Chapter 11

Question 1

…. sets high initial prices to “skim” revenue layers from the market.

Answer 1

Market-skimming pricing

Question 2

…. involves setting a low price for a new product in order to attract a large number of buyers and a large market share.

Answer 2

Market-penetration pricing

Question 3

…. takes into account the cost differences between products in the line, customer evaluations of their features, and competitors’ prices.

Answer 3

Product line pricing

Question 4

…. takes into account optional or accesory products along with the main product.

Answer 4

Optional product pricing

Question 5

…. sets prices of products that must be used along with the main product.

Answer 5

Captive product pricing

Question 6

…. discount list prices by providing promotional money in return for an agreement to feature the manufacturer’s products in some way.

Answer 6

Allowences

Question 7

For segmented pricing to be effective:

Answer 7

• Market must be segmentable
• Segments must show different degrees of demand
• Costs of segmenting cannot exceed the extra revenue
• Must be legal

Question 8

…. are prices that buyers carry in their minds and refer to when they look at a given product.

Answer 8

Reference prices

Question 9

…. is characterized by temporarily pricing below the list price, and sometimes even below cost, to increase short-run sales.

Answer 9

Promotional pricing

Question 10

…. prevents unfair price discrimination by ensuring that the seller offer the same price terms to customers at a given level of trade.

Answer 10

Robinson-Patman Act

Question 11

… is when a manufacturer requires a dealer to charge a specific retail price for its product.

Answer 11

Retail (or resale) price maintenance