1) A company sets not a single price, but rather a ________ that covers different items in its line that change over time as products move through their life cycles.
A) pricing by-product
B) pricing structure
C) pricing loop
D) pricing cycle
E) pricing bundle
Answer: B
Diff: 1 Page Ref: 313
Skill: Concept
Objective: 11-1
2) Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.
A) market-level pricing
B) market-competitive pricing
C) market-skimming pricing
D) market-price lining
E) market-price filling
Answer: C
Diff: 2 Page Ref: 314
Skill: Concept
Objective: 11-1
3) Of the following, which statement(s) would NOT support a market-skimming policy for a new product?
A) The product's quality and image support its higher price.
B) Enough buyers want the products at that price.
C) Competitors are not able to undercut the high price.
D) Competitors can enter the market easily.
E) C and D
Answer: D
Diff: 3 Page Ref: 314
Skill: Concept
Objective: 11-1
4) A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future.
A) price skimming
B) trial pricing
C) value pricing
D) market-penetration pricing
E) prestige pricing
Answer: A
Diff: 2 Page Ref: 314
Skill: Concept
Objective: 11-1
5) ________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.
A) Market-skimming
B) Market-penetration
C) Below-market
D) Value-based
E) Leader
Answer: B
Diff: 1 Page Ref: 314
Skill: Concept
Objective: 11-1
6) Which of the following conditions would NOT support the use of a market-penetration pricing strategy?
A) The market is highly price sensitive.
B) Production and distribution costs will fall as sales volume increases.
C) The product's quality and image support a high price.
D) A low price would help keep out the competition.
E) A and C
Answer: C
Diff: 3 Page Ref: 315
Skill: Concept
Objective: 11-1
7) Which of the following is a reason that a marketer would choose a penetration pricing strategy?
A) to ensure the company has the ability to increase prices once demand decreases
B) to focus on the rapid achievement of profit objectives
C) to appeal to different consumer segments with different levels of price sensitivity
D) to create markets for highly technical products
E) to discourage competition from entering the market
Answer: E
Diff: 3 Page Ref: 315
Skill: Concept
Objective: 11-1
8) Companies usually develop ________ rather than ________.
A) single products; product families
B) product lines; single products
C) product families; product lines
D) product brands; product images
E) product images; product brands
Answer: B
Diff: 2 Page Ref: 315
Skill: Concept
Objective: 11-2
9) A marketer must be familiar with the five major product mix pricing situations. Which of the following is NOT one of them?
A) product line pricing
B) optional product pricing
C) captive product pricing
D) unbundled product pricing
E) by-product pricing
Answer: D
Diff: 3 Page Ref: 315
Skill: Concept
Objective: 11-2
10) A challenge for management in product line pricing is to decide on the price steps between the ________.
A) various products in a line
B) product mixes
C) product groupings
D) product lines
E) channel partners
Answer: A
Diff: 2 Page Ref: 315
Skill: Concept
Objective: 11-2
11) Typically, producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product.
A) low; low markups
B) high; low markups
C) low; high markups
D) high; high markups
E) moderately; moderate markups
Answer: C
Diff: 2 Page Ref: 316
Skill: Concept
Objective: 11-2
12) Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is being used?
A) product line pricing
B) optional product pricing
C) captive product pricing
D) by-product pricing
E) product bundle pricing
Answer: C
Diff: 2 Page Ref: 316
Skill: Concept
Objective: 11-2
13) In the case of services, captive product pricing is called ________ pricing.
A) by-product
B) optional product
C) two-part
D) bundle
E) segmented
Answer: C
Diff: 2 Page Ref: 316
Skill: Concept
Objective: 11-2
14) When amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n) ________ pricing strategy.
A) by-product
B) optional-product
C) two-part
D) skimming
E) penetration
Answer: C
Diff: 2 Page Ref: 316
Skill: Concept
Objective: 11-2
15) HiPoint Telephone Company uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed fee plus a(n) ________.
A) fixed usage rate
B) variable usage rate
C) standard usage rate
D) market usage rate
E) optional usage rate
Answer: B
Diff: 2 Page Ref: 316
Skill: Concept
Objective: 11-2
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