تسويق شابتر 12 b

Chapter 13Pricing Management
ESSAY
1. Describe the six steps of the process that marketers can use to establish prices.
ANS:
Answer not provided.
PTS: 1 DIF: Moderate REF: p. 628

OBJ: 13-01 Describe the six major stages of the process used to establish prices.
NAT: AACSB: Communication | MKTG: Pricing MSC: Knowledge
2. What are some of the objectives a firm might hope to achieve when setting prices?
ANS:

OBJ: 13-02 Explore issues related to developing pricing objectives.
NAT: AACSB: Analytic | MKTG: Pricing MSC: Knowledge
3. How are pricing objectives similar to a corporation's overall goals? How are they different?
ANS:

NAT: AACSB: Analytic | MKTG: Pricing | MKTG: Strategy MSC: Knowledge
4. How can a marketer use product quality as a pricing objective to influence purchasing decisions?
ANS:
PTS: 1 DIF: Difficult REF: p. 630

NAT: AACSB: Reflective Thinking | MKTG: Pricing MSC: Knowledge
5. How might a marketer find information about a competitor's prices? Why is this information
important?
ANS:

OBJ: 13-04 Examine how marketers ananlyze competitors' prices.
6. Explain the difference between cost-plus and markup pricing.

ANS:

OBJ: 13-05 Describe the basis used for setting prices.
7. Describe, compare, and contrast the three major bases for setting prices.
ANS:
PTS: 1 DIF: Moderate REF: p. 633-636

8. Explain differential pricing and then describe the four major types.
ANS:
PTS: 1 DIF: Easy REF: p. 636

OBJ: 13-06 Explain the different types of pricing strategies.
9. Compare and contrast price skimming and penetration pricing.
ANS:

10. Identify and describe the four types of product-line pricing.
ANS:

11. Identify and describe six types of psychological pricing.
ANS:

12. What is bundle pricing? Give three examples, each one from a different industry.
ANS:

13. Explain the ethical implications of professional pricing.
ANS:

14. Under what conditions would a marketer most likely use a price leader strategy?
ANS:

15. What are some issues to consider when determining a specific price?
ANS:

MULTIPLE CHOICE
16. When establishing prices, a marketer's first step is to
a. determine demand.
b. develop pricing objectives.
c. select a pricing policy.
d. evaluate competitors' prices.
e. determine a pricing method.
ANS: B PTS: 1 DIF: Moderate REF: p. 628
17. Marketers must take steps to make sure that the pricing objectives they set are consistent with the
organization's ____ objectives and ____ objectives.
a. advertising; marketing
b. overall; marketing
c. marketing; promotional
d. overall; promotional
e. overall; revenue
18. If Wrigley set its pricing objective as attaining 38 percent of the chewing gum market, what else would
be needed to make this a true pricing objective?
a. Statement of demand elasticities
b. Identification of cost structure
c. Breakeven analysis
d. Identification of a time period for accomplishment
e. Establishment of a subsequent pricing policy
ANS: D PTS: 1 DIF: Difficult REF: p. 628
NAT: AACSB: Reflective Thinking | MKTG: Pricing MSC: Application
19. Which of the following is a requirement for setting pricing objectives?

a. The objectives should be short-term oriented.
b. There should be only one pricing objective.
c. An evaluation of competitors' prices should be made.
d. The cost structure should be identified.
e. The objectives should be explicitly stated.
ANS: E PTS: 1 DIF: Difficult REF: p. 628
20. When a company adjusts price levels so that it can increase sales volume to levels that match the
organization's expenses, it is said to employ a ____ objective.
a. market share
b. cash flow
c. return on investment
d. survival
e. profit
ANS: D PTS: 1 DIF: Easy REF: p. 629
21. Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in
which a firm's primary pricing objective is
a. status quo.
b. profit.
c. survival.
d. market share.
e. recovery.
ANS: C PTS: 1 DIF: Difficult REF: p. 629
NAT: AACSB: Analytic | MKTG: Pricing MSC: Comprehension
22. Westin Inc. has an objective of achieving a 25 percent return from its overall sales. This is an example
of a ____ pricing objective.
a. market share
b. cash flow
d. profit
e. status quo
ANS: D PTS: 1 DIF: Moderate REF: p. 629
NAT: AACSB: Analytic | MKTG: Pricing MSC: Application
23. Most pricing objectives based on ____ are achieved by trial and error because not all cost and revenue
data are available when prices are set.
a. market share
b. cash flow
d. survival
e. profit
24. Maintaining or increasing market share

a. can be achieved even if industry sales are flat or decreasing.
b. is an infrequently used pricing objective in most industries.
c. depends upon the overall growth of the total industry.
d. is a profit-related objective based on price.
e. is directly tied to leading an industry in product quality.
ANS: A PTS: 1 DIF: Moderate REF: p. 629
25. If Nabisco had established a pricing objective of selling one out of every three crackers consumed in
the world, it would have established an objective based on
a. cash flow.
b. market share.
c. survival.
d. return on investment.
e. dollar sales volume.
ANS: B PTS: 1 DIF: Easy REF: p. 629
26. A market share objective

a. is not recommended when sales for the total industry are declining.
b. is not especially useful when sales for the total industry are increasing.
c. is not especially useful when sales for the total industry are flat.
d. is useful primarily in an industry where total sales are increasing.
e. can be used effectively whether total industry sales are rising or falling.
ANS: E PTS: 1 DIF: Moderate REF: p. 629
27. A firm establishes which of the following pricing objectives to maintain or increase its product's sales
in relation to total industry sales?
a. Cash flow
b. Sales potential
c. Product quality
d. Market share
e. Status quo
28. Which of the following pricing objectives sets prices to recover cash as quickly as possible?
a. Market share
b. Profit
c. Cash flow
d. Return on investment
e. Product quality
29. A marketer is most likely to set prices according to a cash-flow objective when a
a. trial-and-error approach to the market is acceptable.
b. certain market share must be maintained.
c. quick return on investment is desired.
d. higher price is acceptable to the firm.
e. product is expected to have a long life cycle.
ANS: C PTS: 1 DIF: Moderate REF: p. 629
30. Gambrell Designs thinks its new product, the Automatic Dog Walker, will have a short product life
cycle; therefore, its marketing department sets its primary pricing objective as
a. market share.
b. cash flow.
c. profit.
d. product quality.
e. status quo.
ANS: B PTS: 1 DIF: Difficult REF: p. 630
31. Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and
achieving price stability are all associated with a ____ pricing objective.
a. product quality
b. market share
c. survival
d. profit
e. status quo
32. Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an
industry?
a. Status quo
b. Return on investment
c. Market share
d. Survival
e. Cash flow
ANS: A PTS: 1 DIF: Difficult REF: p. 630
NAT: AACSB: Reflective Thinking | MKTG: Pricing MSC: Comprehension
33. What type of pricing objective would an organization use if it were in a favorable position and desired
nothing more?
a. Return on investment
b. Cash flow
c. Profit
d. Status quo
e. Survival
34. Which type of pricing objective can reduce a firm's risk by helping to stabilize demand for its
products?
a. Status quo
b. Market share
c. Survival
d. Cash flow
e. Return on investment
NAT: AACSB: Reflective Thinking | MKTG: Pricing | MKTG: Strategy
MSC: Knowledge
35.If an organization sets prices to recover research and development expenses and establish a premium
quality image for its product, it would be using a ____ pricing objective.
a. survival
b. return on investment
c. market share
d. product quality
e. cash flow
36. The pricing of Clinique makeup considerably higher than brands such as Cover Girl, Revlon, and
Maybelline is used to communicate ____, which is the company's primary pricing objective.
a. market share
b. product quality
c. status quo
d. profitability
e. cash flow
NAT: AACSB: Analytic | MKTG: Pricing | MKTG: Strategy MSC: Application
37. Research indicates that both market share and ____ are good indicators of profitability.
a. low pricing
b. product quality
c. limited competition
d. sales growth
e. ROI pricing
MSC: Comprehension
38. When consumers are making do with less expensive products and shopping more selectively,
manufacturers and retailers must focus on the ____ of their products.
a. price
b. quality
c. availability
d. value
e. image
ANS: D PTS: 1 DIF: Moderate REF: p. 630-631
OBJ: 13-03 Understand the importance of identifying the target market's evaluation of price.
MSC: Knowledge
39. For customers, value is a function of the product's

a. quality attributes.
b. price.
c. price and durability.
d. quality and functional attributes.
e. quality relative to the quality of competing brands.
ANS: A PTS: 1 DIF: Easy REF: p. 630-631
40. Marketers improve their ability to establish prices appropriately when

a. there is nonprice competition.
b. they know prices charged for competing brands.
c. their products are of better quality than the competition's.
d. the main objective is image building.
e. using psychological pricing.
41. Some grocery stores collect data on competitive prices

a. by calling their competitors.
b. on a quarterly basis.
c. through stores' purchase data.
d. from their resellers.
e. by using full-time comparison shoppers.
42. Marketers at organizations engaged in nonprice competition

a. are more concerned about knowing competitors' prices than are marketers in organizations
that are engaged in price competition.
b. are not concerned about the prices of competing brands.
c. need competitive price information to make sure that their products are priced at
approximately the same level as the prices of competing brands.
d. rely on customers to help them gather information regarding the prices of competing
brands.
e. experience high levels of price instability.
43. Competitors' prices, along with the marketing variables they emphasize, are determining factors in
a. the instability of prices in a particular industry.
b. using markup pricing for consumer goods.
c. how much marketing research a firm needs to collect.
d. using differential pricing to demonstrate quality differences.
e. how important price will be to customers.
ANS: E PTS: 1 DIF: Moderate REF: p. 631-632
44. The three primary bases for developing prices are

a. profit, demand, and competition.
b. supply, demand, and marketing objectives.
c. demand, competition, and cost.
d. markup, cost, and cost-plus.
e. negotiation, periodicity, and randomness.
ANS: C PTS: 1 DIF: Easy REF: p. 633-635
45. When a seller's costs are usually determined during or after a product is made and then a specified
percentage or dollar amount is added to the cost to establish a price, an organization is using ____
pricing.
a. markup
b. demand-based
c. differential
d. cost-plus
e. expensed-based
46. For custom-made equipment or commercial construction projects, which pricing method is most likely
used?
a. Prestige
b. Premium
c. Differential
d. Return-on-investment
e. Cost-plus
NAT: AACSB: Analytic | MKTG: Pricing MSC: Comprehension
47. Steinway produces concert grand pianos, often using the custom materials and designs desired by a
specific customer. The average price of these pianos runs about $50,000 depending on the exact piano.
What type of pricing does Steinway most likely use for these pianos?
a. Markup
b. Competition-based
c. Cost-plus
d. Demand-based
e. Secondary-market
48. The federal government often uses ____ pricing when it grants defense contracts.
a. markup
b. differential
c. breakeven
d. cost-plus
e. competition-based
MSC: Knowledge
49. A cost-based pricing method commonly used in retail is called

a. value pricing.
b. cost-plus pricing.
c. cost discounting.
d. differential pricing.
e. markup pricing.
ANS: E PTS: 1 DIF: Easy REF: p. 633
50. Which of the following statements about markup pricing is correct?

a. The use of similar markups reduces price competition.
b. Markup pricing is inconvenient to use.
c. Markup pricing results in a high price when demand is high and a low price when demand
is low.
d. Markup pricing is a demand-based pricing method.
e. Using markups makes pricing a time-consuming, difficult process.
ANS: A PTS: 1 DIF: Easy REF: p. 633
51. Markup is measured either as a percentage of ____ or a percentage of ____.

a. selling price; cost
b. cost; profit
c. revenue; contribution margin
d. resources used; cost
e. demand; competition
52. When determining markup as a percentage of cost, divide the markup amount by
a. price.
b. cost.
c. quantity.
d. revenue.
e. 100.
53. A retailer of Real Dry deodorant prices it at $2.00; it costs the retailer $1.40. What is the approximate
markup as a percentage of selling price?
a. 3 percent
b. 14.3 percent
c. 30 percent
d. 70 percent
e. 20 percent
54. J.C. Penney's pays $16.50 for a six-ounce bottle of cologne and sells it for $25.95. Its markup as a
percentage of cost is approximately ____ percent for this product.
a. 64
36
c. 18
d. 57
e. 45
OBJ: 13-05 Describe the basis used for setNAT: AACSB: Analytic |MKTG: Pricing
MSC: Application
55. If a product is priced based on how many or how few people want it at a particular time and place,
____ pricing is being used.
a. markup
b. demand-based
c. competitive
d. peak
e. differential
56.Amtrak prices its tickets so that it is less expensive to travel on weekends than during the week when there
is heavy business travel. This illustrates ____ pricing.
a. cost-plus
b. demand-based
c. competitive
d. secondary markup
e. seasonal
57. During July and August, Lakewood Links Golf Course, located in South Carolina, offers weekday
rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between
$25 and $35. This is an example of the use of
a. differential pricing.
b. incentives.
c. competition-based pricing.
d. demand-based pricing.
e. random discounting.
58. 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
59. 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.
60. 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.
61. If General Mills looks at Kellogg's cereal prices as the primary method of determining its own prices,
General Mills is using
a. price fixing.
b. price discrimination.
c. demand-based pricing.
d. market share pricing.
e. competition-based pricing.
62. If PepsiCo sets its twelve-pack price at $3.99 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
63. 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
64. 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.
65. 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.
66. 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
67.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.
68. A manager at JC Penney discovers that Sears 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
69. 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.
MSC: Knowledge
70. A sale that advertised prices "up to 65 percent off" the original price uses
a. tensile pricing.
c. periodic discounting.
d. bait pricing.
e. psychological pricing.
71. Price skimming and penetration pricing are both strategies used for
a. product-line pricing.
b. business products only.
c. psychological pricing.
d. new-product pricing.
e. promotional pricing.
72. When businesses charge the highest possible price that customers who really want the new product
will pay, they are using
a. premium pricing.
b. prestige lining.
c. captive pricing.
d. price skimming.
MSC: Knowledge
73. 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.
74. 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.
75. 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.
76.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.
77. A penetration pricing strategy is particularly appropriate when demand is

a. increasing.
b. highly elastic.
c. highly inelastic.
d. decreasing.
e. inefficient.
78. 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.
c. captive pricing.
d. price skimming.
e. everyday low prices.
79. 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
80. 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
NAT: AACSB: Analytic | MKTG: Pricing | MKTG: Strategy MSC: Comprehension
81. 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.

MSC: Knowledge
82.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.
MSC: Knowledge
83. 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.
84. 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
85. 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
86. When a company prices one item in a line low with the intention of selling a higher-priced item in the
same line, it is using
a. bait pricing.
b. a price leader.
c. penetration pricing.
d. price lining.
e. captive pricing.
MSC: Knowledge
87. 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.
88. 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.
d. odd-even pricing.
e. ethical pricing.
MSC: Knowledge
89. 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.
MSC: Knowledge
90. When a company attempts to influence a consumer's perception of price to make a product's price
more attractive and reduce "sticker shock," it is using a ____ pricing strategy.
a. competition-based
b. professional
c. promotional
d. comparison
e. psychological
91. All of the following are psychological techniques except

b. prestige pricing.
c. reference pricing.
d. odd-even pricing.
e. price skimming.
MSC: Knowledge
92. 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.
MSC: Knowledge
93. 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
94. 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.
95. 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.
96. Products such as light bulbs, canned soft drinks, and ice cream sandwiches are usually priced using
a. multiple-unit pricing.
c. price lining.
d. bundle pricing.
e. odd-even pricing.
97. The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo shirt is an application
of odd-even pricing, and even prices are often used to
a. give a product an upscale or exclusive image.
b. show customers products are priced based on tradition.
c. coordinate efforts with a promotional campaign.
d. indicate prices have been cut to the last penny.
e. facilitate comparison to competitors' prices.
98. 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.
99. If REVO sets the price for its sunglasses at $240, it is using psychological pricing to convey
a. thrift.
b. cost cutting.
c. value.
d. prestige.
e. availability.
100. Goods that are priced primarily based on the way they have always been priced are examples of
a. traditional pricing.
b. professional pricing.
c. everyday low prices.
d. price lining.
e. customary pricing.
MSC: Knowledge
101. What type of pricing strategy is used in a situation where demand for a product is price inelastic and
the seller has an ethical responsibility not to overcharge the client?
a. Price lining
b. Prestige pricing
c. Professional pricing
d. Customary pricing
e. Price skimming
102. 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.
103. 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.
104. 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.
MSC: Comprehension
105. 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.
106. 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
NAT: AACSB: Reflective Thinking | MKTG: Pricing MSC: Comprehension
107. A sale at The Bon Marche the day after Thanksgiving to kick off the Christmas season would be
considered
a. psychological pricing.
b. comparison discounting.
d. special-event pricing.
e. captive pricing.
108. 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.
c. comparison discounting.
d. captive pricing.
e. psychological pricing.
ANS: C PTS: 1 DIF: Easy REF: p. 644
109. The manager at Best Buy puts a sign up next to a Pioneer audio system that reads, "Only $199.99! $60
less than Circuit City." 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
ANS: C PTS: 1 DIF: Easy REF: p. 644
110. 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.
Scenario 13.1
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.
111. Refer to Scenario 13.1. 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
112. Refer to Scenario 13.1. 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
113. Refer to Scenario 13.1. 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
114. Refer to Scenario 13.1. 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
Scenario 13.2
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.
115. Refer to Scenario 13.2. Glenwood's previous pricing strategy is an example of ____ pricing, while the
new strategy is an example of ____ pricing.
a. percentage; cost-based
b. cost-based; psychological
c. sales-based; customary
d. a la carte; bundle
e. demand-based; bundling
116. Refer to Scenario 13.2. Glenwood has decided that it is going to offer a special package offer if the
prevention plan is purchased within the first 30 days of each year's time for vaccinations. This type of
pricing strategy would be an example of
b. secondary-market pricing.
c. introductory pricing.
d. periodic discounting.
117. Refer to Scenario 13.2. Glenwood's closest competitor, The Hearthstone Pet Hospital, currently
charges $60 for each basic office visit. If Glenwood were to price its basic office visit at $45, it would
most likely be employing which of the following?
b. penetration pricing.
c. prestige pricing.
d. price skimming.
e. cost-based pricing.
118. Refer to Scenario 13.2. Glenwood is considering a markup pricing basis, with the cost for office visit
plus vaccines at $45. If Glenwood were to add a markup of 33.3 percent of the costs, its price would be
____.
a. $79
b. $65
c. $55
d. $78
e. $60
TRUE/FALSE
119. The six stages of setting prices should always be followed if prices are to be set correctly.
ANS: F PTS: 1 DIF: Easy REF: p. 628

NAT: AACSB: Reflective Thinking | CBE: Model Pricing MSC: Knowledge
120. A marketer uses only one pricing objective to avoid organizational confusion.

121. Pricing objectives should be considered overall goals to aid the organization in its long-range plans.
ANS: T PTS: 1 DIF: Easy REF: p. 628

MSC: Knowledge
122. The objective of profit maximization is rarely operational because its achievement is difficult to
measure.
ANS: T PTS: 1 DIF: Moderate REF: p. 629

123. The objective of maintaining or increasing market share depends on growth in industry sales.
ANS: F PTS: 1 DIF: Moderate REF: p. 629

MSC: Knowledge
124. The use of market share as a pricing objective oversimplifies the value of price in contributing to
profits.
ANS: F PTS: 1 DIF: Difficult REF: p. 629

125. The role played by attitudes toward price in the overall evaluation of the marketing mix is a minor
concern in identifying the target market.

126. Knowing the target market's evaluation of price allows the marketer to know how much emphasis to
place on price and how to price a product relative to competition.

MSC: Knowledge
127. The price of a hotel room is more important to a business traveler than to a tourist.

NAT: AACSB: Analytic | MKTG: Pricing | MKTG: Customer MSC: Knowledge
128. The importance of price depends on the type of product, the type of target market, and the purchase
situation.

NAT: AACSB: Reflective Thinking | MKTG: Pricing | MKTG: Marketing Plan
MSC: Knowledge
129. A marketer is usually in a better position to establish prices when it knows the prices charged for
competing brands.

130. Some stores employ comparison shoppers to learn what prices their competitors are charging.

MSC: Knowledge
131. It is usually easy to obtain an accurate price list for a competitor's products.

132. Marketers that evaluate competitors' prices do so to set their own prices slightly below those of
competitors.

133. Cost-based pricing strategies result in a percentage being added to the cost of the product.

134. Cost-based pricing results in a high price when demand is high and a low price when demand is low.

135. One pitfall of cost-plus pricing for the buyer is that the seller may increase costs to establish a larger
profit base.

MSC: Knowledge
136. Cost-plus pricing is popular in periods of rapid inflation.

137. Markup pricing is not used often by marketers because establishing a percentage markup greatly
increases the complexity of the decision-making process.

138. Markup can be stated as a percentage of the cost or as a percentage of the selling price.

139. A major reason why retailers use markup pricing is that it is convenient.

140. The effectiveness of demand-based pricing often depends on a marketer's ability to determine all the
costs associated with the product.

141. Demand-based pricing strategies are easy to use.

142. A firm that considers costs and revenue secondary to competitors' prices when setting its own prices is
using a competition-based pricing strategy.
ANS: T PTS: 1 DIF: Difficult REF: p. 635

143. The government frequently uses competition-based pricing in granting defense contracts.

NAT: AACSB: Analytic |MKTG: Pricing MSC: Knowledge
144. Competition-based pricing is important if competing products are almost homogeneous or if price is
the key variable in the marketing strategy.
ANS: T PTS: 1 DIF: Difficult REF: p. 635

145. A pricing strategy is a course of action designed to achieve pricing and marketing objectives.

MSC: Knowledge
146. Differential pricing means different buyers pay different prices for the same quality and quantity of
product.

147. Differential pricing is effective mainly when focusing on only one market segment.

148. Grocery stores use negotiated pricing strategies.

149. An early-bird special offered by a restaurant during off-peak hours is an example of the secondary-
market pricing strategy.

150. Periodic discounting is often predictable so consumers wait to make purchases until they can benefit
from the price reductions.

NAT: AACSB: Reflective Thinking | MKTG: Pricing | MKTG: Customer
MSC: Knowledge
151. Random discounting means discounting various products on a systematic basis.

152. Two types of new-product pricing are price skimming and product-line pricing.
ANS: F PTS: 1 DIF: Easy REF: p. 638-639

153. Penetration pricing and price skimming of the market are two types of new-product pricing.
ANS: T PTS: 1 DIF: Easy REF: p. 638-639

154. Price skimming is designed to yield maximum unit sales volume.

MSC: Knowledge
155. The use of price skimming discourages competitors from entering a market.

156. Penetration pricing is one new-product pricing approach that provides the most flexible introductory
price.

157. A company wanting to maximize profits from its new product would use product-line pricing.
ANS: F PTS: 1 DIF: Difficult REF: p. 639

158. Captive pricing, premium pricing, bait pricing, and price lining are all strategies aimed at maximizing
the profits of an entire product line rather than an individual product.

159. Grocery stores that position their less expensive, private brands next to more expensive, well-known
manufacturer brands on the shelf are using the concept of reference pricing.

160. A psychological price is designed to encourage purchases on the basis of rational response rather than
on the basis of emotional reactions.

MSC: Knowledge
161. In some cases, prices are assigned to goods on the basis of nothing more than custom.

MSC: Knowledge
162. Prestige pricing is used when a higher price is consistent with buyers' attitudes toward the quality or
image of a product.

MSC: Knowledge
163. A price-leader approach is a pricing approach most often used in supermarkets to attract consumers by
giving them special low prices on a few items.

164. The local florist advertises a discount on arrangements during the month of April because the
anniversary of the store's opening is in April. This is an example of special-event pricing.

165. The way that pricing is used in the marketing mix will influence the determination of the final price.

NAT: AACSB: Reflective Thinking | MKTG: Pricing | MKTG: Marketing Plan
MSC: Knowledge

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Chapter 13Pricing Management

PTS: 1 DIF: Moderate REF: p. 628

PTS: 1 DIF: Moderate REF: p. 628

PTS: 1 DIF: Moderate REF: p. 628

PTS: 1 DIF: Difficult REF: p. 630

PTS: 1 DIF: Moderate REF: p. 631

6. Explain the difference between cost-plus and markup pricing.

PTS: 1 DIF: Moderate REF: p. 633

PTS: 1 DIF: Moderate REF: p. 633-636

PTS: 1 DIF: Easy REF: p. 636

9. Compare and contrast price skimming and penetration pricing.

PTS: 1 DIF: Moderate REF: p. 639-640

10. Identify and describe the four types of product-line pricing.

PTS: 1 DIF: Moderate REF: p. 639

11. Identify and describe six types of psychological pricing.

PTS: 1 DIF: Moderate REF: p. 641-643

PTS: 1 DIF: Moderate REF: p. 641

13. Explain the ethical implications of professional pricing.

PTS: 1 DIF: Moderate REF: p. 644

PTS: 1 DIF: Moderate REF: p. 644

PTS: 1 DIF: Moderate REF: p. 645

19. Which of the following is a requirement for setting pricing objectives?

24. Maintaining or increasing market share

26. A market share objective

39. For customers, value is a function of the product's

40. Marketers improve their ability to establish prices appropriately when

41. Some grocery stores collect data on competitive prices

42. Marketers at organizations engaged in nonprice competition

44. The three primary bases for developing prices are

49. A cost-based pricing method commonly used in retail is called

50. Which of the following statements about markup pricing is correct?

51. Markup is measured either as a percentage of ____ or a percentage of ____.

59. Competition-based pricing is

76.A price-skimming strategy assumes that

77. A penetration pricing strategy is particularly appropriate when demand is

ANS: E PTS: 1 DIF: Moderate REF: p. 639

91. All of the following are psychological techniques except

92. Reference pricing is

94. Bundle pricing may be perceived to be of value by customers because

98. Odd-even pricing is

110. Pricing strategies and methods

ANS: F PTS: 1 DIF: Easy REF: p. 628

ANS: F PTS: 1 DIF: Easy REF: p. 628

ANS: T PTS: 1 DIF: Easy REF: p. 628

ANS: T PTS: 1 DIF: Moderate REF: p. 629

ANS: F PTS: 1 DIF: Moderate REF: p. 629

ANS: F PTS: 1 DIF: Difficult REF: p. 629

ANS: F PTS: 1 DIF: Moderate REF: p. 631

ANS: T PTS: 1 DIF: Easy REF: p. 631

ANS: F PTS: 1 DIF: Moderate REF: p. 631

ANS: T PTS: 1 DIF: Easy REF: p. 631

ANS: T PTS: 1 DIF: Easy REF: p. 632

ANS: T PTS: 1 DIF: Easy REF: p. 632

ANS: F PTS: 1 DIF: Easy REF: p. 632

ANS: F PTS: 1 DIF: Moderate REF: p. 632

ANS: T PTS: 1 DIF: Easy REF: p. 633

ANS: F PTS: 1 DIF: Moderate REF: p. 633

ANS: T PTS: 1 DIF: Easy REF: p. 633

136. Cost-plus pricing is popular in periods of rapid inflation.

ANS: T PTS: 1 DIF: Moderate REF: p. 633

ANS: F PTS: 1 DIF: Moderate REF: p. 633

ANS: T PTS: 1 DIF: Easy REF: p. 633

ANS: T PTS: 1 DIF: Easy REF: p. 633

ANS: F PTS: 1 DIF: Moderate REF: p. 634

51. Markup is measured either as a percentage of or a percentage of .