68) Shoe Trends, a company that manufactures formal shoes for men and women, offers to give
its customers $10 for an old pair of shoes when they buy a new pair. In essence, they’re
reducing the price of the new shoes by $10. What is this type of price adjustment called?
A) functional discount
B) captive product pricing
C) seasonal discount
D) trade-in allowance
E) by-product pricing
69) ________ allowances are payments or price reductions that reward dealers for participating
in advertising and sales support programs.
A) Promotional
B) Trade-in
C) Segmented
D) Functional
E) Dynamic
70) In return for participating in Honda advertising and sales support programs, Honda
dealerships are rewarded with payments or price reductions, which are known as ________.
A) seasonal discounts
B) functional allowances
C) cash discounts
D) promotional allowances
E) trade-in allowances
71) By definition, ________ pricing is used when a firm sells a product or service at two or
more prices, even though the difference in price is not based on differences in cost.
A) segmented
B) variable
C) flexible
D) cost-plus
E) reference
72) The New Age Gallery has three admission prices for students, adults, and seniors, even
though all three groups are entitled to the same services. This form of pricing is called
________ pricing.
A) psychological
B) product form
C) customer-segment
D) captive product
E) by-product
73) Under ________ pricing, different versions of the product are priced differently but not
according to differences in their costs.
A) product form
B) optional product
C) captive product
D) by-product
E) seasonal
74) Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that
do not, even though the cottages and services offered are identical in every other aspect. This
form of pricing is called ________ pricing.
A) location-based
B) time-based
C) by-product
D) seasonal
E) captive product
75) When theaters vary seat prices due to audience preferences for seats in coveted rows, they
use ________ pricing.
A) customer-segment
B) location-based
C) time-based
D) product line
E) captive product
76) When a firm varies its price by the season, it is using ________ pricing.
A) product form
B) customer-segment
C) location-based
D) time-based
E) value-added
77) Segmented pricing is only effective when ________.
A) the segments show similar degrees of demand
B) the cost of segmenting does not exceed the revenue obtained from the price difference
C) the segmented prices do not reflect real differences in customers’ perceived value
D) the customers of different socio-economic classes are treated according to their rank
E) companies make their services and products accessible exclusively to wealthy patrons
78) A movie theater offers a reduced price for an afternoon showing of a film. This type of
pricing is ________ pricing.
A) location-based
B) customer-segmented
C) cost-based
D) product form
E) time-based
79) Which of the following is a price adjustment strategy that considers how a customer’s
perception of a product is influenced by its price?
A) captive product pricing
B) psychological pricing
C) by-product pricing
D) promotional pricing
E) international pricing
80) Consumers are less likely to use price to judge the quality of a product when they
________.
A) have never tried the product before
B) have little knowledge of the brand
C) have experience with the product
D) are shopping for luxury items
E) cannot physically examine the product
81) Which term refers to prices that buyers carry in their minds and check with when they look
at a given product?
A) product line prices
B) reference prices
C) location-based prices
D) product form prices
E) time-based prices
82) Which of the following is NOT a cue to consumers about whether a price is high or low?
A) price-matching guarantees
B) prices of surrounding, similar products
C) signs such as “Clearance”
D) “Coming Soon!” signs
E) location in the store, especially at the entry
83) ________ are formed by noting current prices, remembering past prices, or assessing the
buying situation.
A) Product line prices
B) Seasonal prices
C) Reference prices
D) Time-based prices
E) Product bundle prices
84) La Belle released a cut glass bottle of perfume at $299 per item, even though its major
competitor prices its signature scent at $99 per item. La Belle reasons that customers in search
of luxury goods will prefer its product because they are likelier to believe that high price
indicates superior quality. What price adjustment strategy is evident in its reasoning?
A) seasonal pricing
B) time-based pricing
C) captive product pricing
D) psychological pricing
E) location-based pricing
85) A supermarket places its store brand of blackberry jam priced at $5 per jar in the fruit
preserves aisle, alongside the jam jars of a better known brand—whose products are priced at
$8 apiece. Store managers reason that customers are more likely to choose the store brand
instead of the better-known brand when they realize the price difference. What price adjustment
strategy is evident in the supermarket’s reasoning?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) psychological pricing
E) seasonal pricing
86) What type of pricing is being used when a company temporarily prices its product below
the list price or even below cost to create buying excitement and urgency?
A) segmented pricing
B) international pricing
C) reference pricing
D) promotional pricing
E) basing-point pricing
87) Hearth & Home, a store which sells household products, has announced a one-week sale on
its new carpet line. This is an example of ________.
A) promotional pricing
B) seasonal pricing
C) by-product pricing
D) product bundle pricing
E) time-based pricing
88) Which of the following is true of promotional pricing?
A) It leads to ‘deal-prone’ customers who buy products only during sales.
B) It fortifies the brand’s image in the eyes of customers if relied upon extensively.
C) It simplifies shopping for customers if used simultaneously by multiple stores.
D) It makes balancing short-term sales incentives against long-term brand building
unnecessary.
E) It is extremely beneficial for the brand’s profitability if practiced repeatedly.
89) Low-interest financing and longer warranties are both examples of ________ pricing.
A) segmented
B) promotional
C) product bundling
D) captive product
E) product form
90) 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.
91) Which of the following involves adjusting prices to account for the physical location of
customers?
A) location-based pricing
B) geographical pricing
C) domestic pricing
D) interior pricing
E) captive pricing
92) 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
93) 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) dynamic pricing
E) FOB-origin pricing
94) 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.
95) 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) uniform-delivered pricing
B) psychological pricing
C) zone pricing
D) FOB-origin pricing
E) basing-point pricing
96) If Detroit DLX charges the same price for the delivery of its product to customers located
in the states near the Great Lakes, but a different price to customers elsewhere, the company is
using ________.
A) psychological pricing
B) promotional pricing
C) zone pricing
D) reference pricing
E) uniform-delivered pricing
97) 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) basing-point
C) zone
D) uniform-delivered
E) freight-absorption
98) ________ 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
99) 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
100) With which pricing strategy does the seller take responsibility for part or all of the actual
freight charges in order to acquire the desired business?
A) FOB origin pricing
B) freight-absorption pricing
C) basing-point pricing
D) location-based pricing
E) uniform-delivered pricing
101) 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
102) 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
103) 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
104) Stores can combat the current consumer practice of ________, in which consumers visit
stores and then check online for price comparisons.
A) discounting
B) conferencing
C) using Instagram to share purchases
D) showrooming
E) auctioning
105) Which of the following likely does NOT play into products being offered for different
prices in different countries?
A) additional costs of operations
B) product commonality
C) physical distribution
D) shipping and insurance
E) exchange-rate fluctuations
106) 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 that has insignificant purchasing power.
107) Consumers who have no past experience with a product are more likely to judge it by its
price.
108) A seasonal discount is a price reduction to buyers who buy merchandise while the
products are in season.
109) Online flash sales are used to create buying urgency and make buyers feel lucky to have
gotten in on the deal.
110) If used infrequently, price promotions create “deal-prone” customers who wait until
brands go on sale before buying them.
111) Constantly reduced prices can erode a brand’s value in the eyes of customers.
112) In segmented pricing, the difference in prices is based on differences in costs.
113) For segmented pricing to be an effective strategy, prices should reflect real differences in
customers’ perceived value.
114) Sellers cannot influence or use consumers’ reference prices when setting their product
prices.
115) Customers located close to a firm are less likely to benefit from FOB-origin pricing than
customers located farther away.
116) The uniform-delivered pricing strategy means that goods sold are placed free on board a
carrier with the customer paying the freight from the factory to the destination.
117) Dynamic pricing is least prevalent online.