Marketing, 14e (Kerin)
1) Amazon wanted lower retail prices for e-books to
A) lower royalties to authors.
B) eliminate distributors.
C) raise prices overall for printed books.
D) undermine its rival, Nook.
E) build its e-book business.
2) To accommodate the changes in the book selling market, publishers changed their pricing
approach so that
A) rebates could be paid to the bookstores.
B) readers would pay more so that distributors would continue to profit.
C) distributors would no longer get a commission on every e-book sold.
D) distributors would get a commission on every e-book sold.
E) eventually e-books would be free to distribute.
3) With the introduction of e-books, distributors could still set their own retail prices, but with a
restriction. Distributors could set prices below a publisher’s retail list price so long as they
A) matched the commission received from a publisher.
B) exceeded the commission received from a publisher.
C) did not exceed the commission received from a publisher.
D) did not increase prices to the readers.
E) prevented discounts to competitors.
4) Which of the following is the step in setting a final price for a product that occurs immediately
after determining cost, volume, and profit relationships?
A) set list or quoted price
B) select an approximate price level
C) scan competitors for prices of similar products or services
D) estimate demand and revenue
E) identify pricing objectives and constraints
5) The key to setting a final price for a product is finding an approximate price level to use as a
reasonable starting point. Which of the following is one of four common approaches to selecting
an approximate price level?
A) demand-oriented
B) cause-oriented
C) revenue-oriented
D) stakeholder-oriented
E) distribution-oriented
6) Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box
A represents which approach?
A) cost-oriented
B) profit-oriented
C) competition-oriented
D) demand-oriented
E) results-oriented
7) Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box
B represents which approach?
A) cost-oriented
B) profit-oriented
C) competition-oriented
D) demand-oriented
E) results-oriented
8) Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box
C represents which approach?
A) cost-oriented
B) profit-oriented
C) competition-oriented
D) demand-oriented
E) results-oriented
9) Figure 14-2 above represents the four approaches to selecting an appropriate price level. Box
D represents which approach?
A) cost-oriented
B) profit-oriented
C) competition-oriented
D) demand-oriented
E) results-oriented
10) Which of the following statements about the price-setting process is most accurate?
A) When selecting a strategy for setting an initial price, it doesn’t matter which one you use as
long as you stick with it.
B) Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies
when choosing an approximate price level.
C) Demand-oriented pricing approaches rely heavily on competitors’ prices.
D) Skimming pricing is a competition-oriented pricing strategy.
E) Penetration pricing is the best pricing strategy for companies trying to meet the goals of a
profit-oriented pricing approach.
11) Demand-oriented approaches weigh factors that underlie expected ________ more heavily
than such factors as cost, profit, and competition when selecting a price level.
A) total revenue
B) stakeholder concerns
C) prevailing prices
D) product substitutes
E) customer tastes
12) All of the following are demand-oriented approaches to selecting an approximate price level
except which?
A) odd-even
B) yield management
C) cost-plus
D) bundle
E) prestige
13) Skimming pricing is considered to be a ________ approach to pricing.
A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented
14) Setting the highest initial price that customers really desiring the product are willing to pay
when introducing a new or innovative product is referred to as a(n)
A) skimming strategy.
B) penetration strategy.
C) price-lining strategy.
D) experience-curve pricing strategy.
E) prestige pricing strategy.
15) Skimming pricing refers to
A) setting the lowest initial price possible when introducing a new or innovative product in order
to “skim” sales from competitors.
B) setting the highest initial price that customers who really desire the product are willing to pay.
C) setting a low initial price on a new product to appeal immediately to the mass market.
D) the practice of replacing promotional allowances with higher manufacturer list prices.
E) setting a high price so that quality- or status-conscious consumers will be attracted to the
product and buy it.
16) Skimming pricing is a strategy that introduces a new or innovative product by
A) following a price elastic strategy.
B) creating multiple price points.
C) setting a high initial price.
D) setting a low initial price.
E) setting the price at the average of competitors’ prices.
17) There are several factors that predict when a skimming pricing policy is likely to be most
effective, including situations in which
A) consumers tend to be price-sensitive.
B) enough prospective customers are willing to buy immediately at a high initial price to make
these sales profitable.
C) it will be easier to set measurable sales unit goals.
D) a lower price will significantly reduce unit costs.
E) consumers perceive your product to be similar to other products in the market.
18) A skimming pricing policy is likely to be most effective when
19) A manufacturer of a portable digital HD camera is thinking of using a skimming pricing
strategy for its new product. Which of the following conditions would argue against using a
skimming pricing strategy for the camera?
A) There will be a large potential market, even if the product is sold at a high price.
B) Technological problems still exist for competitors; their products are not equivalent.
C) Increasing the volume sold reduces production costs substantially.
D) Consumers perceive a strong price-quality relationship for this product.
E) Many consumers in the target market are innovators.
20) The latest in appliance technology allows your refrigerator to send messages to your
smartphone and even photos of the interior to remind you of what you need to pick up at the
store. Taking advantage of strong consumer demand for technology-enabled products, marketers
set prices for these refrigerators at thousands above other models. These marketers are using a
________ pricing strategy.
A) skimming
B) penetration
C) prestige
D) price lining
E) bundle
21) The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in
line overnight so they could be one of the first to own this unique smartphone. Which pricing
strategy did Apple use to help recoup its costs for developing the smartphone?
A) penetration pricing
B) experience curve pricing
C) customary pricing
D) skimming pricing
E) target pricing
22) Penetration pricing is considered to be a ________ approach to pricing.
A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented
23) Penetration pricing refers to
A) charging different prices to different buyers for goods of like grade and quality.
B) setting the highest initial price that customers really desiring the product are willing to pay.
C) setting a low initial price on a new product to appeal immediately to the mass market.
D) setting a market price for a product or product class based on a subjective feel for the
competitors’ prices or market price.
E) setting prices a few dollars or cents under an even number.
24) The pricing strategy that is almost the exact opposite of skimming pricing is
A) target pricing.
B) penetration pricing.
C) price lining.
D) odd-even pricing.
E) prestige pricing.
25) Penetration pricing is intended to appeal to which market?
A) highly selective, quality-seeking consumers
B) price-insensitive markets
C) specialty product markets
D) the same markets as those targeted with a skimming pricing strategy
E) the mass market
26) Which of the following statements about penetration pricing is most accurate?
A) Penetration pricing is a profit-oriented approach to pricing.
B) Penetration pricing is a cost-oriented pricing method.
C) Penetration pricing encourages competitors to enter a market.
D) Penetration pricing is more effective in a price-sensitive market segment.
E) Penetration pricing usually precedes a skimming pricing.
27) Several factors indicate that a penetration pricing policy would most likely to be effective
when introducing a new product, including situations in which
A) lowering the price has only a minor effect on increasing the sales volume and reducing the
unit cost
B) the high initial price will not attract competitors
C) customers interpret the high price as signifying high quality
D) enough prospective customers are willing to buy immediately at the high initial price to make
these sales profitable
E) many segments of the market are price sensitive
28) A penetration pricing policy is most likely to be effective when
A) lowering the price has only a minor effect on increasing the sales volume and reducing the
unit cost.
B) the high initial price will not attract competitors.
C) a low initial price discourages competitors from entering the market.
D) customers interpret the high price as signifying high quality.
E) enough prospective customers are willing to buy immediately at the high initial price to make
these sales profitable.
29) In some cases, penetration pricing may follow which pricing strategy?
A) experience curve
B) target ROI
C) odd-even
D) above market
E) skimming
30) In some cases, penetration pricing may follow skimming pricing. The skimming pricing
would help ________ and the penetration pricing would help
A) increase market share; attract price-insensitive customers.
B) attract price-sensitive customers; increase market share.
C) recoup initial research and development costs; increase market share.
D) recoup initial research and development costs; improve firm reputation.
E) increase market share; attract price insensitive customers.
31) When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the
lowest price iPad for $499, Amazon was using a ________ pricing strategy.
A) skimming
B) price lining
C) BOGO
D) penetration
E) loss-leader
32) The manufacturer of a fat-free ice cream with the consistency and taste of regular ice cream
is thinking of using a penetration pricing strategy for its new product. Which of the following
conditions would argue against using a penetration pricing strategy?
A) The ice cream market demonstrates high levels of loyalty.
B) Economies of scale in production would be substantial.
C) Retailers are not willing to carry new brands of ice cream in the already overcrowded
category.
D) Once the initial price is set, it is nearly impossible to lower the price without alienating early
buyers.
E) Customers recognize the uniqueness of this patented production process.
33) In response to Duracell’s introduction of the Duracell Ultra battery, Energizer introduced an
Advanced Formula battery. But unlike Duracell, Energizer priced its batteries at a low initial
price, believing that consumers were too price sensitive to pay more in this category. In this case,
Energizer used
A) penetration pricing.
B) prestige pricing.
C) skimming pricing.
D) price lining.
E) cost-plus fixed-fee pricing.
34) Prestige pricing is considered to be a ________ approach to pricing.
A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented
35) Prestige pricing refers to
A) charging different prices to different buyers for goods of like grade and quality.
B) setting a low initial price on a new product to appeal immediately to the mass market odd-
even pricing.
C) setting a market price for a product or product class based on a subjective feel for the
competitors’ price or market price.
D) setting a high price so that quality- or status-conscious consumers will be attracted to the
product and buy it.
E) setting a price that is dictated by tradition, a standardized channel of distribution, or other
competitive factors.
36) Setting a high price so that quality- or status-conscious consumers will be attracted to the
product and buy it is referred to as
A) skimming pricing.
B) status pricing.
C) price lining.
D) value pricing.
E) prestige pricing.