Question 1

The Robinson-Patman Act allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

Accepted Answer

A)  using price differentials when price differences charged to different customers do not exceed the differences in the cost of manufacture, sale, or delivery resulting from different methods or quantities in which such goods are sold or delivered to buyers
B)  using price differentials when price differences are given on the basis of other family businesses
C)  using price differentials when charging different prices to different buyers for goods of like grade or quality
D)  using price differentials when charging different prices on the basis of religious affiliation
E)  using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specificationsF) None of the above
G) A) and B)

Question 2

Noncumulative quantity discounts refers to

Accepted Answer

A)  discounts that are based on a series of orders rather than on the size of an individual order.
B)  onetime discounts per customer or household.
C)  onetime discounts that must be used within a certain time frame or they will become null and void.
D)  discounts used to place new products on supermarket shelves.
E)  discounts that are based on the size of an individual purchase order rather than a series of orders.F) C) and D)
G) A) and C)

Question 3

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Accepted Answer

A)  above-, at-, or below-market pricing.
B)  loss-leader pricing.
C)  penetration pricing.
D)  standard markup pricing.
E)  experience curve pricing.F) B) and E)
G) C) and E)

Question 4

What is the difference between noncumulative and cumulative quantity discounts?

Accepted Answer

Noncumulative quantity discounts are bas...

Question 5

Suppose a manufacturer quotes price in the following form: List price-$100 less 30/10/5. When calculating this trade discount, the first number "30" in the percentage sequence always refers to the

Accepted Answer

A)  discount to the ultimate consumer.
B)  manufacturer's cost.
C)  retail end of the channel.
D)  channel intermediary closest to the manufacturer.
E)  original unit cost.F) A) and D)
G) D) and E)

Question 6

Customary pricing refers to

Accepted Answer

A)  a pricing method where the price the seller quotes includes all transportation costs.
B)  setting the same price for similar customers who buy the same product and quantities under the same conditions.
C)  deliberately selling a product below its list price to attract attention to it.
D)  setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
E)  pricing based on what the market will bear.F) B) and C)
G) A) and D)

Question 7

What are the conditions favoring the use of penetration pricing?

Accepted Answer

The conditions favoring penetration pric...

Question 8

What is the difference between an EDLP retailer and a high-low retailer? Why does Carmex charge them a different price?

Accepted Answer

Everyday low price (EDLP) retailers, suc...

Question 9

A skimming pricing policy is likely to be most effective when

Accepted Answer

A)  consumers perceive your product to be similar to other products on the market.
B)  a lower price will significantly lower fixed costs.
C)  customers interpret the high price as signifying high quality.
D)  consumers tend to be price-sensitive.
E)  it is easier to set measurable sales unit goals.F) C) and D)
G) A) and D)

Question 10

What is experience curve pricing and how does it relate to marketing strategies?

Accepted Answer

Experience curve pricing is based on the...

Question 11

Setting an annual target of a specific dollar volume of profit is referred to as

Accepted Answer

A)  target profit pricing.
B)  target return-on-investment pricing.
C)  loss-leader pricing.
D)  at-, above-, or below-market pricing.
E)  yield management pricing.F) A) and E)
G) A) and D)

Question 12

Which of the following companies would be most likely to use target return-on-investment pricing?

Accepted Answer

A)  a farmer
B)  a supermarket chain
C)  a book publisher
D)  a veterinarian
E)  an automobile manufacturerF) None of the above
G) A) and E)

Question 13

Target pricing is considered to be a __________ approach to pricing.

Accepted Answer

A)  cost-oriented
B)  profit-oriented
C)  demand-oriented
D)  competition-oriented
E)  service-orientedF) A) and B)
G) All of the above

Question 14

A critical assumption when using target profit pricing is that

Accepted Answer

A)  a higher average price will not cause the demand for a product to fall.
B)  a higher average price will cause the demand for a product to rise.
C)  a higher average price will always cause the demand for a product to fall.
D)  this form of pricing is extremely risky because profit is tied to the current value of the dollar.
E)  being first is essential if you increase your average price since all of your competitors will do the same.F) All of the above
G) C) and D)

Question 15

Product-line pricing involves determining (1)  the lowest-priced product and price; (2)  __________; and (3)  the price differentials for all other products in the line.

Accepted Answer

A)  the single most popular item in the line
B)  the least vulnerable product in the line
C)  the highest-priced product and price
D)  the most frequently sold product in the line
E)  the most price insensitive product in the lineF) B) and D)
G) C) and D)

Question 16

Frito-Lay recognizes that its tortilla chip products are partial substitutes for one another. Its bean and cheese dips and salsa sauces complement its tortilla chips. Frito-Lay uses this knowledge to set prices for each item in order to ensure that the entire line is profitable. This pricing strategy is known as

Accepted Answer

A)  bundle pricing.
B)  price lining.
C)  customary pricing.
D)  product-line pricing.
E)  loss-leader pricing.F) B) and D)
G) C) and D)

Question 17

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and

Accepted Answer

A)  regional pricing.
B)  flexible pricing.
C)  mode of transportation pricing.
D)  FOB origin pricing.
E)  FOB destination pricing.F) All of the above
G) B) and C)

Question 18

When establishing product-line pricing, the highest priced item is typically positioned as

Accepted Answer

A)  the oldest product item in the line.
B)  the premium item in the line in terms of quality and features.
C)  the largest selling product item in the line.
D)  the loss-leader item for the rest of the product line.
E)  the most price-insensitive product item in the line.F) B) and D)
G) C) and D)

Question 19

One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery. There is a website where independent interstate truckers can look for loads to carry on their return trips, known as backhauls. Because the trucks would normally return empty, truckers who use this website to generate business they would not have had otherwise receive a reduced shipping rate. This reduced rate for a backhaul is an example of

Accepted Answer

A)  penetration pricing.
B)  target pricing.
C)  cost-plus pricing.
D)  odd-even pricing.
E)  yield management pricing.F) A) and B)
G) B) and D)

Question 20

What is loss-leader pricing and why do retailers use it?

Accepted Answer

For a special promotion, many retail sto...

Exam 14: Arriving at the Final Price

Which of the following companies would be most likely to use target return-on-investment pricing?

Correct Answer
verified

The Robinson-Patman Act allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

Correct Answer
verified

Correct Answer
verified

What is the difference between noncumulative and cumulative quantity discounts?

Correct Answer
verified
Noncumulative quantity discounts are bas...
View Answer

Noncumulative quantity discounts refers to

Correct Answer
verified

A critical assumption when using target profit pricing is that

Correct Answer
verified

Setting an annual target of a specific dollar volume of profit is referred to as

Correct Answer
verified

Correct Answer
verified

Product-line pricing involves determining (1) the lowest-priced product and price; (2) __________; and (3) the price differentials for all other products in the line.

Correct Answer
verified

A skimming pricing policy is likely to be most effective when

Correct Answer
verified

Suppose a manufacturer quotes price in the following form: List price-$100 less 30/10/5. When calculating this trade discount, the first number "30" in the percentage sequence always refers to the

Correct Answer
verified

When establishing product-line pricing, the highest priced item is typically positioned as

Correct Answer
verified

What are the conditions favoring the use of penetration pricing?

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

Customary pricing refers to

Correct Answer
verified

What is loss-leader pricing and why do retailers use it?

Correct Answer
verified
For a special promotion, many retail sto...
View Answer

What is experience curve pricing and how does it relate to marketing strategies?

Correct Answer
verified
Experience curve pricing is based on the...
View Answer

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Correct Answer
verified

What is the difference between an EDLP retailer and a high-low retailer? Why does Carmex charge them a different price?

Correct Answer
verified
Everyday low price (EDLP) retailers, suc...
View Answer

Target pricing is considered to be a __________ approach to pricing.

Correct Answer
verified

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and

Correct Answer
verified

Exam 14: Arriving at the Final Price

Which of the following companies would be most likely to use target return-on-investment pricing?

Correct AnswerverifiedShow Answer

The Robinson-Patman Act allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the difference between noncumulative and cumulative quantity discounts?

Correct AnswerverifiedNoncumulative quantity discounts are bas...View AnswerShow Answer

Noncumulative quantity discounts refers to

Correct AnswerverifiedShow Answer

A critical assumption when using target profit pricing is that

Correct AnswerverifiedShow Answer

Setting an annual target of a specific dollar volume of profit is referred to as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Product-line pricing involves determining (1) the lowest-priced product and price; (2) __________; and (3) the price differentials for all other products in the line.

Correct AnswerverifiedShow Answer

A skimming pricing policy is likely to be most effective when

Correct AnswerverifiedShow Answer

Suppose a manufacturer quotes price in the following form: List price-$100 less 30/10/5. When calculating this trade discount, the first number "30" in the percentage sequence always refers to the

Correct AnswerverifiedShow Answer

When establishing product-line pricing, the highest priced item is typically positioned as

Correct AnswerverifiedShow Answer

What are the conditions favoring the use of penetration pricing?

Correct AnswerverifiedThe conditions favoring penetration pric...View AnswerShow Answer

Customary pricing refers to

Correct AnswerverifiedShow Answer

What is loss-leader pricing and why do retailers use it?

Correct AnswerverifiedFor a special promotion, many retail sto...View AnswerShow Answer

What is experience curve pricing and how does it relate to marketing strategies?

Correct AnswerverifiedExperience curve pricing is based on the...View AnswerShow Answer

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Correct AnswerverifiedShow Answer

What is the difference between an EDLP retailer and a high-low retailer? Why does Carmex charge them a different price?

Correct AnswerverifiedEveryday low price (EDLP) retailers, suc...View AnswerShow Answer

Target pricing is considered to be a __________ approach to pricing.

Correct AnswerverifiedShow Answer

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Noncumulative quantity discounts are bas...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

Correct Answer
verified

Correct Answer
verified
For a special promotion, many retail sto...
View Answer

Correct Answer
verified
Experience curve pricing is based on the...
View Answer

Correct Answer
verified

Correct Answer
verified
Everyday low price (EDLP) retailers, suc...
View Answer

Correct Answer
verified

Correct Answer
verified