117. Breyer’s produces a variety of ice cream flavors and of varying qualities. The higher quality ice cream varieties are
priced higher than the basic ones. Breyer’s is using ____ to price its ice cream.
a. captive pricing
b. price baiting
c. premium pricing
d. bait pricing
e. differential pricing
118. When a company that produces computer printers prices them low, but the ink required to operate the printer is
priced higher per relative usage, it is using:
a. bait pricing.
b. premium pricing
c. penetration pricing.
d. price lining.
e. captive pricing.
Chapter 12 – Pricing Concepts and Management
119. When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as:
a. prestige pricing.
b. price lining.
c. customary pricing.
d. odd-even pricing.
e. ethical pricing.
120. The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called:
a. price lining.
b. odd-even pricing.
c. price skimming.
d. prestige pricing.
e. customary pricing.
Chapter 12 – Pricing Concepts and Management
121. When a satellite dish company uses bundling to combine phone, dish, and broadband Internet access prices, it is
attempting to influence a consumer’s perception of price to make a product’s price more attractive and reduce
“sticker shock.” This is an example of using a ____ pricing strategy.
a. competition-based
b. cost-based
c. promotional
d. competitive
e. psychological
122. All of the following are psychological techniques except:
a. customary pricing.
b. multiple-unit pricing.
c. reference pricing.
d. odd-number pricing.
e. negotiated pricing.
Chapter 12 – Pricing Concepts and Management
123. Reference pricing is:
a. listing the manufacturer’s suggested retail price on the price tag along with the store’s lower price.
b. mentioning the price that other retailers charge for the same product on the display for the product.
c. using a consumer’s internal perceptions of what the appropriate price should be to help price a firm’s
products.
d. pricing a product at a moderate level and positioning it next to a more expensive model or brand.
e. using prices in advertising so that customers will have a point of reference when they come to the retail
facility.
124. A Macy’s manager designs the casual clothing department such that one of Macy’s private label pairs of jeans,
pricedat$24.99,ispositionednexttoanationalbrandofjeans,suchasLevi’s,pricedat$39.99.Whichofthe
following strategies is the manager attempting to accomplish?
a. Everyday low prices strategy
b. Odd-even pricing strategy
c. Prestige pricing strategy
d. Special-event pricing strategy
e. Reference pricing strategy
Chapter 12 – Pricing Concepts and Management
125. Bundle pricing is perceived to be of value by customers because:
a. they reduce or eliminate the use of frequent short-term price reductions.
b. they prefer buying a combination of products in a single transaction, which saves time, effort, and money.
c. the companies selling the products can sell them at a lower price because their costs of packaging are lower.
d. the prices are coordinated with advertising or sales promotions.
e. they can purchase items that are consumed frequently in larger quantities.
126. When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package,
their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is
an example of the use of:
a. multiple-unit pricing.
b. bundle pricing.
c. prestige pricing.
d. price lining.
e. price packaging.
Chapter 12 – Pricing Concepts and Management
127. Price leaders, comparison discounting, and special-event pricing are examples of:
a. psychological pricing.
b. professional pricing.
c. product-line pricing.
d. premium pricing
e. promotional pricing.
128. If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase
other items at regular prices, the grocer is using:
a. reference pricing.
b. a price leader.
c. special-event pricing.
d. comparison discounting.
e. professional pricing.
Chapter 12 – Pricing Concepts and Management
129. A product is a price leader when:
a. it is sold at the highest price.
b. its price maximizes profits.
c. an increase or decrease in price leads to increased revenue or lower costs.
d. it is sold at a lower cost in the hope that sales of other products will increase.
e. its price leads the industry in sales.
130. To attract customers into a store, Safeway advertises its milk at a lower cost, hoping that customers will purchase
other groceries as well. This pricing strategy is called:
a. price lining.
b. special-event pricing.
c. differential pricing.
d. comparison discounting.
e. price leader pricing.
Chapter 12 – Pricing Concepts and Management
131. Which of the following pricing strategies most likely results in a retailer losing money on the product?
a. Price leader pricing
b. Psychological pricing
c. Penetration pricing
d. Special-event pricing
e. Ethical pricing
132. ChrisisplanningthreesalesduringthethirdquarteroftheyearatToysR’Us.Thefirstisatthebeginningofthe
school year, the second is the week before Halloween, and the third is Black Friday. These sales would be
considered to be:
a. psychological pricing.
b. calendar discounting.
c. sales promotion pricing.
d. special-event pricing.
e. captive pricing.
Chapter 12 – Pricing Concepts and Management
133. Showing a product’s price along with its previous price, the price of a competing brand, or the price at another retail
outlet is called:
a. competition-based pricing.
b. reference pricing.
c. comparison discounting.
d. captive pricing.
e. psychological pricing.
134. The manager at Target puts a sign up next to a Samsung audio system that reads, “Only $299.99! $60 less than at
Best Buy.” This is an example of:
a. random discounting.
b. periodic discounting
c. comparison discounting.
d. penetration pricing.
e. everyday low prices.
Chapter 12 – Pricing Concepts and Management
135. What type of discount is given to marketing intermediaries or middlemen?
a. Quantity
b. Cash
c. Geographic
d. Service
e. Trade
136. The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is
discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____
discounts.
a. trade
b. cumulative
c. noncumulative
d. quantity
e. intermediary
Chapter 12 – Pricing Concepts and Management
137. Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson’s Entertainment by 10
percent to allow for expenses associated with Robertson’s promoting the games to consumers. This is an example
of a ____ discount.
a. quantity
b. cash
c. seasonal
d. trade
e. complementary
138. If Ralph Lauren offers to reduce the price of its women’s blazers when retailers buy more than 100 pieces, the
designer is offering a ____ discount.
a. quantity
b. cash
c. seasonal
d. trade
e. complementary
Chapter 12 – Pricing Concepts and Management
139. A concession in price in business markets to achieve a desired goal is called a(n):
a. allowance.
b. objective-oriented discount.
c. cash discount.
d. trade discount.
e. cumulative discount.
140. Reductions for transportation and other costs related to the physical distance between buyer and seller are known
as:
a. base-point pricing.
b. freight absorption pricing.
c. penetration pricing.
d. location pricing.
e. geographic pricing.
Chapter 12 – Pricing Concepts and Management
141. If a retailer orders a quantity of merchandise to be delivered to his store in Phoenix and is quoted a price that does
not include shipping charges, the retailer is paying a(n) ____ price.
a. F.O.B. destination
b. F.O.B. origin pricing
c. transfer
d. postage-stamp
e. base-point
142. Ryan orders 16 dozen fishing lures from Strike Right for $375. When he gets the invoice, he is furious that $25 in
freight charges has been tacked on to his bill because he thought the price included freight costs. Ryan should have
been certain that the order terms were:
a. F.O.B. origin.
b. F.O.B. factory.
c. cumulative
d. noncumulative
e. F.O.B. destination.
Chapter 12 – Pricing Concepts and Management
143. The frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of
pricing used to charge the frozen foods division is called:
a. zone pricing.
b. base-point pricing.
c. business-unit pricing.
d. transfer pricing.
e. price discrimination.
144. When Cadillac buys headlights from Delco, both of which are divisions of General Motors, ____ pricing occurs.
a. base-point
b. zone
c. transfer
d. geographic
e. matrix
Chapter 12 – Pricing Concepts and Management
Scenario 12.1
Use the following to answer the questions.
Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country.
Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field:
Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6.
145. Refer to Scenario 12.1. If Concession Supply increased its price by 10 percent and experienced only a 2 percent
decrease in the demand for hotdogs, the demand would be:
a. inelastic.
b. constant
c. prestige.
d. elastic.
e. marginal.
146. Refer to Scenario 12.1. To break even, Concession Supply should sell ____ cases of hot dogs per day at Wrigley
Field.
a. 13
b. 120
c. 40
d. 200
e. 60
Chapter 12 – Pricing Concepts and Management
147. Refer to Scenario 12.1. What is the break-even point in dollar sales volume?
a. $1,200
b. $1,440
c. $3,000
d. $1,920
e. $1,600
Scenario 12.2
Use the following to answer the questions.
Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would
be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be
priced higher than other brands in the store. A lower price line than the current Ray-Ban lines that are sold through
more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all
brands sold in department stores and about customers’ perceptions of those brands.
148. Refer to Scenario 12.2. Ray-Ban’s plan of gathering information about the other brands sold in department stores,
including their prices, would most likely be used in a ____ basis for pricing.
a. cost
b. competition
c. demand
d. customer
e. market
Chapter 12 – Pricing Concepts and Management
149. Refer to Scenario 12.2. Ray-Ban has decided to promote the new sunglasses line as an “affordable luxury” and
plans significant promotional expenditures. With these objectives, which of the following should Ray-Ban use to
price its product line?
a. competition-based pricing
b. cost-plus pricing
c. markup pricing
d. demand-based pricing
e. differential pricing
150. Refer to Scenario 12.2. Given Ray-Ban’s plan for positioning the new sunglasses line, they should use a ____
strategy when introducing their new product.
a. promotional
b. penetration
c. price-skimming
d. reference
e. secondary-market
Chapter 12 – Pricing Concepts and Management
Scenario 12.3
Use the following to answer the questions.
Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After
reviewing the previous three years’ revenue, Glenwood finds that most of its customers bring their pets in for the
required annual vaccinations only if the animal is ill. Glenwood’s objective is to generate more income per customer
on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for
each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat
office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay
one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent
heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet’s health as part
of a prevention program, rather than a one-time annual visit.
151. Refer to Scenario 12.3. Glenwood’s new pricing strategy is an example of ____ pricing.
a. cost-based
b. psychological
c. customary
d. bundle
e. demand-based
Chapter 12 – Pricing Concepts and Management
152. Refer to Scenario 12.3. Glenwood has decided that it is going to offer a special package if the prevention plan is
purchased within the first 30 days of each year’s time for vaccinations. This type of pricing strategy would be an
example of:
a. customary pricing.
b. secondary-market pricing.
c. introductory pricing.
d. periodic discounting.
e. random discounting.
153. Refer to Scenario 12.3. Glenwood’s closest competitor, The Hearthstone Pet Hospital, currently charges $60 for
each basic office visit. If Glenwood were to price its basic office visit at $45, it would most likely be employing:
a. customary pricing.
b. penetration pricing.
c. prestige pricing.
d. price skimming.
e. cost-based pricing.
Chapter 12 – Pricing Concepts and Management
Scenario 12.4
Use the following to answer the questions.
The BASF Chemical Company in Germany has developed a new rubberized coating. The product is used on cell
phones and other hand-held electronic devices that give them protection from falls and scratches. BASF plans to
market the product directly to businesses that manufacture the casings for these types of products. BASF currently
uses a system of salespeople headquartered in Germany, while its primary business customers are in China.
154. Refer to Scenario 12.4. BASF has decided to offer discounts to its businesses customers in the form of the
following: For each order of $100,000 or more during the next 90 days, the buyer will receive a rebate of 5 percent.
This type of pricing would be an example of ____ discounts.
a. allowance
b. cash
c. seasonal
d. noncumulative
e. cumulative
155. Refer to Scenario 12.4. BASF is considering the problem of actual distance in delivering its product from the plant
in Germany to some of its customers in China. Which pricing strategy would help overcome this problem?
a. Geographic
b. Transfer
c. Commercial
d. Transit
e. Factory
Chapter 12 – Pricing Concepts and Management