98) Failure to enter the current price into a retailer’s system may result in charges of ________.
A) predatory pricing
B) scanner fraud
C) retail maintenance pricing
D) discriminatory pricing
E) price fixing
Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles
Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market
quickly.
99) Which of the following best supports a market-penetration strategy for Champion?
A) Production costs increase as sales volume increases.
B) It is very difficult for competitors to enter the market.
C) The cost of producing a smaller volume is negligible.
D) The quality of the products supports high initial prices.
E) The market for the products is highly price sensitive.
100) Noticing that the themed envelopes aren’t selling well, Charles Payton decides to offer
customers a special “letter writing” kit, He prices the kit—which comprises letter paper,
matching envelopes, and pens—at $5, even though the combined prices of the individual items is
$8. Which of the following pricing strategies is he using?
A) optional product pricing
B) product bundle pricing
C) by-product pricing
D) dynamic pricing
E) captive product pricing
101) Pricing strategies tend to change and evolve as the average product passes through its life
cycle.
102) For market skimming to be successful, the cost of producing a smaller quantity of goods
should not be higher than the prices charged.
103) When The Candy Store sets a low initial price in order to get its “foot in the door” and to
quickly attract a large number of buyers, the company is practicing market-skimming pricing.
104) Pricing is difficult because various products have related demand and costs, and producers
face different degrees of competition.
105) In product line pricing, the price steps should account for differences in customer
perceptions of the value of different features.
106) Thinking Cap Corp. prices its various cap designs at different price levels, ranging from
$2.05 to $5.95. This is an example of optional product pricing.
107) In addition to its customary services, On the Spot, a house mover, also sells the boxes and
padding that are used when moving household furniture. This is an example of customer-
segmented pricing.
108) When a manufacturer seeks a market for by-products and accepts a price that covers more
than the cost of storing and delivering those by-products, the manufacturer is able to reduce the
main product’s price to make it more competitive.
109) Some industries commonly use two-part pricing, breaking the price down into a fixed fee
and a fixed usage rate.
110) When using product bundle pricing, sellers combine several of their products and offer the
bundle at an increased price for increased profit.
111) Consumers who have no past experience with a product are especially likely to judge it by
its price.
112) A seasonal discount is a price reduction to buyers who buy merchandise while the products
are in season.
113) Online flash sales are used to create buying urgency and make buyers feel lucky to have
gotten in on the deal.
114) If used infrequently, price promotions create “deal-prone” customers who wait until brands
go on sale before buying them.
115) Constantly reduced prices can erode a brand’s value in the eyes of customers.
116) In segmented pricing, the difference in prices is based on differences in costs.
117) For segmented pricing to be an effective strategy, the prices should reflect real differences
in customers’ perceived value.
118) Sellers cannot influence or use consumers’ reference prices when setting prices.
119) Customers located close to a firm are less likely to benefit from FOB-origin pricing than
customers located further away.
120) The uniform-delivered pricing strategy means that the goods sold are placed free on board a
carrier with the customer paying the freight from the factory to the destination.
121) Dynamic pricing is least prevalent online.
122) Excess capacity leads to companies initiating an increase in price.
123) Launching a fighter brand is an effective way to deal with a situation in which the market
segment being lost is price sensitive and will not respond to arguments of higher quality.
124) Price discrimination is permissible if the seller manufactures different qualities of the same
product for different retailers and can prove that the price difference is proportional.
125) The widespread use of scanner-based computer checkouts has eradicated complaints of
retailers overcharging their customers.
126) Differentiate between market skimming and market penetration pricing strategies. Explain
the conditions within which they are effective.
127) Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process
of production, the company generates a great deal of scrap hardwood. How can using by-product
pricing benefit the company?
128) Explain product line pricing.
129) Why do businesses use cash discounts when they are in essence losing some money on the
sale?
130) Differentiate between dynamic and fixed pricing.
131) Explain the factors involved in setting international pricing.
132) Discuss the conditions under which a company might consider using price cuts or price
increases.
133) When are competitors most likely to react to price changes? How can a firm anticipate the
likely reactions of its competitors?
134) In what way does the government regulate pricing?
135) Compare the practices of price fixing and predatory pricing, explaining why each is
prohibited by law.
136) For what types of products might marketers use market-skimming pricing?
137) Why might marketers use market-penetration pricing?
138) What should the price steps of product line pricing take into account?
139) Give two examples of products for which marketers might use optional-product pricing.
140) Give two examples of products for which captive product pricing might be used.
141) Give two examples of by-product pricing.
142) Give two examples of product bundle pricing.
143) List four types of discounts.
144) List four types of segmented pricing.
145) Explain the psychology behind a price of $9.99 instead of $10.00.
146) Casual Comfort sells its catalog items using FOB-origin pricing. Who pays the freight
charges?
147) How might a consumer view a price cut?
148) Why is predatory pricing considered illegal?
149) Why is identifying predatory pricing difficult?
150) What is deceptive pricing?