Chapter 16

Question 1

Target Return Objective:

Answer 1

Sets a specific level of profit as an objective.

Question 2

Profit Maximization Objective:

Answer 2

Seeks to get as much profit as possible.

Question 3

Status Quo Objectives:

Answer 3

Don’t rock the pricing boat objectives. Most common when the total market is not growing and managers are satisfied with their current market share and profits.

Question 4

Sales-Oriented Objective:

Answer 4

Seeks some level of unit sales, dollar sales, or share of market (without referring to profit).

Question 5

Nonprice Competition:

Answer 5

Aggressive action on one or more of the Ps other than price.

Question 6

Administered Prices:

Answer 6

Consciously set prices. (Instead of letting daily market forces decide their prices, most firms set their own prices)

Question 7

One-Price Policy:

Answer 7

Offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.

Question 8

Flexible-Price Policy:

Answer 8

Offering the same product and quantities to different customers at different prices.

Question 9

Introductory Price Dealing:

Answer 9

Temporary price cuts.

Question 10

Basic List Prices:

Answer 10

The prices final customers or users are normally asked to pay for products.

Question 11

Discounts:

Answer 11

Reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves.

Question 12

Quantity Discounts:

Answer 12

Discounts offered to encourage customers to buy in larger amounts.

Question 13

Cumulative Quantity Discounts:

Answer 13

Apply to purchases over a given period and the discount usually increases as the amount purchased increases.

Question 14

Noncumulative Quantity Discounts:

Answer 14

Apply only to individual orders.

Question 15

Seasonal Discounts:

Answer 15

Discounts offered to encourage buyers to buy earlier than present demand requires.

Question 16

Net:

Answer 16

Payment for the face value of the invoice is due immediately. Sometimes changed to net 10 or net 30, which means payment is due within 10 or 30 days of the date on the invoice.

Question 17

Cash Discounts:

Answer 17

Reductions in price to encourage buyers to pay their bills quickly.

Question 18

2/10, net 30:

Answer 18

The buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days, otherwise, the full face value is due within 30 days.

Question 19

Sale Price:

Answer 19

Temporary discount from the list price. Encourage immediate buying.

Question 20

Everyday Low Pricing:

Answer 20

Setting a low list price rather than relying on frequent sales, discounts, or allowances.

Question 21

Allowances:

Answer 21

Given to final consumers, business customers, or channel members for doing something or accepting less of something.

Question 22

Advertising Allowances:

Answer 22

Price reductions given to firms in the chanel to encourage them to advertise or otherwise promote the suppliers products locally.

Question 23

Stocking Allowances:

Answer 23

Given to an intermediary to get shelf space for a product.

Question 24

Push Money (or Prize Money) Allowances:

Answer 24

Given to retailers by manufacturers or wholesalers to pass on to the retailers’ salesclerks for aggressively selling certain items.

Question 25

Trade-In Allowance:

Answer 25

A price reduction given for used products when similar new products are bought.

Question 26

F.O.B.:

Answer 26

A transportation term meaning free on board some vehicle at some place. It means taht the seller pays the cost of loading the products onto some vehicle, then title to the products passes to the buyer.

Question 27

Zone Pricing:

Answer 27

Making an average freight charge to all buyers within specific geographic areas. The seller pays the actual freight charges and bills each customer for an average charge.

Question 28

Uniform Delivered Pricing:

Answer 28

Making an average freight charge to all buyers. A type of zone pricing.

Question 29

Freight-Absorption Pricing:

Answer 29

Absorbing freight cost so that a firm’s delivered price meets that of the nearest competitor.

Question 30

Value Pricing:

Answer 30

Setting a fair price level for a marketing mix that really gives the target market superior customer value.

Question 31

Unfair Trade Practice Acts:

Answer 31

Put a lower limit on prices, especially at the wholesale and retail levels.

Question 32

Dumping:

Answer 32

Pricing a product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market.

Question 33

Phony List Prices:

Answer 33

Prices customers are shown to suggest that the price has been discounted from list.

Question 34

Wheeler Lea Amendment:

Answer 34

Bans “unfair or deceptive acts in commerce.”

Question 35

Price Fixing:

Answer 35

Competitors getting together to raise, lower, or stabilize prices. Common and relatively easy, but completely illegal.

Question 36

Robinson-Patman Act:

Answer 36

Makes illegal any price discrimination if it injures competition.

Question 37

Price Discrimination:

Answer 37

Selling the same products to different buyers at different prices.