chapter 9

Question 1

________ is the sum of all the values that customers exchange for the benefits of having or using a product or service.
A) Payroll
B) Profit
C) Price
D) Cost
E) Salary

Answer 1

C) Price

Question 2

________ is the only element in the marketing mix that produces revenue.
A) Price
B) Place
C) Promotion
D) Product
E) Profit

Answer 2

A) Price

Question 3

Which of the following sets the price ceiling for a product’s pricing?
A) profits
B) product costs
C) consumer perceptions of value
D) elements of the product mix
E) competition

Answer 3

C) consumer perceptions of value

Question 4

Which of the following sets the price floor lower limit for a product’s pricing?
A) product costs
B) profits
C) competition
D) elements of the product mix
E) consumer perceptions of value

Answer 4

A) product costs

Question 5

) ________ uses buyers’ perceptions of what a product is worth as the key to pricing.
A) Customer value-based pricing
B) Target return pricing
C) Cost-plus pricing
D) Psychological pricing
E) Competition-based pricing

Answer 5

A) Customer value-based pricing

Question 6

A ________ pricing strategy for an offering begins with an assessment of customer needs and perceptions. Then a target price is set based on customer perceptions of worth.
A) cost-based
B) target costing
C) value-based
D) value-added
E) competition-based

Answer 6

C) value-based

Question 7

When establishing prices, it’s important for a manager to understand that “good value” is not the same as ________.
A) “low price”
B) “high price”
C) “bargain basement”
D) “perceived value”
E) “everyday value”

Answer 7

A) “low price”

Question 8

Retailers like Kohl’s and JCPenney carry less-expensive versions of established brand name products or new lower-price lines. They have adopted a ________ pricing strategy.
A) high-low
B) target return
C) cost-plus
D) good-value
E) market-skimming

Answer 8

D) good-value

Question 9

Providing extra amenities to differentiate and support high-priced products is referred to as ________ pricing.
A) high-low
B) value-added
C) target return
D) everyday low
E) cost-plus

Answer 9

B) value-added

Question 10

________ pricing involves setting prices based on the expenses involved in producing, distributing, and selling a product plus a fair rate of return for a company’s effort and risk.
A) Competition-based
B) Value-added
C) Cost-based
D) Good-value
E) Demand-based

Answer 10

C) Cost-based

Question 11

Rent, electricity, and executive salaries that do not vary with production or sales level are referred to as ________ costs.
A) fixed
B) variable
C) break-even
D) target
E) promotional

Answer 11

A) fixed

Question 12

Costs that change directly with the level of production are referred to as ________ costs.
A) fixed
B) variable
C) target
D) capital
E) payroll

Answer 12

B) variable

Question 13

Lovely Skin is establishing a pricing strategy for a new moisturizer. The total cost to produce each unit is $3.50. The company has decided to add a $1.50 markup, so the unit price to distributors will be $5. Lovely Skin is using a ________ approach to price the new moisturizer.
A) value-added
B) good-value
C) cost-plus
D) competitor-based
E) break-even

Answer 13

C) cost-plus

Question 14

________ pricing is an approach whereby a firm tries to determine the price at which it will break even or earn the profit it is seeking.
A) Competition-based
B) Target return
C) Cost-plus
D) Good-value
E) Value-added

Answer 14

B) Target return

Question 15

The Fashion Store, a new startup, sets product prices so that revenues will equal manufacturing and marketing costs. The pricing strategy used by the company is referred to as ________ pricing.
A) good-value
B) value-added
C) cost-plus
D) competition-based
E) target return

Answer 15

E) target return

Question 16

Which of the following statements about break-even analysis is most likely true?
A) It determines how customer-perceived value changes with value-added pricing.
B) It is a tool used to calculate fixed costs.
C) It is used to determine the maximum price that can be set on a product.
D) It is a tool marketers use to examine the relationship between supply and demand.
E) It fails to consider customer value and the relationship between price and demand.

Answer 16

E) It fails to consider customer value and the relationship between price and demand.

Question 17

Each PC produced by HP involves a cost of computer chips, wires, plastic, packaging, and other inputs. Although these costs tend to be the same for each unit produced, they are called ________ costs because the total changes based on the number of units produced.
A) fixed
B) variable
C) target
D) capital
E) payroll

Answer 17

B) Variable

Question 18

Los Amigos, a new Mexican restaurant, has set up shop across the street from Hot Tamales and More. Which of the following pricing strategies will Los Amigos likely use?
A) cost-plus
B) competition-based
C) break-even
D) good-value
E) target costing

Answer 18

B) competition-based

Question 19

Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company’s pricing approach is referred to as ________.
A) mass production
B) cost-plus pricing
C) target costing
D) value-added pricing
E) target return pricing

Answer 19

C) target costing

Question 20

In ________, the market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) a pure monopsony

Answer 20

A) pure competition

Question 21

There are more than 50 blueberry farmers in Shammonton, New Jersey, that grow, package, and distribute the same quality blueberries. An individual farmer cannot charge more than the going market price per unit without the risk of losing business to the other farmers. This is an example of ________.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) a black market

Answer 21

A) pure competition

Question 22

Under ________, the market consists of many buyers and sellers trading over a range of prices rather than a single market price.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) a pure monopsony

Answer 22

B) monopolistic competition

Question 23

Under ________, the market consists of a few large sellers who are highly sensitive to each other’s pricing and marketing strategies.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) pure monopsony

Answer 23

C) oligopolistic competition

Question 24

The relationship between the price charged for a product and the resulting demand level can be shown in a(n) ________.

Answer 24

A) demand curve

Question 25

When demand hardly changes with a small change in the price of a product, the demand for the product is best described as ________.

Answer 25

C) inelastic

Question 26

Which of the following is an economic factor that affects the pricing decisions of a company?
A) market-penetration practices
B) top management decisions
C) promotional activities
D) reseller policies
E) interest rates

Answer 26

E) interest rates

Question 27

The Great Recession of 2008-2009 and the 2020-2021 COVID-19 pandemic caused many consumers to ________.
A) buy mainly food products
B) focus more on luxury goods
C) become more thrifty
D) spend more money than normal
E) limit their spending on clothing

Answer 27

C) become more thrifty

Question 28

As a resul¬t of the Great Recession of 2008-2009 and the 2020-2021 COVID-19 pandemic marketers have increased their focus on ________.
A) price elastic product sales
B) value-for-the-money pricing strategies
C) goods sold in oligopolistic markets
D) organizational pricing strategies
E) higher priced products in the marketing mix

Answer 28

B) value-for-the-money pricing strategies

Question 29

these is NOT one of those roles?
A) attracting new customers
B) retaining customer loyalty
C) prevent competitors from entering the market
D) create brand excitement
E) sell below cost to eliminate competitors

Answer 29

E) sell below cost to eliminate competitors

Question 30

________ reverses the usual process of first designing a new product, determining its cost, and then asking “Can we sell that?”
A) Target costing
B) Break-even analysis
C) Product mixing
D) Monopolizing
E) Price elasticity of demand

Answer 30

A) Target costing

Question 31

With each new generation of Apple iPhone, iPad, or Mac computer, new models start at a high price then work their way down as newer models are introduced. Apple initially uses a ________ strategy.
A) market-skimming
B) target costing
C) deceptive
D) market-penetration
E) predatory

Answer 31

A) market-skimming

Question 32

The first Target store opened in 1962. Its initial strategy was to set prices low to attract a large number of buyers quickly and win a large market share. This is referred to as ________.
A) market-skimming pricing
B) market-penetration pricing
C) value-added pricing
D) target costing
E) deceptive pricing

Answer 32

B) market-penetration pricing

Question 33

Which of the following conditions is most likely essential for implementing a successful market-skimming pricing strategy for a product?
A) The product’s quality and image must support its high price.
B) Lower-priced alternatives can enter the market easily.
C) Low prices promote more market growth than high prices.
D) The product’s price matches its manufacturing costs.
E) A low-price position of the product is maintained.

Answer 33

A) The product’s quality and image must support its high price.

Question 34

Which of the following conditions is most likely essential for implementing a successful market-skimming pricing strategy for a product?
A) The product’s quality and image must support its high price.
B) Lower-priced alternatives can enter the market easily.
C) Low prices promote more market growth than high prices.
D) The product’s price matches its manufacturing costs.
E) A low-price position of the product is maintained.

Answer 34

A) The product’s quality and image must support its high price.

Question 35

Which of the following conditions is most likely essential for implementing a successful market-penetration pricing strategy for a product?
A) The product’s quality supports its high price.
B) Alternative products can enter the market easily.
C) The market for the product is highly price sensitive.
D) Prices increase incrementally as sales volume increases.
E) Production costs rise with an increase in marketing efforts.

Answer 35

C) The market for the product is highly price sensitive.

Question 36

Posh Collections introduced a new watch to appeal to upscale consumers. The company will most likely use a(n) ________ strategy.
A) market-skimming pricing
B) market-penetration pricing
C) optional-product pricing
D) by-product pricing
E) allowance pricing

Answer 36

A) market-skimming pricing

Question 37

Firms should begin thinking about product pricing ________.
A) at the very beginning of the design process.
B) after the test market is finished
C) when mass production begins
D) when the design process is completed
E) when the distribution channels are fixed

Answer 37

A) at the very beginning of the design process.

Question 38

________ only makes sense if the product’s quality and image support a higher price and enough buyers want the product at that price.
A) Market-penetration pricing
B) Market-skimming pricing
C) Optional-product pricing
D) By-product pricing
E) Allowance pricing

Answer 38

B) Market-skimming pricing

Question 39

NerdHerd Electronics sells three different sizes of televisions at three different prices. In this case, the company’s pricing strategy is referred to as ________ pricing.
A) product line
B) optional-product
C) by-product
D) product bundle
E) captive-product

Answer 39

A) product line

Question 40

Computer World sells laptops separately from accessory products like docking stations, anti-virus software, and external hard drives. This is referred to as ________ pricing.
A) product bundle
B) optional-product
C) market-penetration
D) by-product
E) product line

Answer 40

B) optional-product

Question 41

Establishing prices for razor blades that must be used with a razor blade system is known as ________ pricing.
A) by-product
B) market-penetration
C) product line
D) product bundle
E) captive-product

Answer 41

E) captive-product

Question 42

How do firms that use captive-product pricing make up for the low prices of their main products?
A) They reduce the cost of the captive products.
B) They provide the captive products as freebies.
C) They set high markups on the captive products.
D) They increase the price of the main products.
E) They offer the captive products and main products together at a reasonable price.

Answer 42

C) They set high markups on the captive products.

Question 43

Netcorp, an Internet service provider, charges its users a fixed rental fee for its basic package, which has a download limit. If a user exceeds this download limit, an additional fee is charged for every download. In this case, the firm’s pricing strategy is referred to as ________ pricing.
A) by-product
B) two-part
C) optional-product
D) segmented
E) promotional

Answer 43

B) two-part

Question 44

Salon Du Jour offers special combination packages at a reduced price. Separately, a haircut is $30 and a conditioning treatment is $35. But the combo price is $50. This is referred to as ________ pricing.
A) by-product
B) product bundle
C) captive-product
D) optional-product
E) product line

Answer 44

B) product bundle

Question 45

Microsoft offers a full line of Surface tablets, laptops, and PCs at various prices depending on the chosen configuration. This is referred to as ________ pricing.
A) by-product
B) product bundle
C) captive-product
D) optional-product
E) product line

Answer 45

E) product line

Question 46

) Roberto ordered his new Ford vehicle with a premium sound system and upgraded tires and rims. Ford will set the car’s price using ________ pricing.
A) by-product
B) product bundle
C) captive-product
D) optional-product
E) product line

Answer 46

D) optional-product

Question 47

Nintendo sells its Switch video game consoles for slightly more than it costs to make the units. However, Nintendo expects to make up for the thin margins by selling higher margin video games. This is referred to as ________ pricing.
A) by-product
B) product bundle
C) captive-product
D) optional-product
E) product line

Answer 47

C) captive-product

Question 48

Which group is most likely offered functional discounts by manufacturers?
A) trade-channel members that perform sales tasks
B) consumers who buy products in large quantities
C) buyers who pay their bills before the due date
D) buyers who purchase merchandise out of season
E) retailers that participate in advertising programs

Answer 48

A) trade-channel members that perform sales tasks

Question 49

The National Tree Company offers resellers half-price reductions on artificial Christmas trees if they purchase them in July. This is an example of a ________.
A) functional discount
B) seasonal discount
C) promotional allowance
D) trade-in allowance
E) quantity discount

Answer 49

B) seasonal discount

Question 50

Vac ‘N’ Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine. This is an example of a ________.
A) functional discount
B) cash discount
C) seasonal discount
D) trade-in allowance
E) by-product allowance

Answer 50

D) trade-in allowance

Question 51

When Nabisco offers to cover half the cost of all local advertising for supermarkets that sell Oreo Cookies, the company is granting ________.
A) cash discounts
B) seasonal discounts
C) quantity discounts
D) promotional allowances
E) trade-in allowances

Answer 51

D) promotional allowances

Question 52

Metro Museum has different admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________ pricing.
A) time-based
B) location-based
C) customer-segment
D) by-product
E) product form

Answer 52

C) customer-segment

Question 53

Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, even though each seat costs the same for the owners of the stadium. What is this form of pricing called?
A) location-based pricing
B) market-skimming pricing
C) product-form pricing
D) time-based pricing
E) market-penetration pricing

Answer 53

A) location-based pricing

Question 54

Movie theaters charge matinee pricing during the daytime, and resorts give weekend and seasonal discounts. This is illustrative of a ________ pricing strategy.
A) product form
B) market-penetration
C) market-skimming
D) time-based
E) value-added

Answer 54

D) time-based

Question 55

Pricing a product based on consumers’ reference prices is referred to as ________ pricing.
A) geographical
B) psychological
C) allowance
D) by-product
E) captive-product

Answer 55

B) psychological

Question 56

Consumers rely less on price to judge the quality of a product when they ________.
A) lack information about the product
B) are unable to research the product
C) have prior experience with the product
D) are unable to judge the quality of the product
E) rely on cues from sellers to differentiate a high or low price

Answer 56

C) have prior experience with the product

Question 57

________ prices are carried in buyers’ minds and used when looking at a given product.
A) Captive-product
B) Reference
C) Promotional
D) Geographical
E) Dynamic

Answer 57

B) Reference

Question 58

What type of pricing is being used when a company temporarily prices its products below the list price to create buying excitement and urgency?
A) segmented pricing
B) psychological pricing
C) geographical pricing
D) promotional pricing
E) dynamic pricing

Answer 58

D) promotional pricing

Question 59

When a manufacturer offers a ________, a customer buys a product from a manufacturer’s dealer within a specified time period, and the manufacturer then sends the customer a check.
A) cash rebate
B) quantity discount
C) promotional allowance
D) flash sale
E) functional discount

Answer 59

A) cash rebate

Question 60

Which of the following pricing strategies charges the same price plus freight to all customers, regardless of their location?
A) basing-point pricing
B) freight-absorption pricing
C) FOB-origin pricing
D) zone pricing
E) uniform-delivered pricing

Answer 60

E) uniform-delivered pricing

Question 61

Which of the following pricing strategies is the opposite of FOB-origin pricing?
A) basing-point pricing
B) dynamic pricing
C) uniform-delivered pricing
D) freight-absorption pricing
E) zone pricing

Answer 61

C) uniform-delivered pricing

Question 62

Wilkinson & Company sells plumbing supplies across the United States. Wilkinson uses Chicago as its central location for determining freight costs regardless of the city from which products are actually shipped. For example, a Dallas customer pays the freight cost from Chicago to Dallas even if the goods are shipped from Dallas. Wilkinson most likely uses ________ pricing.
A) basing-point
B) FOB-origin
C) freight-absorption
D) zone
E) reference

Answer 62

A) basing-point

Question 63

Computer Works is a computer accessories manufacturer based in Brazil. All customers in South America pay the same freight charge, $20, when they order products from the company. All customers in North America pay a freight charge of $50. The company’s pricing strategy is referred to as ________ pricing.
A) basing-point
B) FOB-origin
C) freight-absorption
D) zone
E) uniform-delivered

Answer 63

D) zone

Question 64

The Vitamin Shoppe sells natural vitamins and supplements. Product prices are adjusted frequently to meet the needs of individual customers. For example, long-time customers receive discounts. This strategy is most likely an example of ________ pricing.
A) zone
B) competition-based
C) dynamic
D) basing-point
E) penetration

Answer 64

C) dynamic

Question 65

Which of the following would most likely trigger a price increase?
A) cost inflation
B) reduced demand
C) cheaper alternatives
D) reduced expenses
E) overproduction

Answer 65

A) cost inflation

Question 66

________ is a core element of our free-market economy.
A) Cost substitution
B) Price competition
C) Deceptive pricing
D) Predatory pricing
E) Inflationary pricing

Answer 66

B) Price competition

Question 67

) ________ is illegal in the U.S.
A) Cost inflation
B) Price competition
C) Offering cheaper alternatives
D) Price-fixing
E) By-product pricing

Answer 67

D) Price-fixing

Question 68

The Sherman Act, Clayton Act, and Robinson-Patman Act are all federal laws that were initially adopted to curb the formation of ________.
A) monopolies
B) oligopolies
C) competitive markets
D) international markets
E) limited partnerships

Answer 68

A) monopolies

Question 69

________ pricing refers to selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.
A) Oligopolistic
B) Captive
C) Dynamic
D) Zone
E) Predatory

Answer 69

E) Predatory