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77) Solid Surface, a countertop store, will give customers a 10 percent discount if they pay their
bills in full in 20 days; however, after 20 days they do not receive a discount. This is an example
of a ________.
A) cash discount
B) trade discount
C) quantity discount
D) seasonal discount
E) promotional allowance
78) ________ provide an incentive to a channel member for performing some function in the
channel that benefits the seller, such as stocking a product or performing a product service.
A) Cash discounts
B) Quantity discounts
C) Trade discounts
D) Seasonal discounts
E) Promotional allowances
79) ________ are typically expressed as greatly extended invoice due dates.
A) Cash discounts
B) Trade discounts
C) Quantity discounts
D) Seasonal discounts
E) Promotional allowances
80) Veggie Vitality will send retailers a check if the retailer successfully includes its vegetable-
based smoothies in promotional efforts. Veggie Vitality uses ________ to incentivize retailers.
A) cash discounts
B) trade discounts
C) quantity discounts
D) seasonal discounts
E) promotional allowances
81) Which of the following free on board (FOB) pricings indicates that until the goods arrive at
the purchaser's location, title doesn't change hands and freight charges are the responsibility of
the seller?
A) FOB-destination
B) FOB-origin
C) FOB-factory
D) FOB-zone
E) FOB-market
82) Giovanni's Gems is a high-quality Italian leather goods store in Manhattan. Giovanni also
runs an Internet site where people can buy his products and he will charge the same delivery fee
to any location within the 48 contiguous states. Giovanni utilizes ________ pricing.
A) free on board (FOB)
B) uniform delivered
C) zone
D) psychological
E) product line
83) When shipping prices are dependent on geographic areas based on the distance from the
shipping location, it is considered ________ pricing.
A) free on board (FOB)
B) uniform delivered
C) zone
D) target return
E) psychological
84) ________ is the amount of price increase that can be taken without affecting customer
demand.
A) Just noticeable difference (JND)
B) Price skimming
C) Return on investment (ROI)
D) Reference pricing
E) Free on board (FOB)
85) ________ could result in overall higher prices for consumers since various competitors are
all pricing the same to maximize their profits.
A) Price-fixing
B) Price discrimination
C) Deceptive pricing
D) Reference pricing
E) Predatory pricing
86) Jameson purchased an alarm system for his car during a promotion. He considered the price
after the promotion to be very attractive. However, he later learned that the firm set an artificially
high reference price for the alarm system just before the promotion to make the advertised sale
price more attractive. Jameson just experienced ________.
A) price fixing
B) price discrimination
C) deceptive pricing
D) bait and switch
E) predatory pricing
87) When a seller advertises an item at an unbelievably low price to lure customers into a store,
and then refuses to sell the advertised item and instead pushes a similar item with a much higher
price and higher margin, the seller is participating in the illegal practice of ________.
A) price fixing
B) price discrimination
C) psychological pricing
D) bait and switch
E) predatory pricing
88) Companies that collude to set prices at a mutually beneficial high level are engaged in
________.
A) price discrimination
B) deceptive pricing
C) predatory pricing
D) price-fixing
E) bait and switch
89) A strategy to intentionally sell below cost to push a competitor out of a market, then raise
prices to new highs, is called ________.
A) price-fixing
B) price discrimination
C) deceptive pricing
D) bait and switch
E) predatory pricing
90) In the past, ________ allowed manufacturers to establish artificially high prices by limiting
the ability of wholesalers and retailers to offer reduced or discounted prices.
A) fair trade laws
B) minimum markup laws
C) the Robinson-Patman Act
D) the Consumer Goods Pricing Act
E) price discrimination
91) ________ require that a certain percentage markup be applied to all products.
A) Fair trade laws
B) Minimum markup laws
C) Partnership laws
D) State fair trade laws
E) Criminal laws
92) ________ refers to products sold at prices below cost to attract shoppers to a store.
A) Free on board (FOB)
B) Bait and switch
C) Price bundling
D) Loss leader
E) Prestige
93) Define the concept of cost leadership. Explain how a company might achieve cost leadership
and the primary benefits to be gained.
94) Define and discuss the pros and cons of three of the following pricing strategies: penetration
pricing, price skimming, target return on investment (ROI) pricing, competitor-based pricing,
and value pricing.
95) Explain the tactic of product line pricing and provide three examples of this strategy in the
marketplace today.
96) Explain step-by-step how average-cost pricing would be used to set the exact price of a
product. What is the primary risk associated with average-cost pricing?
Step 1: Calculate the total costs expected to produce the product.
Step 2: Forecast the number of units expected to be sold.
Step 3: Divide the total cost by the number of units to determine the average cost per unit.
Step 4: Add the desired profit margin to the average cost per unit to determine the average price
per unit.
97) Define the four types of channel discounts and provide an example of each.
98) You are a marketing manager and have determined that to meet your company's financial
objectives, you will need to increase the bottom line contribution of your product. What are three
creative approaches you might take beyond just considering a price increase?
99) Define price-fixing and differentiate horizontal price-fixing from vertical price-fixing. Give
an example of how price-fixing might manifest in the market.
