ch 14 mkt pricing II part i

Question 1

To accommodate the changes in the book selling market, publishers changed their pricing approach so that
A) rebates could be paid to the bookstores.
B) readers would pay more so that distributors would continue to profit.
C) distributors would no longer get a commission on every e-book sold.
D) distributors would get a commission on every e-book sold.
E) eventually e-books would be free to distribute.

Answer 1

D) distributors would get a commission on every e-book sold.

Question 2

Which of these is the step in setting a final price for a product that occurs immediately after determining cost, volume, and profit relationships?
A) set list or quoted price
B) select an approximate price level
C) scan competitors for prices of similar products or services
D) estimate demand and revenue
E) identify pricing objectives and constraints

Answer 2

B) select an approximate price level

Question 3

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Which of the following is one of four common approaches to selecting an approximate price level?
A) competition-oriented
B) cause-oriented
C) revenue-oriented
D) stakeholder-oriented
E) distribution-oriented

Answer 3

A) competition-oriented

Question 4

All of these are demand-oriented approaches to selecting an approximate price level except which?
A) odd-even
B) yield management
C) customary
D) bundle
E) prestige

Answer 4

C) customary

Question 5

Skimming pricing is considered to be a \_\_\_\_\_\_\_\_ approach to pricing.
A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented

Answer 5

A) demand-oriented

Question 6

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as
A) a skimming strategy.
B) a penetration strategy.
C) a price-lining strategy.
D) an experience-curve pricing strategy.
E) a prestige pricing strategy.

Answer 6

A) a skimming strategy.

Question 7

Skimming pricing is a strategy that introduces a new or innovative product by
A) following a price elastic strategy.
B) creating multiple price points.
C) setting a high initial price.
D) setting a low initial price.
E) setting the price at the average of competitors’ prices.

Answer 7

C) setting a high initial price.

Question 8

A manufacturer of a portable digital HD camera is thinking of using a skimming pricing strategy for its new product. Which of the following conditions would argue against using a skimming pricing strategy for the camera?
A) There will be a large potential market, even if the product is sold at a high price.
B) Technological problems still exist for competitors; their products are not equivalent.
C) Increasing the volume sold reduces production costs substantially.
D) Consumers perceive a strong price-quality relationship for this product.
E) Many consumers in the target market are innovators.

Answer 8

C) Increasing the volume sold reduces production costs substantially.

Question 9

Penetration pricing is considered to be a \_\_\_\_\_\_\_\_ approach to pricing.
A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented

Answer 9

A) demand-oriented

Question 10

The pricing strategy that is almost the exact opposite of skimming pricing is
A) target pricing.
B) penetration pricing.
C) price lining.
D) odd-even pricing.
E) prestige pricing.

Answer 10

B) penetration pricing.

Question 11

Penetration pricing is intended to appeal to which market?
A) highly selective, quality-seeking consumers
B) price-insensitive markets
C) specialty product markets
D) the same markets as those targeted with a skimming pricing strategy
E) the mass market

Answer 11

E) the mass market

Question 12

Which of these statements about penetration pricing is most accurate?
A) Penetration pricing is a profit-oriented approach to pricing.
B) Penetration pricing is a cost-oriented pricing method.
C) Penetration pricing often encourages competitors to enter a market.
D) Penetration pricing is more effective for a price-sensitive market segment.
E) Penetration pricing usually precedes a skimming pricing.

Answer 12

D) Penetration pricing is more effective for a price-sensitive market segment.

Question 13

When Amazon introduced the latest Kindle Fire tablet at $49.99 and the average price of competitive models was $323, Amazon was using a \_\_\_\_\_\_\_\_ pricing strategy.
A) skimming
B) price lining
C) BOGO
D) penetration
E) loss-leader

Answer 13

D) penetration