therefore, option E is the correct answer.

Question 5

Give two examples of product bundle pricing.

Accepted Answer

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Question 6

Solar Tanning Salon prices tanning sessions at $25 per visit. It also offers seasonal passes for $175 that allow the customer to visit the salon multiple times in a year. This is an example of a ________.
A) sample
B) promotional allowance
C) product bundle
D) discount
E) product line

Accepted Answer

The seasonal pass offers a reduced price per visit compared to paying for each session individually, which constitutes a discount.

Question 7

Give two examples of products for which captive product pricing might be used.

Accepted Answer

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Question 8

When using product bundle pricing, sellers combine several of their products and offer the bundle at an increased price for increased profit.

Accepted Answer

Product bundle pricing involves combining several products and offering them at a reduced price compared to buying each item separately, to encourage more sales.

Question 9

Which of the following is a price adjustment strategy?
A) product bundle pricing
B) by-product pricing
C) product line pricing
D) optional product pricing
E) discount and allowance pricing

Accepted Answer

Discount and allowance pricing is a price adjustment strategy which involves offering discounts or allowances to customers in order to increase sales and improve customer satisfaction. This strategy can be used for various reasons such as reducing inventory, encouraging customers to buy in bulk, attracting new customers, or retaining existing ones. The other options listed are pricing strategies, but not specifically price adjustment strategies.

Question 10

Thinking Cap Corp. prices its various cap designs at different price levels, ranging from $2.05 to $5.95. This is an example of optional product pricing.

Accepted Answer

Optional product pricing involves setting prices for optional or accessory products along with a main product, not simply having a range of prices for different products.

Question 11

Give two examples of by-product pricing.

Accepted Answer

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Question 12

What should the price steps of product line pricing take into account?

Accepted Answer

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Question 13

In addition to its customary services, On the Spot, a moving company, also sells the boxes and padding that are used when moving household furniture. This is an example of customer-segmented pricing.

Accepted Answer

This is an example of product line pricing, where a company offers related products or services at different price points.

Question 14

Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly?
A) cash discount
B) season discount
C) quantity discount
D) trade discount
E) functional discount

Accepted Answer

A cash discount is a price adjustment strategy that offers a reduction in price to buyers who pay their bills promptly. This discount is offered as an incentive for customers to pay their bills early or on time. Season, quantity, trade, and functional discounts are all different types of price adjustments that do not specifically offer a reduction in price to prompt pay customers.

Question 15

Print-Fast Printers prices its printer cartridges at a premium, since customers must buy Print-Fast cartridges to work with their Print-Fast printer. Print-Fast uses optional-product pricing.

Accepted Answer

Print-Fast uses captive-product pricing, where the main product (printer) is priced competitively, but the necessary complementary products (cartridges) are priced at a premium. Optional-product pricing involves pricing optional or accessory products sold with the main product.

Question 16

When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

Accepted Answer

When a manufacturer is able to earn a profit from the sale of by-products, it can reduce the cost of the main product and still maintain profitability. This makes the main product more competitive in the market.

Question 17

Pricing across a product mix is difficult because various products have related demand and costs, and products face different degrees of competition.

Accepted Answer

Pricing across a product mix is a complex process because products within a mix tend to have different demand, costs, and levels of competition. Businesses need to analyze and understand these factors in order to effectively set prices that balance out profitability and market demand. Failure to do so can result in lost revenue, missed opportunities, and other negative consequences.

Question 18

In product line pricing, price steps should account for differences in customer perceptions of the value of different features.

Accepted Answer

Product line pricing is the practice of setting prices for an entire product line, with different price points for different products within the line. Price steps should be based on the perceived value of each product to different customer segments. Customers are willing to pay more for products that offer more features, so the price should reflect the perceived value of those features. Therefore, price steps should account for differences in customer perceptions of the value of different features.

Question 19

Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.

Accepted Answer

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Question 20

Explain product line pricing.

Accepted Answer

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Quiz 11: Pricing Strategies: Additional Considerations