41) ________ are offered by a manufacturer to trade-channel members if they will perform
certain functions, such as selling, storing, and record keeping.
A) Consumer promotions
B) Quantity discounts
C) Functional discounts
D) Seasonal discounts
E) Trade-in allowances
42) When hotels, motels, and airlines offer discounts in slow selling periods, they are said to be
offering ________.
A) trade discounts
B) quantity discounts
C) functional discounts
D) seasonal discounts
E) trade-in allowances
43) ________ are granted for turning in old item when buying a new one.
A) Promotional allowances
B) Quantity discounts
C) Functional discounts
D) Seasonal discounts
E) Trade-in allowances
44) ________ reward dealers for participating in advertising and sales support programmes.
A) Functional discounts
B) Trade discounts
C) Promotional allowances
D) Rebates
E) Quantity discounts
45) When supermarkets and department stores drop the price on well-known brands to stimulate
store traffic, they are said to be following ________.
A) value pricing
B) loss-leader pricing
C) special event pricing
D) high-low pricing
E) everyday low pricing
46) When Alan bought his car, the bank gave him 24 months to repay his car loan. But when
Alan made a request to increase the time frame to 36 months, the bank granted the extension.
The bank was willing to offer Alan a ________.
A) longer payment term
B) warranty contract
C) service contract
D) special customer price
E) special event price
47) In second-degree price discrimination, the seller charges ________.
A) less to buyers of larger volumes
B) different prices depending on the season, day, or hour
C) a separate price to each customer depending on the intensity of his or her demand
D) different prices for different versions of the same product
E) different prices for the same product depending on the channel through which it is sold
48) In ________, the seller charges different amounts to different classes of buyers.
A) perceived value pricing
B) third-degree price discrimination
C) first-degree price discrimination
D) second-degree price discrimination
E) psychological discounting
49) When museums charge a lower admission fee to students and senior citizens, then this form
of price discrimination is known as ________.
A) location pricing
B) channel pricing
C) customer-segment pricing
D) special-customer pricing
E) loss-leader pricing
50) Madame Tussaud’s wax museum is a popular tourist attraction in London. The museum
charges higher entry rates for tourists compared to locals. This form of price discrimination is
known as ________.
A) customer-segment pricing
B) image pricing
C) location pricing
D) special customer pricing
E) special event pricing
51) The price of tickets to the opera vary depending on where the person would like to be
seated–in the gallery or in the stalls. This is an example of ________.
A) channel pricing
B) time pricing
C) image pricing
D) product-form pricing
E) location pricing
52) When hotels drop their rates on the weekends, then this form of price discrimination is
known as ________.
A) channel pricing
B) image pricing
C) product-form pricing
D) time pricing
E) location pricing
53) The airline and hospitality industries use ________, by which they offer discounted but
limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory
just before it expires.
A) special-customer pricing
B) yield pricing
C) cash rebates
D) location pricing
E) customer-segment pricing
54) For price discrimination to work ________.
A) the market must be segmentable and the segments must show similar intensities of demand
B) members in the lower-price segment must be able to resell the product to the higher-price
segment
C) competitors must be able to undersell the firm in the higher-price segment
D) the practice must not breed customer resentment and ill will
E) the extra revenue derived from price discrimination must not exceed the cost of segmenting
and policing the market
55) When a company maintains its price but removes or prices separately one or more elements
that were part of the former offer, such as free delivery or installation, it is known as ________.
A) escalating
B) differentiation
C) unbundling
D) reverse discounting
E) delayed quotation pricing
56) Price is one of the two elements of the marketing mix that produces revenue.
57) Purchase decisions are based on how consumers perceive prices and what they consider the
current actual price to be–not the marketer’s stated price.
58) Customers usually have a lower price threshold below which prices signal inferior or
unacceptable
quality, as well as an upper price threshold above which prices are prohibitive and the product
appears not worth the money.
59) Although consumers may have fairly good knowledge of the range of prices involved, very
few can accurately recall specific prices of products.
60) When examining products, consumers compare an observed price to an internal reference
price they remember or an external frame of reference.
61) Many consumers use price as an indicator of quality and value.
62) Companies strive to maximize their current profits if they are plagued with overcapacity,
intense competition, or changing consumer wants.
63) A firm is said to be following a market-skimming pricing strategy, if it introduces a product
into the market at a high price and slowly drops the price over time.
64) In the case of prestige goods, the demand curve sometimes slopes upward.
65) Companies prefer customers who are less price sensitive.
66) Price elasticity depends upon the magnitude and direction of the contemplated price change.
67) Total costs consist of the sum of the fixed and variable costs for any given level of
production.
68) The key to effectively using perceived-value pricing is to deliver value that is on par with
your competitors.
69) Value pricing requires a company to reengineer its operations to become a low-cost
producer.
70) In a compensation deal, the seller sells a plant, equipment, or technology to another country
and agrees
to accept as partial payment products manufactured with the supplied equipment.
71) A quantity discount is a price reduction given to those who pay their bills promptly.
72) Trade-in allowances reward dealers for participating in advertising and sales support
programs.
73) In first-degree price discrimination, the seller charges less to buyers of larger volumes.
74) When firms charge different prices to different customer groups for the same product or
service, it is a case of second-degree price discrimination.
75) Escalator clauses are found in contracts for major industrial projects, such as aircraft
construction and bridge building.
76) Briefly describe the different types of pricing objectives.
77) What are the different price-setting methods? Briefly describe each of them.
78) What are the different forms of countertrade?
79) What are the different types of promotional pricing?
80) When Sony introduced the world’s first high-definition television to the Japanese market in
1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from
the various segments of the market. The price dropped steadily through the years—a 28-inch
Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $600 in 2010.
What pricing strategy did Sony use here?