167. Delta Airlines prices its tickets so that it is less expensive to travel between midnight and 5:00 a.m. than during the
day, when there is heavy business travel. This illustrates pricing.
a. cost-plus
b. demand-based
c. competition-based
d. secondary markup
e. seasonal
168. Price differentiation is
a. a form of competition-based pricing.
b. a form of cost-based pricing.
c. a form of demand-based pricing.
d. focused on achieving fewer sales but at higher prices.
e. focused on selling different goods for different prices.
169. Price differentiation attempts to sell
a. different products with different features at the same price.
b. identical products at different times at different prices.
c. products at lower prices, due to economies of scale unintentionally resulting in lower net income for the
company.
d. products to customers based on their ability to pay.
e. all products at different prices.
170. A hotel room in New Orleans during Mardi Gras costs considerably more than it would during the following week.
This is an example of
a. status–quo pricing.
b. cost-based pricing.
c. price differentiation.
d. variable pricing.
e. price adjustment.
171. Demand-based pricing, unlike cost-based pricing, places firms in a better position to
a. attain higher profit levels.
b. estimate demand easily and accurately.
c. perform breakeven analysis.
d. calculate price based on intangible benefits.
e. penetrate the market quickly.
172. Competition-based pricing is
a. used when costs and revenues are considered secondary to competitors’ prices.
b. not useful as a method of increasing or maintaining market share.
c. of little use if the competing products are homogeneous.
d. not able to increase sales.
e. most often used when competing products are homogeneous.
173. If Macy’s department store managers looked at Dillard’s department store prices for identical national brands and,
based on that information, decided to advertise a sale on those products, they would be exercising which pricing
method?
a. Competition-based
b. Demand-based
c. Cost-based
d. Premium
e. Penetration
174. The strategy of charging the highest possible price for a product during the introduction stage of its life-cycle is
known as
a. penetration pricing.
b. price skimming.
c. prestige pricing.
d. sample pricing.
e. odd pricing.
175. When Polaroid comes out with a new model in a series, it sets an initial price and then gradually lowers the price.
Polaroid is initially using which pricing strategy?
a. Penetration pricing
b. Prestige pricing
c. Price lining
d. Premium pricing
e. Price skimming
176. The strategy of setting a low price for a new product to gain a large market share for the product quickly is called
a. penetration pricing.
b. price skimming.
c. sample pricing.
d. introductory pricing.
e. odd pricing.
177. The maker of Oral-B toothbrushes is introducing a new electric plaque remover and expects considerable
competition. What pricing strategy would be appropriate for this maker to choose?
a. Price skimming
b. Penetration pricing
c. Odd-even pricing
d. Prestige pricing
e. Psychological pricing
178. The fact that senior citizens are charged a lower price at movie theaters than are younger adults is an example of
pricing.
a. price–lining
b. promotional
c. professional
d. differential
e. psychological
179. Lisa goes to a car dealership to purchase a new Honda Accord. She is not willing to pay the listed sticker price for
the car, and she instead works with the salesperson and manager until a mutually satisfactory price is agreed upon.
This is an example of pricing.
a. differential
b. comprised
c. negotiated
d. reference
e. secondary
180. The temporary reduction of prices on a patterned or systematic basis is called
a. random discounting.
b. negotiated pricing.
c. periodic discounting.
d. secondary-market discounting.
e. comparison discounting.
181. A manager at JCPenney discovers that Dillard’s has reduced the price of its children’s Levi‘s from $31.99 to
$24.99, according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs
the salesperson on duty to put a sign up next to their children’s Levi’s that reads, “SALE: $24.99.” This is an
example of what pricing strategy?
a. Secondary-market pricing
b. Periodic discounting
c. Reference pricing
d. Random discounting
e. Comparison discounting
182. The strategy of setting prices at uneven amounts that are slightly below an even or whole number of dollars is
called
a. penetration pricing.
b. price skimming.
c. sample pricing.
d. introductory pricing.
e. odd-number pricing.
183. The strategy of setting a single price for two or more units is known as
a. penetration pricing.
b. price skimming.
c. sample pricing.
d. multiple-unit pricing.
e. odd pricing.
184. If a manager designs the shoe department in a manner that one of its private-label pairs of shoes, priced at $39.99,
is positioned next to a well-known national brand of shoes priced at $69.99, what strategy is the manager attempting
to accomplish?
a. Everyday low price
b. Odd-even pricing
c. Prestige pricing
d. Special-event pricing
e. Reference pricing
185. Ties ‘R‘ Us sells a variety of ties at many different prices. Often customers are confused about the pricing and
have a hard time making a buying decision. Ties ‘R‘ Us should use what type of pricing strategy?
a. Odd pricing
b. Price lining
c. Captive pricing
d. Multiple-unit pricing
e. Geographic pricing
186. If Tiger Mart advertises a 2-liter bottle of Pepsi for 89 cents to generate store traffic that will increase the
purchasing of 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.
187. Price leaders
a. are sold at the highest possible price.
b. maximize profits.
c. lead to increased revenue or lower costs when prices are increased or decreased.
d. are sometimes sold at less than cost in hopes that sales of other products will increase.
e. lead the industry in sales.
188. If the manager at Best Buy puts a sign up next to a Pioneer stereo that reads, “Only $199.99! $58.01 less than
Circuit City,” this is an example of what type of pricing strategy?
a. Random discounting
b. Periodic discounting
c. Comparison discounting
d. Penetration discounting
e. Everyday low prices
189. A pricing strategy in which a manufacturer pays for the shipping cost of its merchandise to the wholesaler is called
pricing.
a. geographic
b. FOB origin
c. trade discount
d. FOB destination
e. postage-stamp
190. A deduction from the price of an item is called a
a. discount.
b. variable reduction.
c. trade-in.
d. line.
e. concession remittance.
191. A discount from the list, or retail, price offered to intermediaries is a(n) discount.
a. quantity
b. FOB price
c. cash
d. trade
e. cumulative
192. Discounts from the list price offered to intermediaries are called discounts.
a. trade
b. quantity
c. wholesale
d. cash
e. preferential
193. Discounts given to customers who buy in large amounts are called discounts.
a. trade
b. cash
c. quantity
d. wholesale
e. preferential
194. Discounts offered to encourage early payment of outstanding accounts are called discounts.
a. trade
b. cash
c. wholesale
d. quantity
e. preferential
195. A product may be a good or a service but not an idea.
a. True
b. False
196. Candy bars, milk, and newspapers are all examples of convenience products.
a. True
b. False
197. Appliances, stereos, and furniture are all considered specialty products.
a. True
b. False
198. New products are often immediate successes.
a. True
b. False
199. During the decline stage of the product life-cycle, the sales volume decreases sharply because of an increase in the
number of competing firms.
a. True
b. False
200. In the decline life-cycle stage of a product, less profitable versions of the product are sold at reduced rates to cut
losses.
a. True
b. False
201. A product mix is a combination of all the information a producer uses to sell its product to the public.
a. True
b. False
202. The width of a product mix is a measure of the number of individual products within each line.
a. True
b. False
203. The depth of a product mix is a measure of the average number of individual products within each line.
a. True
b. False
204. BMW’s acquisition of the British automaker Rover provides BMW with instant entry into the growing sport-utility
vehicle market with the legendary Range Rover line. BMW’s purchase is an attempt to widen its product mix.
a. True
b. False
205. There are two dimensions to a firm’s product mix: volume and breadth.
a. True
b. False
206. A company‘s product mix usually must be changed to stay competitive.
a. True
b. False
207. Once it becomes effective, a product mix for a given product remains effective for a long time.
a. True
b. False