Question 1

Maria and Kiana are shopping for ball gowns for a charity ball to be held at The Peninsula Hotel in Beverly Hills,California,a five-star,$825 per night hotel.Maria suggests that they look for dresses at Sax Fifth Avenue,Nieman Marcus,or Versace so they will blend with the wealthy people at the hotel.She also asserts that clothing purchased at these stores will be of higher quality and value than clothing purchased at Macy's,J.C.Penney's,or Ross even though they could find dresses by some of the same designers at those stores.Kiana asserts that dresses bought at Macy's,J.C.Penney's,or Ross by the same designers are the same as those from the high-end stores and will cost far less.Kiana tells Maria that paying more for a dress by the same designer does not make it a better dress.When buyers equate the status,quality,and value of a luxury item with its cost,what part of the pricing strategy is involved with setting prices of these luxury items?
A) Price competition
B) Product differentiation
C) Pricing perceptions
D) Price communication

Accepted Answer

Pricing perceptions are involved with setting prices of luxury items. This is when the price of a product is related to the perceived quality and exclusivity of the product, rather than just the cost of producing it. Luxury brands often set high prices to create an image of exclusivity and quality, which appeals to consumers who are willing to pay more for perceived status and prestige.

Question 2

Harold is an accountant with Brain Industries and Matilda is in the marketing department.They are discussing the pricing strategy for a new product the company will soon release.Their recommendations will be presented to the board of directors at the next board meeting.Matilda has discussed profit maximization and market-sharing goals for the product.She asks Harold what product survival pricing entails and he explains it as well as return-on-investment pricing.Of the pricing strategies they have discussed,which one is not an obtainable goal?
A) Product survival
B) Profit maximization
C) Return on investment
D) Market-sharing goal

Accepted Answer

The answer of Harold is an accountant with Brain Industries...

Question 3

Jersey's Smoothie Bar has decided to set its pricing structure based on an annual percentage of the amount earned as a result of financial investment as a quantifiable means to gauge the success of their pricing.This pricing structure is known as
A) target return on investment pricing.
B) market-share pricing.
C) status-quo pricing.
D) survival pricing.

Accepted Answer

Jersey's Smoothie Bar is using target return on investment pricing, which sets prices based on achieving a specific ROI goal. This method uses financial investment as a benchmark to determine pricing rather than competition or production costs.

Question 4

DeAngelo went to the store to purchase groceries.By the time he reached the paper products aisle,he was down to his last few dollars but he desperately needed paper towels.After surveying the aisle,he bought a package that was labeled "Paper Towels" with no other designations.What brand of paper towels did he purchase?
A) Brand name
B) Manufacturer brand
C) Store brand
D) Generic brand

Accepted Answer

The package was labeled only as "Paper Towels" with no other designations, which suggests that DeAngelo purchased a generic brand of paper towels.

Question 5

Zach is opening a tire store.He intends to set the price of tires based on determining the total cost of his purchase of one tire and then adding an amount to cover additional costs and profits.Zach is using ___ pricing.
A) cost-based
B) additional markup
C) floor establishment
D) survival

Accepted Answer

Zach is determining the price of tires based on the total cost of his purchase, which is the key feature of cost-based pricing. Option B (additional markup) is not a correct choice because adding an amount to cover additional costs and profits is part of the cost-based pricing strategy. C) floor establishment and D) survival are not relevant to the pricing strategy used by Zach.

Question 6

Frank's Fabrics has a large inventory of fabric for home crafters and seamstresses but carries very few craft supplies and is finding it difficult to compete with the large chain fabric stores as a result.In order to bring more customers into the store,Frank lowers the price of fabric below his cost for a month,hoping that once customers come to his store,they will return.This is called ___ pricing.
A) survival
B) competitive
C) profit maximization
D) investment

Accepted Answer

Survival pricing is a strategy used by businesses when they are facing intense competition and are at risk of going out of business. In this case, Frank's Fabrics is finding it difficult to compete with larger chain stores and is risking losing customers. By lowering the price of fabric below his cost, Frank is hoping to attract more customers and increase his sales. This strategy is not focused on maximizing profit, but rather on keeping the business afloat.

Question 7

Discounts given to customers who buy in large amounts are called ____ discounts.
A) trade
B) cash
C) quantity
D) wholesale
E) preferential

Accepted Answer

Quantity discounts are given to customers who buy in large amounts. The other options are different types of discounts - trade discounts are discounts given to retailers by wholesalers, cash discounts are offered to customers who pay their invoices quickly, wholesale discounts are given to customers who buy directly from the manufacturer or wholesaler, and preferential discounts are special discounts given to preferred customers.

Question 8

​A major big box store allegedly adds 5 percent to the total cost of production or cost of purchasing items it sells in its store,then adds to this number the additional costs and profits in order to arrive at the product's selling price.The 5 percent represents the ___ amount.
A) ​markup
B) ​income
C) ​equity
D) ​market share

Accepted Answer

Markup refers to the amount added to the cost of goods in order to arrive at the selling price. In this case, the big box store allegedly adds 5 percent as markup to the cost of production or cost of purchasing items it sells in its store.

Question 9

​Lang Industries is introducing a new product and will use price skimming to set the price.Price skimming is
A) ​the strategy of charging the highest possible price for a product during the introduction stage of its life-cycle.
B) ​a way for the seller to secretly pocket extra money charged for a product but not recorded on the company books.
C) ​raising prices above a fair price.
D) ​a means of increasing competition in order to raise prices even higher.

Accepted Answer

Price skimming is the strategy of charging the highest possible price for a product during the introduction stage of its life-cycle, in order to maximize profits while the product is still perceived as new and innovative.

Question 10

Janie,a farmer,sells a dozen ears of corn to her neighbor for $1/dozen.She sells a dozen ears of corn to the small market down the street for $.75/dozen.She sells corn to the chain grocery store in town for $.50/dozen.Janie is using
A) differential pricing.
B) discriminatory pricing.
C) price skimming.
D) illegal pricing.

Accepted Answer

Janie is using differential pricing by charging different prices to different customers based on their purchasing power and willingness to pay. She charges the highest price to the neighbor who is willing to pay $1/dozen, a lower price to the small market for $.75/dozen, and the lowest price to the chain grocery store for $.50/dozen. This strategy allows Janie to maximize her profits by capturing the most value from each customer group. Discriminatory pricing involves charging different prices to different customers based on their personal characteristics, such as age, gender, race, etc., which is illegal in many cases. Price skimming involves charging a high price for a product when it is first introduced, then gradually lowering the price as competition enters the market. This strategy is usually used for high-end products with a limited target market. Illegal pricing involves setting prices below the cost of production with the intention of driving competitors out of business, which is considered predatory pricing and is illegal in many countries.

Question 11

Discounts from the list price offered to intermediaries are called ____ discounts.
A) trade
B) quantity
C) wholesale
D) cash
E) preferential

Accepted Answer

Trade discounts are offered to intermediaries such as wholesalers and retailers as a reward for performing certain tasks such as promoting the manufacturer's products, carrying inventory, and handling distribution. They are a common practice in many industries and are usually calculated as a percentage off the list price. Quantity discounts are based on the volume of goods purchased, wholesale discounts are offered to wholesalers buying large quantities, cash discounts are given for prompt payment, and preferential discounts are based on a special relationship between the buyer and seller.

Question 12

Amy is starting a new business and is confused about how to determine the price to set for her product.She comes to you for advice and you tell her,correctly,that the two factors that determine the price at which a product will sell are
A) the market and the awareness that costs and expected sales can be used only to establish aprice floor.
B) the market and status-quo.
C) the cost of production and maximum price that can be charged.
D) the competition price point and product demand.

Accepted Answer

The market determines the price ceiling, while costs and expected sales help establish a price floor.

Question 13

During a department-head meeting at XYZ Corporation,the executives and department-heads were discussing all of the products the firm has to offer for sale.What were they referring to?
A) Product line
B) Product mix
C) Marketing mix
D) Brand mix

Accepted Answer

Product mix refers to the combination of all the products that a company offers for sale.

Question 14

Kerry would like to buy a new electric bicycle.He has reviewed them in Bicycling Magazine as well as looked at them in stores.He goes to his local bicycle store and asks about two bikes that he is interested in.The owner shows him the two he is interest in then shows him a bike that is getting good reviews,has been promoted extensively by the manufacturer and has been widely distributed.This model was not reported on in Bicycling Magazine so Kerry was unaware of it,but after reviewing the literature about it and test-riding it,he realizes it is better than the two older models he read about in Bicycling Magazine and took for test drives.What stage of the product life-cycle is this bicycle most likely in?
A) Introduction
B) Growth
C) Maturity
D) Decline

Accepted Answer

The answer of Kerry would like to buy a new...

Question 15

​____ is a pricing goal that is impossible to achieve.
A) ​Profit maximization
B) ​Survival pricing
C) ​Market-share pricing
D) ​Target return on investment pricing

Accepted Answer

Profit maximization is considered an impossible goal because it requires perfect knowledge of demand and cost conditions, which is not feasible in real-world markets.

Question 16

XYZ Industries is in a business in which competition demands little variance in pricing so it prices its products to stay at the same level of business it has enjoyed in order to maintain price stability.This is known as
A) status-quo pricing.
B) target return on investment pricing.
C) profit maximization.
D) ground floor pricing.

Accepted Answer

Status-quo pricing involves maintaining current prices to sustain a stable level of business in the face of little price competition. This strategy is effective when there is a small variation in pricing among competitors, as it minimizes the risk of losing sales to competitors while maintaining profitability. Target return on investment pricing involves setting prices based on the desired return on investment, profit maximization involves setting prices to maximize profits, and ground floor pricing involves setting low prices to gain market share. None of these options fit the given scenario as well as status-quo pricing.

Question 17

Discounts offered to encourage early payment of outstanding accounts are called ____ discounts.
A) trade
B) cash
C) wholesale
D) quantity
E) preferential

Accepted Answer

Cash discounts are designed to encourage early payment of outstanding accounts. Trade discounts are discounts given to customers for purchasing in large quantities, wholesale discounts are given to customers for buying in bulk from wholesalers, quantity discounts are given based on the number of items purchased, and preferential discounts are given to certain customers based on their status or relationship with the company. Thus, only option B fits the given description.

Question 18

Martin is experimenting with boosting the sales of the goods in his store by using odd-even pricing,multiple-unit pricing,and reference pricing.These are all examples of ___ pricing strategies.
A) psychological
B) status
C) luxury
D) exemplary

Accepted Answer

Odd-even pricing, multiple-unit pricing, and reference pricing are all examples of psychological pricing strategies, which aim to influence consumer behavior and perception through pricing techniques. Odd-even pricing uses prices that end in odd or even numbers to create the perception of a deal or discount. Multiple-unit pricing offers discounts for buying more than one item, such as "buy one, get one 50% off." Reference pricing involves setting a price that references a previous price or a competitor's price to make the current price seem more attractive. These strategies all play on consumer perceptions and psychology to encourage purchases.

Question 19

Darren wants to impress his new girlfriend whose father is a nationally known race car driver.He drives his Lexus to the Chevrolet dealer and without negotiating,trades the Lexus in for a new smoke gray 545-hp Nissan GT-R.The car cost him $174,990 but he feels it is worth it to impress his girlfriend.What specific type of product did Darren purchase?
A) Convenience product
B) Shopping product
C) Specialty product
D) Consumer product

Accepted Answer

A specialty product is a unique or high-end product that consumers are willing to go out of their way to obtain. The Nissan GT-R is a specialty product as it has a high horsepower, is relatively expensive, and has a distinct smoke gray color. Darren is willing to pay the high price to acquire a specialty product to impress his girlfriend.

Question 20

Toyota has made Corollas for many years.Each year it comes out with a new model of the same basic vehicle but with new features,a few upgrades,better sound system,and more computer systems to make the vehicle seem new.What was it doing to extend the life of the Corolla?
A) Product development
B) Product deletion
C) Line extension
D) Product modification

Accepted Answer

Toyota was using product modification to extend the life of the Corolla by adding new features, upgrades, and computer systems to the basic vehicle each year, making it appear new and updated.

Quiz 12: Creating and Pricing Products That Satisfy Customers

Jersey's Smoothie Bar has decided to set its pricing structure based on an annual percentage of the amount earned as a result of financial investment as a quantifiable means to gauge the success of their pricing.This pricing structure is known as

Zach is opening a tire store.He intends to set the price of tires based on determining the total cost of his purchase of one tire and then adding an amount to cover additional costs and profits.Zach is using ___ pricing.

Discounts given to customers who buy in large amounts are called ____ discounts.

​A major big box store allegedly adds 5 percent to the total cost of production or cost of purchasing items it sells in its store,then adds to this number the additional costs and profits in order to arrive at the product's selling price.The 5 percent represents the ___ amount.

​Lang Industries is introducing a new product and will use price skimming to set the price.Price skimming is

Janie,a farmer,sells a dozen ears of corn to her neighbor for $1/dozen.She sells a dozen ears of corn to the small market down the street for $.75/dozen.She sells corn to the chain grocery store in town for $.50/dozen.Janie is using

Discounts from the list price offered to intermediaries are called ____ discounts.

Amy is starting a new business and is confused about how to determine the price to set for her product.She comes to you for advice and you tell her,correctly,that the two factors that determine the price at which a product will sell are

During a department-head meeting at XYZ Corporation,the executives and department-heads were discussing all of the products the firm has to offer for sale.What were they referring to?

​____ is a pricing goal that is impossible to achieve.

XYZ Industries is in a business in which competition demands little variance in pricing so it prices its products to stay at the same level of business it has enjoyed in order to maintain price stability.This is known as

Discounts offered to encourage early payment of outstanding accounts are called ____ discounts.

Martin is experimenting with boosting the sales of the goods in his store by using odd-even pricing,multiple-unit pricing,and reference pricing.These are all examples of ___ pricing strategies.

Toyota has made Corollas for many years.Each year it comes out with a new model of the same basic vehicle but with new features,a few upgrades,better sound system,and more computer systems to make the vehicle seem new.What was it doing to extend the life of the Corolla?

A major big box store allegedly adds 5 percent to the total cost of production or cost of purchasing items it sells in its store,then adds to this number the additional costs and profits in order to arrive at the product's selling price.The 5 percent represents the ___ amount.

Lang Industries is introducing a new product and will use price skimming to set the price.Price skimming is

____ is a pricing goal that is impossible to achieve.