Chapter 11 Pricing Strategies
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
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
3) Of the following, which statement 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
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
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
6) Accent Software faces the conditions below, all of which support Accent's use of a market- penetration pricing strategy EXCEPT that ________.
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
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
8) Companies usually develop ________ rather than single products.
A) product families
B) product lines
C) product groupings
D) product brands
E) product images
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
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) various target markets
11) When using price steps, the seller must establish perceived ________ that support the price differences.
A) nonprice competitions
B) quality differences
C) quantity levels
D) images
E) strategies
12) Many 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
13) 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) captive-product
D) skimming
E) penetration
14) 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 rate plus a ________.
A) fixed rate usage
B) variable usage rate
C) standard usage rate
D) market usage rate
E) none of the above
15) Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.
A) product bundle
B) optional-product
C) captive-product
D) by-product
E) skimming
16) Keeping in mind that a seller must sell by-products at a price that covers more than the cost of storing and delivering them, which of the following will by-product pricing permit a seller to do?
A) increase the main product's price
B) make extra profit
C) reduce the main product's price
D) none of the aboveE) B and C
17) With product bundle pricing, sellers can combine several products and offer the bundle ________.
A) as a working unit
B) at a reduced price
C) as a complete self-service package
D) as a reward to loyal customers
E) as segmented pricing
18) What is a major advantage of product bundle pricing?