Quiz 6

Question 1

Strategy planning for Price is concerned with:

Answer 1

to whom and when discounts and allowances will be given.
how transportation costs will be handled.
how flexible prices will be.
at what level prices will be set over the product life cycle.

Question 2

______ is what a customer must give up to get the benefits offered by the rest of a firm’s marketing mix.

Answer 2

Price

Question 3

Pricing objectives should flow from, and fit in with,

Answer 3

company-level and marketing objectives.

Question 4

A marketing manager may choose a pricing objective that is:

Answer 4

sales oriented.
status-quo oriented.
profit oriented.

Question 5

Prices are “administered” when:

Answer 5

firms consciously set their own prices.

Question 6

A one-price policy means:

Answer 6

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

Question 7

A flexible-price policy means offering

Answer 7

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

Question 8

A _____ price policy tries to sell the top of the demand curve at a high price before aiming at more price-sensitive customers.

Answer 8

skimming

Question 9

Trying to sell a firm’s new product to a large market at one low price is known as:

Answer 9

a penetration pricing policy.

Question 10

Using temporary price cuts to speed a producer’s new product into a market is known as:

Answer 10

introductory price dealing.

Question 11

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

Answer 11

Basic list prices

Question 12

______ are reductions from list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himself.

Answer 12

Discounts

Question 13

Which of the following statements about rebates is True?

Answer 13

Rebates are refunds paid to consumers after a purchase.
Rebates ensure that the final consumer gets a producer’s price reduction.
Many consumers purchase a product because a rebate is offered but then never request the refund.
Many consumers think that some sellers make it an unnecessary hassle to claim a rebate.

Question 14

If a producer wants title to pass to a buyer immediately–but still wants to pay the freight bill — the invoice should read:

Answer 14

F.O.B. seller’s factory–freight prepaid.

Question 15

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

Answer 15

Value pricing

Question 16

Unfair trade practice acts:

Answer 16

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

Question 17

Price fixing means:

Answer 17

competitors getting together to raise, lower, or stabilize prices.

Question 18

According to the text, the two basic approaches to price setting are

Answer 18

cost-oriented and demand-oriented price setting.

Question 19

Most firms in the business world set their prices using:

Answer 19

cost-oriented price setting.

Question 20

A _____ is a dollar amount added to the cost of products to get the selling price.

Answer 20

markup

Question 21

The text says “markup” means percent of:

Answer 21

selling price–unless otherwise stated.

Question 22

The sequence of markups firms use at different levels in a channel is referred to as a(n)

Answer 22

markup chain.

Question 23

Which of the following is a TRUE statement about markups?

Answer 23

A firm can lose money even when using a high markup.

Question 24

High markups on a product could lead to low profits when

Answer 24

sales dip due to high prices

Question 25

Setting prices by adding a “reasonable” markup to a firm’s average cost is called:

Answer 25

average-cost pricing.

Question 26

Average-cost pricing:

Answer 26

May be very profitable if actual sales are higher than expected.
may lose money for the firm if actual sales are less than expected.
does not take demand into account in setting prices.

Question 27

Total fixed cost:

Answer 27

is the sum of those costs which do not change in total no matter how much is produced.

Question 28

The sum of those changing expenses which are closely related to output is called:

Answer 28

total variable cost.

Question 29

At break-even point (BEP),

Answer 29

the firm’s total sales will equal its total production.

Question 30

The best pricing tool marketers have for looking at costs and revenue at the same time is

Answer 30

marginal analysis.

Question 31

The main advantage that marginal analysis has over most other popular pricing methods is that it:

Answer 31

Takes into account both costs and demand.

Question 32

Customers are likely to be more price sensitive when:

Answer 32

the total expenditure is great.
they have to pay the bill themselves.
the end benefit isn’t very significant.

Question 33

Which of the following observations concerning a “reference price” is true?

Answer 33

Demand may increase if a firm’s price is lower than a customer’s reference price.

Question 34

Which of the following statements is true?

Answer 34

Leader pricing means setting some very low prices to get customers into retail stores.
Bait pricing is setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store.
Price lining is setting a few price levels for a product line and then marking all items at these prices.
Prestige pricing is setting a rather high price to suggest high quality or high status.

Question 35

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

Answer 35

Bid pricing

Question 36

A good marketing plan sets the frame work for effective _____________ and control.

Answer 36

implementation

Question 37

_______is the feedback process that helps the marketing manager learn how ongoing plans are working and how to plan for the future.

Answer 37

control

Question 38

With respect to marketing control,

Answer 38

faster feedback can often be the basis for a competitive advantage

Question 39

The basic objectives of implementation are to do things

Answer 39

better.
faster.
at lower cost.

Question 40

Sales analysis is a

Answer 40

detailed breakdown of a company’s sales records.

Question 41

A._________ looks for exceptions or variations from planned performance.

Answer 41

performance analysis

Question 42

The best way to break down or analyze sales data is

Answer 42

any of these are correct depending on the situation.

Question 43

According to the ________, much good information is hidden in summary data.

Answer 43

iceberg principle

Question 44

Which of the following statements best describes the iceberg principle?

Answer 44

Problems in one area may be offset by good performance in other areas – and thus the problems may not be visible on the surface.

Question 45

__________are the two basic approaches to handling marketing costs allocation problems.

Answer 45

The full-cost approach and the contribution-margin approach.

Question 46

A systematic, critical, and unbiased review and appraisal of the basic objectives and policies of the marketing function – and of the organization, methods, procedures, and people employed to implement the policies – is called a:

Answer 46

marketing audit.