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61) Low-interest financing and longer warranties are both examples of ________.
A) segmented pricing
B) promotional pricing
C) product bundling pricing
D) captive product pricing
E) product-form pricing
62) Which of the following is an adverse effect of using promotional pricing?
A) It makes shopping stressful if used by multiple stores simultaneously.
B) It erodes the value of competing brands in the eyes of customers.
C) It gives pricing secrets away to competitors.
D) It creates "deal-immune" customers if used often.
E) It delays the company's focus on short-term strategies.
63) Which of the following involves adjusting prices to account for the physical location of
customers?
A) location-based pricing
B) geographic pricing
C) domestic pricing
D) interior pricing
E) captive pricing
64) Which of the following is a geographical pricing strategy?
A) basing-point pricing
B) segmented pricing
C) dynamic pricing
D) internet pricing
E) location-based pricing
65) Under which type of geographic pricing strategy does each customer take responsibility for
the freight charges for the product from the factory to its destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) dynamic pricing
66) Which of the following is true of FOB-origin pricing?
A) It is a strategy in which the company charges the same price plus freight to all customers.
B) It is a costly option for customers who are located near the company.
C) It charges all customers the freight cost from a base city to the customer location.
D) It is an expensive alternative for customers in distant locations.
E) It is a strategy in which the seller absorbs all or part of the freight charges.
67) Which form of geographic pricing is a company using when it charges the same rate to ship a
product anywhere in the United States?
A) FOB-origin pricing
B) psychological pricing
C) zone pricing
D) uniform-delivered pricing
E) basing-point pricing
68) If Detroit DLX charges the same price for the delivery of its product to customers located
within the Great Lakes states, but a different price to customers elsewhere, the company is using
________.
A) psychological pricing
B) promotional pricing
C) reference pricing
D) zone pricing
E) uniform-delivered pricing
69) Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates
shipping charges based on shipping parts from Boston, even though some parts actually ship
from St. Louis. Motorzone most likely practices ________ pricing.
A) FOB-origin
B) uniform-delivered
C) zone
D) basing-point
E) freight-absorption
70) ________ is a pricing strategy in which the company sets up two or more clearly identified
geographic regions within which all customers pay the same total price.
A) Freight-absorption pricing
B) Zone pricing
C) Uniform-delivered pricing
D) FOB-origin pricing
E) Basing-point pricing
71) In which of the following geographic pricing strategies would customers located close to the
company pay the same amount as customers in distant locations?
A) uniform-delivered pricing
B) zone pricing
C) FOB-origin pricing
D) location-based pricing
E) reference pricing
72) With which pricing strategy does the seller take responsibility for part or all of the actual
freight charges in order to get the desired business?
A) FOB origin pricing
B) freight-absorption pricing
C) basing-point pricing
D) location-based pricing
E) uniform-delivered pricing
73) Freight-absorption pricing is used for ________.
A) penetrating international markets
B) generating customer buzz about new products
C) holding on to increasingly competitive markets
D) generating quick profits to offset input costs
E) maintaining quality service records
74) The Internet offers ________, where the price can easily be adjusted to meet changes in
demand.
A) captive pricing
B) dynamic pricing
C) basing-point pricing
D) price bundling
E) cost-plus pricing
75) Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold
varies according to individual customer accounts and situations. For example, long-time
customers receive discounts. This strategy is an example of ________.
A) time-based pricing
B) seasonal pricing
C) dynamic pricing
D) promotional pricing
E) penetration pricing
76) Which of the following factors would most likely lead to a company initiating a price cut?
A) overdemand
B) weakened economy
C) poor competition
D) cost inflation
E) weak price competition
77) Which of the following would most likely lead to a company initiating a price increase?
A) weakened economy
B) possession of outdated merchandise
C) excess capacity
D) overdemand
E) possession of defective merchandise
78) The "bottom of the pyramid" refers to ________.
A) the world's poorest consumers
B) the middle classes of Brazil, Russia, India, and China
C) a market with little or no purchasing power
D) people with easy access to luxury goods
E) the middle class of high income countries
79) Which of the following is true of the bottom of the pyramid?
A) It is a market segment that has been tapped into and depleted.
B) It consists of people who have easy access to luxury goods.
C) It comprises people who have easy access to the basic amenities of life.
D) It is considered a source of fresh growth opportunities.
E) It is a market segment which has insignificant purchasing power.
80) Which of the following is true of price changes?
A) Overdemand leads to companies initiating price cuts.
B) Changes in price do not affect a brand's image.
C) Customer reaction to price changes is not as important as competitor reaction.
D) A drop in price can adversely affect how consumers view the brand.
E) Excess capacity is a factor which causes increases in price.
81) Competitors are most likely to react to a price change when ________.
A) a large number of competitors are involved
B) the product is uniform
C) the buyers are not well informed about product features
D) buyers are not well informed about price differences
E) the products are not uniform
82) When a competitor cuts its price, a company should ________ if it believes it will not lose
much market share or would lose too much profit by cutting its own prices.
A) reduce its production costs
B) reduce its marketing costs
C) maintain its current prices and profit margin
D) increase its marketing budget to raise the perceived value of the product
E) increase its production costs to improve the quality of the product
83) When faced with a competitor who has cut its product's price, which of the following is the
most cost-effective way for a company to maintain its own price but raise the perceived value of
its offer?
A) by improving the quality of the product
B) by introducing a higher-priced premium brand
C) by altering the company's marketing communications
D) by bundling the offer with add-ons
E) by distributing the product through less costly channels
84) In response to price cuts from competitors, a cereal company with several more expensive
and higher quality cereals introduced a lower-priced option to its product line. This is an example
of which of the following responses to a competitor's price cut?
A) raising the perceived value of a product
B) improving product quality
C) accepting a reduced market share
D) launching a "fighter brand"
E) using high-low pricing
85) Which of the following is true of public policies and pricing?
A) The government imposes no limits on intrastate pricing issues.
B) The Robinson-Patman Act governs interstate commerce.
C) Companies have free reign when it comes to setting prices.
D) The Sherman Act governs intrastate commerce.
E) The Clayton Act encourages the formation of monopolies.
86) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to
curb the formation of ________.
A) monopolies
B) global partnerships
C) competitive markets
D) internal markets
E) intrastate partnerships
87) When sellers set prices after talking to competitors and engaging in collusion, they are
involved in ________.
A) interstate commerce
B) comparative pricing
C) price fixing
D) skimming pricing
E) price bundling
88) A number of top fashion-modeling agencies would most likely be charged with ________ for
jointly determining what commissions they charge for models.
A) prestige pricing
B) competitive pricing
C) price bundling
D) dynamic pricing
E) price fixing
89) Federal legislation on price fixing requires that sellers set their prices ________.
A) based on their fixed and variable costs
B) without communication from competitors
C) to achieve a specific profit margin
D) without the intention of cutting into competitors' profits
E) consistently throughout a region
90) If a large retailer sold numerous items below cost with the intention of punishing small
competitors and gaining higher long-run profits by putting those competitors out of business, the
retailer would be guilty of ________.
A) price collusion
B) price fixing
C) predatory pricing
D) competitive pricing
E) penetration pricing
91) Savings for You, a discount retail chain, is highly competitive. When entering a new market,
Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller
companies with less purchasing power out of the market. Savings for You is most likely guilty of
________.
A) market skimming
B) price fixing
C) deceptive pricing
D) price collusion
E) predatory pricing
92) Which of the following would be considered predatory pricing?
A) a company which prices it products below cost to get rid of a surplus
B) a company which prices below cost to drive out competitors
C) a company which offers a volume discount
D) a company which offers the suggested retail price on the manufacturer's package
E) a company which offers real-time pricing online
93) The ________ seeks to prevent unfair price discrimination by ensuring that sellers offer the
same price terms to customers at a given price level.
A) RICO Act
B) Robinson-Patman Act
C) Sherman Act
D) Clayton Act
E) Celler-Kefauver Act
94) Price discrimination is legal when a ________.
A) manufacturer and reseller have agreed upon a specified retail price for a product
B) manufacturer sells to retailers in different markets
C) seller can prove its costs are different when selling to different retailers
D) seller advertises prices that are not actually available to consumers
E) seller has not communicated with competitors before announcing prices
95) Price discrimination may be used to match competition as long as the strategy is temporary,
localized, and ________.
A) defensive
B) offensive
C) publicized
D) private
E) uniform across channels
96) Mark's Markers, a manufacturer of white board markers, has required its dealers to charge a
specified retail price for its markers. Mark's is most likely guilty of ________.
A) captive pricing
B) retail price maintenance
C) price discrimination
D) competitive pricing
E) unfair price skimming
97) ________ occurs when a seller states price savings that are not actually available to
consumers.
A) Comparative pricing
B) Scanner fraud
C) Deceptive pricing
D) Market skimming
E) Price collusion
