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56. If General Motors determines that it wants to sell 200,000 Chevrolet Acadias and sets the price at $29,500 because it
knows that at that price it will reach that goal, the firm would be using a ____ pricing method.
a.
cost-plus
b.
competition-based
c.
psychological
d.
comparison
e.
demand-based
57. Competition-based pricing is
a.
used when costs and revenues are secondary to competitors' prices.
b.
not useful as a method of increasing market share.
c.
not useful if the competing products are homogeneous.
d.
not able to increase sales.
e.
used when competing products are heterogeneous.
58. When products in an industry are relatively homogeneous and price is a key purchase consideration,
a.
competition-based pricing becomes more important.
b.
demand-based pricing dominates pricing decisions.
c.
firms tend to use secondary-market pricing.
d.
cost-based methods like markup pricing are dominant.
e.
customary pricing is often used.
59. If local Shell gasoline stations look at BP stations’ prices as the primary method of determining its own prices, Shell is
using ________
a.
price fixing; which considers competition to be less important than costs.
b.
price fixing; which considers costs to be less important than competitor’s prices.
c.
market share pricing; which considers competition to be the ultimate pricing goal.
d.
competition-based pricing, which considers profit to be the ultimate pricing goal.
e.
competition-based pricing, which considers costs to be less important than competitor’s prices.
60. If PepsiCo sets its twelve-pack price to match the price charged by Coca-Cola, Pepsi is using which of the following
pricing methods?
a.
Demand-based
b.
Cost-based
c.
Reference pricing
d.
Competition-based
e.
Price leader
61. The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ____
pricing.
a.
price-line
b.
promotional
c.
professional
d.
differential
e.
psychological
62. Executives in Japan decided to price Lexus luxury cars in the United States at $55,000 while pricing them at $66,000
in their own country. This is an example of
a.
secondary-market pricing.
b.
price skimming.
c.
bait pricing.
d.
prestige pricing.
e.
random discounting.
63. Maria recently put her house on the market at an asking price of $260,000. She realizes, however, that in order to sell
the house, she may have to use
a.
secondary-market pricing.
b.
reference pricing.
c.
negotiated pricing.
d.
price lining.
e.
professional pricing.
64. A problem associated with ____ is that consumers can predict when prices will be lowered and delay purchases until
that time.
a.
random discounting
b.
penetration pricing
c.
reference pricing
d.
everyday low pricing
e.
periodic discounting
65. The "White Sale" that many department stores have every year a few weeks after Christmas is an example of
a.
secondary pricing.
b.
off-peak pricing.
c.
periodic discounting.
d.
random discounting.
e.
captive pricing.
66. A manager at Kohl's discovers that Macy’s has reduced the price of its children's Levi's from $31.99 to $24.99,
according to an advertisement in the Sunday newspaper. She immediately phones her store and instructs the salesperson
on duty to put a sign up next to their children's Levi's that reads, "SALE: $24.99." This is an example of what pricing
strategy?
a.
Secondary-market pricing
b.
Bait-pricing
c.
Reference pricing
d.
Random discounting
e.
Comparison discounting
67. If a business decides to reduce its prices once in a while on an unsystematic basis, it is using
a.
price reduction planning.
b.
random discounting.
c.
bait pricing.
d.
periodic discounting.
e.
penetration pricing.
68. A sale that advertised prices "up to 65 percent off" the original price uses
a.
tensile pricing.
b.
random discounting.
c.
periodic discounting.
d.
bait pricing.
e.
psychological pricing.
69. The newest version of a product like Bose headphones is likely to use _____, while the new version of Red Bull is
likely to use _____ .
a.
penetration pricing; price skimming.
b.
price skimming; psychological pricing.
c.
psychological pricing; penetration pricing
d.
price skimming; penetration pricing
e.
price skimming; promotional pricing.
70. If Samsung uses _____ pricing for its newest version of laptops, it is probably most interested in obtaining market
share; and it is assuming
a.
premium pricing; that no other competitors are likely to enter the market soon.
b.
price skimming; that no other competitors are likely to enter the market soon.
c.
premium pricing; it needs to recoup R & D costs as soon as possible.
d.
penetration pricing; that no other competitors are likely to enter the market soon.
e.
penetration pricing; that other competitors could enter the market easily.
71. If Norelco introduced a new electric razor that sonically removes hair and priced it first at $175 and then at $150
before reducing the price to $100, the firm's initial pricing strategy is known as
a.
penetration pricing.
b.
psychological pricing.
c.
price lining.
d.
price skimming.
e.
odd-even pricing.
72. Sony management decided to use skimming as a pricing strategy for its newest line of high-definition television
(HDTV) sets. It should be aware that this strategy does not
a.
generate capital to cover research and development costs.
b.
discourage competitors from entering the market.
c.
provide flexibility in the introductory base price.
d.
protect the firm from covering costs if prices are set too low.
e.
reduce the stress that may be placed on the firm's production capabilities.
73. When Sharp first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as
competitors have entered the market. The pricing strategy initially used by Sharp is called
a.
customary pricing.
b.
odd-even pricing.
c.
penetration pricing.
d.
price skimming.
e.
prestige pricing.
74. A price-skimming strategy assumes that
a.
the initial demand is highly elastic.
b.
the product is efficient.
c.
it will be difficult to recoup development costs.
d.
all consumers have homogeneous tastes.
e.
the initial demand is highly inelastic.
75. If Nabisco wants to quickly gain a large market share with its new line of reduced-fat snack crackers, it should use
a.
penetration pricing.
b.
random discounting.
c.
captive pricing.
d.
price skimming.
e.
everyday low prices.
76. The management at Allied Electronics is having difficulty in raising the introductory price on system components to
cover the increased costs of producing the sensing devices for home security systems. Apparently, Allied used a(n) ____
strategy in pricing these components.
a.
odd-even
b.
skimming
c.
lining
d.
penetration
e.
psychological
77. Which of the following would be used in setting the price of a new product if considerable competition is expected?
a.
Psychological pricing
b.
Penetration pricing
c.
Odd-even pricing
d.
Price skimming
e.
Prestige pricing
78. All of the following are pricing strategies used by companies establishing prices of multiple products within a product
line except
a.
premium pricing.
b.
price lining.
c.
captive pricing.
d.
bait pricing.
e.
penetration pricing.
79. Pricing the basic product in a product line low while pricing related items at a higher level is called
a.
premium pricing.
b.
bait pricing.
c.
captive pricing.
d.
price skimming.
e.
price lining.
80. Lexmark sells some of its color printers for about $100, but the refill cartridges cost over $30 each. Lexmark's pricing
strategy would be best labeled as
a.
bait pricing.
b.
captive pricing.
c.
customary pricing.
d.
price lining.
e.
complementary pricing.
81. A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants
using which type of pricing strategy?
a.
Custom pricing
b.
Special-event pricing
c.
Premium pricing
d.
Price lining
e.
Bait pricing
82. Breyer's produces a variety of ice cream flavors and lines of varying qualities. The higher quality ice cream varieties
are priced higher than the basic ones. Breyer's is using ____ to price its ice cream.
a.
captive pricing
b.
price baiting
c.
premium pricing
d.
bait pricing
e.
differential pricing
83. When Gabriella logs on to Dell's website, she sees a notebook model priced well below $1,000. As she continues
through the site to view the other options, she realizes the first one she saw was the cheapest model available, but she of
course wants more features. Dell is utilizing
a.
bait and switch.
b.
price lining.
c.
captive pricing.
d.
penetration pricing.
e.
bait pricing.
84. When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as
a.
prestige pricing.
b.
price lining.
c.
customary pricing.
d.
odd-even pricing.
e.
ethical pricing.
85. The pricing strategy that assumes that demand is relatively inelastic over certain price ranges is called
a.
price lining.
b.
odd-even pricing.
c.
price skimming.
d.
prestige pricing.
e.
customary pricing.
86. When a satellite dish company uses bundling to combine phone, dish, and broadband Internet access prices, it is
attempting to influence a consumer's perception of price to make a product's price more attractive and reduce "sticker
shock." This is an example of using a ____ pricing strategy.
a.
competition-based
b.
cost-based
c.
promotional
d.
competitive
e.
psychological
87. All of the following are psychological techniques except
a.
customary pricing.
b.
prestige pricing.
c.
reference pricing.
d.
odd-even pricing.
e.
price skimming.
88. Reference pricing is
a.
listing the manufacturer's suggested retail price on the price tag along with the store's lower price.
b.
mentioning the price that other retailers charge for the same product on the display for the product.
c.
using a consumer's internal perceptions of what the appropriate price should be to help price a firm's products.
d.
pricing a product at a moderate level and positioning it next to a more expensive model or brand.
e.
using prices in advertising so that customers will have a point of reference when they come to the retail
facility.
89. A Macy's manager designs the casual clothing department such that one of Macy's private label pairs of jeans, priced
at $24.99, is positioned next to a national brand of jeans, such as Levis, priced at $39.99. What is the manager attempting
to accomplish?
a.
Everyday low prices strategy
b.
Odd-even pricing strategy
c.
Prestige pricing strategy
d.
Special-event pricing strategy
e.
Reference pricing strategy
90. Bundle pricing may be perceived to be of value by customers because
a.
they always pay a lower price per item than they would have if they bought each item separately.
b.
they prefer buying a combination of bundled products in a single transaction, which saves time, effort, and
perhaps money.
c.
the companies selling the products can sell them at a lower price because their costs of packaging are lower.
d.
they are purchasing complementary products, which is convenient for them.
e.
they can purchase items that are consumed frequently in larger quantities.
91. When Mia and Shane are planning their honeymoon, their travel agent tells them that if they buy a special package,
their trip to Paris will include meals, tickets to the theater, and a rental car in addition to airfare and a hotel. This is an
example of the use of
a.
multiple-unit pricing.
b.
bundle pricing.
c.
prestige pricing.
d.
price lining.
e.
price packaging.
92. Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using ______ usually
resulting in a ____
a.
multiple-unit pricing; lower per unit price.
b.
reference pricing; lower per unit price.
c.
multiple-unit pricing; more convenient package.
d.
bundle pricing; lower per unit price.
e.
bundle pricing; more convenient package.
93. The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo is an application of ____; where ____
prices are often used to _____.
a.
odd-even pricing; even; give a product an upscale or exclusive image.
b.
odd-even pricing; odd; show customers products are priced based on tradition.
c.
prestige; premium; give a product an upscale or exclusive image.
d.
prestige; even; make it easier for consumers to compare.
e.
odd-even; even; facilitate comparison to competitors' prices.
94. Odd-even pricing is
a.
a cost-based strategy.
b.
competition-based.
c.
a rarely used technique.
d.
a psychological pricing strategy.
e.
a form of unethical pricing.
95. If REVO sets the price for its sunglasses at $240, it is most likely using _____pricing to convey ______.
a.
product-line; prestige.
b.
product-line; quality.
c.
psychological; quality.
d.
psychological; prestige.
e.
price skimming; quality.
96. Services that are performed by lawyers, dentists, or doctors are typically priced using ____; sometimes these prices are
not based on the amount of time that is spent in each situation, but are based on a flat fee regardless of the difficulty
involved.
a.
traditional pricing
b.
professional pricing
c.
everyday low prices
d.
price lining
e.
customary pricing
97. What type of pricing strategy is used in a situation where the seller has an ethical responsibility not to overcharge the
client and the fees do not relate directly to the time and/or effort spent in specific cases?
a.
Price lining
b.
Prestige pricing
c.
Professional pricing
d.
Customary pricing
e.
Price skimming
98. Price leaders, comparison discounting, and special-event pricing are applications of
a.
psychological pricing.
b.
professional pricing.
c.
product-line pricing.
d.
bait-and-switch.
e.
promotional pricing.
99. If Kroger Food Stores advertises 2-liter bottles of Pepsi for 89 cents to generate store traffic that will purchase other
items at regular prices, the grocer is using
a.
reference pricing.
b.
a price leader.
c.
special-event pricing.
d.
comparison discounting.
e.
professional pricing.
100. A product is a price leader when
a.
it is sold at the highest price.
b.
its price maximizes profits.
c.
an increase or decrease in price leads to increased revenue or lower costs.
d.
it is sold at less than cost in the hope that sales of other products will increase.
e.
its price leads the industry in sales.
101. To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase
other groceries as well. This pricing strategy is called
a.
price lining.
b.
special-event pricing.
c.
differential pricing.
d.
comparison discounting.
e.
price leader pricing.
102. Which of the following pricing strategies often results in a retailer losing money on the product?
a.
Price leader
b.
Psychological discounting
c.
Penetration pricing
d.
Special-event pricing
e.
Ethical pricing
103. Chris is planning three sales during the third quarter of the year at Toys R’ Us. The first is at the beginning of the
school year, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to
be
a.
psychological pricing.
b.
calendar discounting.
c.
sales promotion pricing.
d.
special-event pricing.
e.
captive pricing.
104. Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail
outlet is called
a.
competition-based pricing.
b.
reference pricing.
c.
comparison discounting.
d.
captive pricing.
e.
psychological pricing.
105. The manager at Target puts a sign up next to a Samsung audio system that reads, "Only $299.99! $60 less than at
Best Buy." This is an example of what type of pricing strategy?
a.
Random discounting
b.
Periodic discounting
c.
Comparison discounting
d.
Penetration pricing
e.
Everyday low prices
106. Pricing strategies and methods
a.
help direct and structure the selection of a final price.
b.
are the last decisions made for a new product.
c.
are the same for all of a company's products.
d.
are the most important decisions made for a product.
e.
require limited planning on the part of management.
107. Scenario 20.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line
would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be
priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through
more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands
sold in department stores and about customers' perceptions of those brands.
Refer to Scenario 20.1. Ray-Ban's plan of gathering information about the other brands sold in department stores,
including their prices, would most likely be used in a ____ basis for pricing.
a.
Cost
b.
Competition
c.
Demand
d.
Customer
e.
Market
108. Scenario 20.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line
would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be
priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through
more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands
sold in department stores and about customers' perceptions of those brands.
Refer to Scenario 20.1. Given Ray-Ban's plan for positioning the new sunglass line, they should use a ____ strategy when
introducing their new product.
a.
promotional
b.
penetration
c.
price-skimming
d.
reference
e.
secondary-market
109. Scenario 20.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line
would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be
priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through
more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands
sold in department stores and about customers' perceptions of those brands.
Refer to Scenario 20.1. Ray-Ban has decided to promote the new sunglass line as an "affordable luxury" and plans
significant promotional expenditures. With these objectives, which of the following should Ray-Ban use to price its
product line?
a.
competition-based pricing
b.
cost-plus pricing
c.
markup pricing
d.
demand-based pricing
e.
differential pricing
110. Scenario 20.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line
would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be
priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through
more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands
sold in department stores and about customers' perceptions of those brands.
Refer to Scenario 20.1. If Ray-Ban selected the prices for its new sunglasses to be $60, $70, or $80, this would most likely
be an example of using ____ pricing to enhance its distinctive positioning strategy.
a.
product-line
b.
odd-even
c.
professional
d.
promotional
e.
penetration
111. Scenario 20.2
Use the following to answer the questions.
Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing
the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual
vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual
basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a
fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies
vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit,
the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to
encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit.
Refer to Scenario 20.2. Glenwood's new pricing strategy is an example of ____ pricing.
a.
percentage
b.
cost-based
c.
customary
d.
bundle
e.
demand-based
