Question 1

Lipton makes several easy-to-prepare side dishes that all use macaroni shells.In promoting this product line,Lipton offers a 50-cents-off coupon that can be used for any of its macaroni-based mixes.Therefore,what must Lipton consider when pricing its mixes?

Accepted Answer

Lipton must consider joint costs when pricing its mixes because the macaroni shells are used in multiple products, and the costs of producing the shells cannot be easily allocated to each individual product.

Question 2

What can leader pricing be used to do?

Accepted Answer

Leader pricing is a pricing strategy where one or more products are priced lower than usual to attract customers to the store. By doing so, the store hopes that the customer will also purchase other products in addition to the leader product, ultimately increasing sales and revenue.

Question 3

The Terra Vista Airport is a small airport frequently used by people who love skydiving.To help keep costs in line,the airport now charges its customers a small parking fee.At one time,the cost of parking at the airport was included in the price of the jump.What is Terra Vista Airport using?

Accepted Answer

Terra Vista Airport is using unbundling, which is the practice of separating the components of a product or service and charging for each one separately. By charging customers a small parking fee, the airport is no longer including the cost of parking in the price of the jump. This allows the airport to keep costs in line and potentially offer lower prices to customers who do not need parking.

Question 4

The office supply store was selling two-drawer file cabinets for $20,which is a below-market price,to lure customers into the store in hopes that while they are in the store to buy a file cabinet they will also buy other items that have a much higher markup.What is the office supply store using?

Accepted Answer

The office supply store is using leader pricing, which involves setting a low price for a particular product to attract customers and increase sales of other, higher-margin products in the store. In this case, the store is offering the file cabinets at a below-market price to entice customers to come in and browse, with the hope that they will purchase other items as well.

Question 5

Which of the following factors can a manager IGNORE when deciding on prices for an entire product line?

Accepted Answer

When deciding on prices for an entire product line, a manager can ignore whether the buyer considers the brand or the price first. This factor is more relevant to individual purchasing decisions and marketing strategies rather than pricing strategies for a product line as a whole. Factors like product substitution, complementarity, and shared costs directly impact pricing strategies across a product line.

Question 6

Business-to-business salespeople often use a discounting practice that is often done routinely without much forethought.The goal is to heighten the demand for certain items in a product line.Which of the following is being described?

Accepted Answer

Price shading is a strategy used by salespeople to offer discounts on products or services, often without much forethought, with the aim of increasing demand for certain items in a product line.

Question 7

Kasha has decided to keep her new power boat in a "drystack" storage facility rather than in the water at a marina.The storage facility charges her a fee of $500 per year,plus $25 each time she calls ahead and asks the facility to put her boat in the water for the day or weekend.Which pricing tactic is the facility using?

Accepted Answer

The facility is charging a fixed annual fee of $500 plus an additional fee ($25) each time Kasha uses the facility's service (putting her boat in the water). This is an example of two-part pricing, where the customer pays a fixed fee for access to a service and then an additional fee for usage.

Question 8

Which of the following BEST describes delayed-quotation pricing?

Accepted Answer

Delayed-quotation pricing allows the final selling price to reflect cost increases incurred between the time the order is placed and the final delivery takes place. It does not require a seller to submit a bid after the closing date, prevent the competitor from submitting an earlier bid, or have any association with price-shading bidding.

Question 9

R.W.Hunt & Sons,a distributor of hunting bows and anything needed for hunting or target practice,has packaged a new range-finder scope with a package of paper targets at one low price.R.W.Hunt is selling the scope slightly below cost,but the paper targets are very profitable.Which pricing technique is R.W.Hunt using?

Accepted Answer

R.W.Hunt is using price bundling technique by combining a low-priced item (new range-finder scope) with a profitable one (paper targets) to increase the overall profit.

Question 10

What is the term for marketing two or more products in a single package for a special price?

Accepted Answer

Price bundling involves offering two or more products or services for a special price. This technique is commonly used by businesses to increase sales and provide added value for customers.

Question 11

If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains,and at even-numbered amounts to denote quality,what is he or she using?

Accepted Answer

The marketer is using psychological pricing, which refers to the use of pricing techniques to influence consumers' perceptions about a product's price or value. In this case, odd-numbered dollar amounts denote bargains because they look more affordable or discounted, while even-numbered amounts suggest higher quality because they look more precise and established. This pricing strategy capitalizes on consumers' psychological tendencies to associate certain numbers with certain meanings or values, and can be effective in attracting or retaining customers.

Question 12

OfficeMax,a retailer of office supplies,is selling a point-and-shoot digital camera,the printer and software needed to print photographs,and a starter package of photograph paper for $230.If purchased separately,the items would cost a total of $250.What has OfficeMax used?

Accepted Answer

OfficeMax has used price bundling, which is the practice of offering multiple products or services as a package deal for a lower price than they would cost separately. By offering a bundle of a digital camera, printer, software, and photo paper at a discounted price, OfficeMax is encouraging customers to purchase multiple items at once, which can increase overall sales and revenue.

Question 13

Which of the following allows for price increases based on the cost-of-living index or some other formula?

Accepted Answer

An escalator price clause allows for price increases based on a predetermined formula, such as the cost-of-living index.

Question 14

What is escalator pricing?

Accepted Answer

Escalator pricing is similar to delayed-quotation pricing as it involves adjusting prices based on changes in costs or other factors over time.

Question 15

Which of the following phrases accurately describes psychological pricing?

Accepted Answer

Psychological pricing is also called odd-even pricing because it involves setting prices at odd or even numbers, which can affect how consumers perceive the price and make them more likely to purchase. It is not the same as price shading, which involves setting different prices for different customers, and it may not be equally effective on all types of products. While it may appeal to economy-minded purchasers, this is not its sole aim.

Question 16

What can a marketing manager do to make demand for his or her product more inelastic?

Accepted Answer

Cultivating selected demand means targeting a specific market segment and creating a unique value proposition for them, which can make the product more differentiated and therefore less substitutable. This can lead to a more inelastic demand because customers are willing to pay a premium for a product that meets their specific needs. Options A, B, and D are not effective strategies to make demand more inelastic as they either do not create differentiation or eliminate existing differentiation.

Question 17

Why do consumers sometimes prefer two-part pricing?

Accepted Answer

Consumers prefer two-part pricing because it allows them to pay a fixed fee for access and then pay per use, which is beneficial when they are uncertain about how much they will use the services or activities, such as at amusement parks.

Question 18

What can a marketing manager do to make demand for his or her product more inelastic?

Accepted Answer

Changing the package design can differentiate the product, making it more appealing and less substitutable, thus making demand more inelastic.

Question 19

What are extra fees paid by consumers for violating the terms of purchase agreements?

Accepted Answer

Consumers may face penalties or fines for violating the terms of purchase agreements, such as returning a product late or in damaged condition. These penalties are known as consumer penalties. Financial judgments (A) relate to court orders for the payment of debts or damages, punitive fees (C) are charges designed to punish rather than compensate, and decoy fees (D) are misleading charges designed to make the overall cost of a purchase seem lower than it actually is.

Question 20

Which of the following pricing methods can be used to build market share during a recession?

Accepted Answer

Bundling can be an effective pricing method to build market share during a recession because it allows customers to receive multiple products or services at a lower overall price. This can attract cost-conscious customers and help to differentiate the business from competitors.

Quiz 17: Setting the Right Price

Lipton makes several easy-to-prepare side dishes that all use macaroni shells.In promoting this product line,Lipton offers a 50-cents-off coupon that can be used for any of its macaroni-based mixes.Therefore,what must Lipton consider when pricing its mixes?

What can leader pricing be used to do?

The Terra Vista Airport is a small airport frequently used by people who love skydiving.To help keep costs in line,the airport now charges its customers a small parking fee.At one time,the cost of parking at the airport was included in the price of the jump.What is Terra Vista Airport using?

The office supply store was selling two-drawer file cabinets for $20,which is a below-market price,to lure customers into the store in hopes that while they are in the store to buy a file cabinet they will also buy other items that have a much higher markup.What is the office supply store using?

Which of the following factors can a manager IGNORE when deciding on prices for an entire product line?

Business-to-business salespeople often use a discounting practice that is often done routinely without much forethought.The goal is to heighten the demand for certain items in a product line.Which of the following is being described?

Which of the following BEST describes delayed-quotation pricing?

What is the term for marketing two or more products in a single package for a special price?

If a marketer decides to price goods at odd-numbered dollar amounts to denote bargains,and at even-numbered amounts to denote quality,what is he or she using?

OfficeMax,a retailer of office supplies,is selling a point-and-shoot digital camera,the printer and software needed to print photographs,and a starter package of photograph paper for $230.If purchased separately,the items would cost a total of $250.What has OfficeMax used?

Which of the following allows for price increases based on the cost-of-living index or some other formula?

What is escalator pricing?

Which of the following phrases accurately describes psychological pricing?

What can a marketing manager do to make demand for his or her product more inelastic?

Why do consumers sometimes prefer two-part pricing?

What can a marketing manager do to make demand for his or her product more inelastic?

What are extra fees paid by consumers for violating the terms of purchase agreements?

Which of the following pricing methods can be used to build market share during a recession?