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294) Predatory pricing is
A) an arrangement a manufacturer makes with a reseller to handle only its products and not those
of a competitor.
B) the practice of charging different prices to different buyers for goods of like grade and
quality.
C) the practice of charging a very low price for a product with the intent of driving competitors
out of business.
D) a conspiracy among firms to set prices for a product or service.
E) a seller's requirement that the purchaser of one product must also buy another product in the
line.
295) Predatory pricing is
A) most effective in the growth stage of the product life cycle.
B) a popular technique preferred by online businesses.
C) illegal but often difficult to prosecute.
D) most effective in business-to-business marketing.
E) one of the most widely used pricing practices for professional marketers.
296) In the 1980s, typical round-trip coach airfares from the East Coast to London were more
than $500. Then Freddie Laker introduced the People's Express, a competing service into
Newark at $350. Major airlines matched his price—and continued to do so until they drove
People's Express out of business. Then prices shot back up to over $500. A lawsuit filed under
the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a
competitor. The experience of People's Express is an example of ________ on the part of the
major airlines.
A) price fixing
B) price discrimination
C) deceptive pricing
D) predatory pricing
E) pricing constraints
297) Bob Biltmore owns dozens of very successful print shops throughout the Midwest.
Biltmore's shops specialize in low-cost black-and-white copies and feature user-friendly
machines consumers can easily operate. In recent months, Biltmore has noticed many more
competitors in the areas where his stores are located. In an attempt to eliminate the competition,
Biltmore has decided to charge a very low price for his black-and-white copies, a price so low
his competitors will be forced out of business. After the competition has been driven out,
Biltmore plans to raise the price of his copies. Biltmore is planning to engage in the illegal and
unethical practice of
A) price fixing.
B) price inflation.
C) deceptive pricing.
D) competitive pricing.
E) predatory pricing.
298) Which of the following statements about the legal and regulatory aspect of pricing is most
accurate?
A) The Robinson-Patman Act deals with predatory pricing.
B) The Consumer Goods Pricing Act is the only federal legislation that deals directly with
pricing issues.
C) The Sherman Act deals only with vertical price fixing.
D) The Federal Trade Commission Act deals with predatory pricing, deceptive pricing, and
geographical pricing issues.
E) The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price
discrimination.
299) Carmex uses all of the following approaches to setting the price of its products except
which?
A) profit-oriented
B) competition-oriented
C) cost-oriented
D) elasticity-oriented
E) demand-oriented
300) A single jar of original formula Carmex has different prices for the product depending upon
where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or
Target, and between $1.59 and $1.79 in drug and food retailers such as Walgreens and Kroger).
This pricing strategy is called
A) standard pricing.
B) odd-even pricing.
C) customary pricing.
D) everyday lower pricing.
E) at-market pricing.
301) What are the six major steps involved in setting prices?
302) What are three special adjustments to the list or quoted price?
303) There are four common approaches to selecting an approximate price level. List them and
provide a brief description for each one.
304) List four of the eight demand-oriented approaches to selecting an approximate price level
and define what they are.
305) When is skimming pricing an effective strategy?
306) What are the conditions favoring the use of penetration pricing?
307) Explain why odd-even pricing may be successful.
308) Give an example of yield management pricing and explain why it is used.
309) What is standard markup pricing and when would it be used?
310) What is experience curve pricing and how does it relate to marketing strategies?
311) What is loss-leader pricing and why do retailers use it?
312) What is the difference between a fixed-price policy and a dynamic pricing policy?
313) What are the four kinds of discounts that are especially important in marketing pricing
strategy?
314) What is the difference between noncumulative and cumulative quantity discounts?
315) Why do manufacturers offer seasonal discounts to channel members? Provide an example
of how one would work.
316) What are the two general methods for quoting prices related to transportation costs? Explain
how each is used.
317) Define the four kinds of uniform delivered pricing methods and give an example of the use
of each.
318) The Consumer Goods Pricing Act, the Sherman Act, the Federal Trade Commission Act,
and the Robinson-Patman Act all address different aspects of deceptive pricing. Select one
example for each act and explain which aspects of the practice would be considered illegal.
319) What are the five most common deceptive pricing practices? Give an example of each one.
320) Explain the deceptive pricing practice known as bait and switch.
321) Explain predatory pricing.
322) Which of the four approaches does Carmex use to set prices for its products?
323) What is the difference between an EDLP retailer and a high-low retailer? Why does
Carmex charge them a different price?
