Question 1

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its batteries at a low initial price to attract the mass market.In this case,Energizer used

Accepted Answer

Energizer used penetration pricing by setting a low initial price to attract the mass market. This is a common strategy used to gain market share quickly and is often used when introducing new products or competing with existing products in a crowded market.

Question 2

A manufacturer using __________ is setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Accepted Answer

Prestige pricing is used when a manufacturer sets a high price for a product to convey a sense of luxury or exclusivity, thereby appealing to quality- or status-conscious consumers.

Question 3

In some cases,penetration pricing may follow which pricing strategy?

Accepted Answer

Penetration pricing is a pricing strategy where the price of the product is set low initially to attract customers and gain market share. It is often followed by a skimming pricing strategy where the price is gradually increased until it reaches the desired level. So, the correct answer is E, skimming pricing strategy.

Question 4

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

Penetration pricing is a strategy of setting a low price for a new product or service in order to attract a large number of consumers and gain market share. This strategy is most effective when there are many segments of the market that are price-sensitive, meaning that customers are highly responsive to changes in price. By setting a low initial price, businesses can attract these price-sensitive customers and gain traction in the market. This approach can also help discourage competitors from entering the market if they perceive that the low price is unsustainable or unprofitable.

Question 5

Figure 14-3 above shows a demand curve that slopes downward and to the right,then turns back on itself to the left.Which pricing approach does Figure 14-3 depict?

Accepted Answer

The demand curve in Figure 14-3 depicts a situation where the price of a product first decreases as quantity demanded increases, and then increases as quantity demanded continues to increase. This type of demand curve is typical of products that are considered luxury or prestigious goods, where consumers are willing to pay a premium price for the reputation, quality, or status associated with the product. This pricing approach is known as prestige pricing, where price is used as a signal of quality or exclusivity. Skimming pricing involves setting a high price for a new product with limited competition, penetration pricing involves setting a low price to enter a new market, price lining involves offering different products at different price points, and reflexive pricing involves adjusting prices based on changes in demand or cost. None of these pricing approaches accurately describes the demand curve in Figure 14-3.

Question 6

Figure 14-3 above is a graph that shows which pricing strategy?

Accepted Answer

The answer of Figure 14-3 above is a graph that...

Question 7

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499,Amazon was using a __________ pricing strategy.

Accepted Answer

Amazon was using a penetration pricing strategy, which involves setting a low price initially to gain market share and encourage adoption. They aimed to make up for the lower price through increased sales volume.

Question 8

A penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)a low initial price discourages competitors from entering the market;and (3)_________.

Accepted Answer

A penetration pricing strategy is effective when unit production and marketing costs fall dramatically as production volumes increase. This allows the company to set a low initial price, which can attract price-sensitive customers and discourage competitors from entering the market. As production volumes increase, the per-unit cost decreases, allowing the company to maintain profitability while keeping the price low.

Question 9

A penetration pricing policy is MOST LIKELY to be effective when: (1)many segments of the market are price sensitive; (2)__________;and (3)unit production and marketing costs fall dramatically as production volumes increase.

Accepted Answer

A low initial price can deter competitors from entering the market, making penetration pricing effective.

Question 10

In some cases,penetration pricing may follow skimming pricing.The skimming pricing would help __________ and the penetration pricing would help __________.

Accepted Answer

The answer of In some cases,penetration pricing may follow skimming...

Question 11

The movement from point B to point C in Figure 14-3 above shows

Accepted Answer

The answer of The movement from point B to point...

Question 12

Prestige pricing refers to

Accepted Answer

Prestige pricing refers to setting a high price to create the perception that the product is of high quality or status, and attracting consumers who are willing to pay a premium for such products. This pricing strategy is commonly used for luxury goods or premium brands.

Question 13

Prestige pricing is considered to be a __________ approach to pricing.

Accepted Answer

Prestige pricing is a demand-oriented approach as it is based on the customer's perception of the product's value and willingness to pay a higher price for a perceived higher quality or status.

Question 14

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold),the greeting card company was trying to appeal to a mass market that was price sensitive.Hallmark was using a __________ pricing strategy.

Accepted Answer

Penetration pricing is a strategy in which the price of a product is set low initially to attract a large number of customers, especially price-sensitive ones. This is exactly what Hallmark was doing by introducing a line of 99-cent cards to appeal to a mass market that was price sensitive.

Question 15

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

A penetration pricing policy aims to enter a market by offering a low initial price. This price discourages competitors as they find it difficult to match or beat the low price. This leads to the business establishing itself in the market without much competition, allowing it to increase prices later on. Therefore, a low initial price discouraging competitors from entering the market is most likely to be effective.

Question 16

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty dessert treat?

Accepted Answer

The answer of The manufacturer of a new kind of...

Question 17

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

A penetration pricing policy involves setting a low initial price to attract a large number of customers, with the aim of increasing market share and eventually raising the price. This strategy is most effective when unit production and marketing costs fall dramatically as production volumes increase, allowing the company to maintain profitability despite the low price. This is because the cost savings from increased production volumes can offset the lower profit margins from the lower prices.

Question 18

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Accepted Answer

Setting a high price to attract quality- or status-conscious consumers is known as prestige pricing.

Question 19

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum-mint mojito.The introductory price was low so that it quickly created loyal customers for the flavor.In this example,Wrigley used

Accepted Answer

Wrigley used penetration pricing by offering a low introductory price to quickly gain market share and create loyal customers for the new flavor.

Question 20

The movement from point A to point B in Figure 14-3 above shows

Accepted Answer

Prestige pricing involves setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.From points A to B,buyers see the lowering of price as a bargain and buy more;from points B to C,they become dubious about the quality and prestige and buy less.A marketing manager's pricing strategy here is to stay above price P₀,the initial price.

Quiz 14: Arriving at the Final Price

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its batteries at a low initial price to attract the mass market.In this case,Energizer used

A manufacturer using __________ is setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

In some cases,penetration pricing may follow which pricing strategy?

A penetration pricing policy is MOST LIKELY to be effective when

Figure 14-3 above shows a demand curve that slopes downward and to the right,then turns back on itself to the left.Which pricing approach does Figure 14-3 depict?

Figure 14-3 above is a graph that shows which pricing strategy?

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499,Amazon was using a __________ pricing strategy.

A penetration pricing policy is MOST LIKELY to be effective when: (1) many segments of the market are price sensitive; (2) a low initial price discourages competitors from entering the market;and (3) _________.

A penetration pricing policy is MOST LIKELY to be effective when: (1) many segments of the market are price sensitive; (2) __________;and (3) unit production and marketing costs fall dramatically as production volumes increase.

In some cases,penetration pricing may follow skimming pricing.The skimming pricing would help and the penetration pricing would help .

The movement from point B to point C in Figure 14-3 above shows

Prestige pricing refers to

Prestige pricing is considered to be a __________ approach to pricing.

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold) ,the greeting card company was trying to appeal to a mass market that was price sensitive.Hallmark was using a __________ pricing strategy.

A penetration pricing policy is MOST LIKELY to be effective when

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty dessert treat?

A penetration pricing policy is MOST LIKELY to be effective when

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum-mint mojito.The introductory price was low so that it quickly created loyal customers for the flavor.In this example,Wrigley used

The movement from point A to point B in Figure 14-3 above shows