339) Cash payments or an extra amount of free goods awarded sellers in the channel for
undertaking certain advertising or selling activities to promote the product is referred to as a
A) promotional allowance.
B) promotional quantity discount.
C) seasonal discount.
D) promotional purchase inducement.
E) dynamic pricing policy.
340) A promotional allowance is
A) a onetime discount to promote the product that must be used within a certain time frame.
B) the cash payments or an extra amount of free goods awarded sellers in the marketing channel
for undertaking certain advertising or selling activities to promote the product.
C) the return of money to promote the product based on proof of purchase.
D) a short-term price reduction when consumer demand takes a significant and unexpected dip.
E) an incentive, such as trips, cruises, jewelry, etc., presented to brand-loyal customers.
341) The practice of replacing promotional allowances with lower manufacturer list prices is
referred to as
A) everyday low pricing.
B) everyday fair pricing.
C) trade-in allowances.
D) markdown pricing.
E) everyday value pricing.
342) Everyday low pricing refers to
A) the pricing strategy of “extreme value” stores to maintain high price-quality images for the
products they sell.
B) the pricing strategy of starting a product at standard list price and then lowering the price by a
certain percentage until it is sold.
C) short-term price reductions when consumer demand takes a significant and unexpected dip.
D) the practice of replacing promotional allowances with lower manufacturer list prices.
E) a form of predatory pricing used solely for the purpose of undercutting competitors’ prices.
343) The acronym EDLP stands for
A) estimated discount leveling policy.
B) extended discounts for loss-leader products.
C) everyday low pricing.
D) either (free) delivery or lower prices.
E) extended discounts in lieu of lower pricing.
344) Carmex uses all of the following approaches to setting the price of its products except which?
A) profit-oriented
B) competition-oriented
C) cost-oriented
D) elasticity-oriented
E) demand-oriented
345) A single jar of original formula Carmex has different prices for the product depending upon
where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or
Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called
A) standard pricing
B) odd-even pricing.
C) customary pricing.
D) everyday lower pricing.
E) at-market pricing.
346) Explain the price equation in the context of a new car purchase.
347) How do consumers use price in their assessments of value?
348) There are four common approaches to selecting an approximate price level. List and provide
a brief description for each one.
349) List four of the seven demand-oriented approaches to selecting an approximate price level
and define what they are.
350) When is skimming pricing an effective strategy?
351) What are the conditions favoring the use of penetration pricing?
352) Explain why odd-even pricing may be successful.
353) What is standard markup pricing and when would it be used?
354) What is loss-leader pricing and why do retailers use it?
355) Factors other than price affect demand. What are they and how do they work?
356) What is the difference between a movement along a demand curve and a shift of a demand
curve?
357) Distinguish between elastic demand and inelastic demand.
358) Price elasticity of demand measures how sensitive consumer demand and the firm’s revenues
are to changes in the product’s price. Explain the difference between a product with elastic demand
and a product with inelastic demand.
359) What is the difference between fixed costs and variable costs?
360) Marketing managers often use break-even analysis to analyze the relationship between total
revenue and total cost to determine profitability at various levels of output. What is the break-even
formula? Use the formula to calculate how many DVD players a dealer must sell if her fixed costs
are $100,000, unit variable costs are $150, and the selling price is $200.
361) What are the six broad objectives that an organization may pursue that tie in directly to its
pricing policies?
362) The price-setting process identifies pricing objectives and constraints. Describe the reasons
these objectives may change and give examples of objectives a firm may set.
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363) Describe a profit objective used by many Japanese manufacturing firms.
364) Describe the pricing constraints a firm is likely to face.
365) What is bait and switch? Give an example of it.
366) Explain predatory pricing.
367) What are the three major steps involved in setting prices?
368) What is the difference between a one-price policy and a dynamic-price policy?
369) What are two special adjustments to the list or quoted price?
370) What are the four kinds of discounts that are especially important in marketing pricing
strategy?
371) Why do manufacturers offer seasonal discounts to channel members? Provide an example of
how one would work.
372) Which of the four approaches does Carmex use to set prices for its products?