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Basic Marketing: A Global Managerial Approach, 10/e

Stanley J. Shapiro
Kenneth B. Wong, Queens School of Business
William D. Perreault, University of North Carolina
E. Jerome McCarthy, Michigan State University

Pricing Objectives and Policies

Quiz Questions


1	Different industries have different names for price.
		A)	True
		B)	False


2	A flexible price policy is most often used in direct sales of business products and where bargaining is common.
		A)	True
		B)	False


3	A low penetration price discourages competitors from entering the market.
		A)	True
		B)	False


4	A firm in an oligopoly market has a lot of flexibility in setting its price.
		A)	True
		B)	False


5	Manufacturers may control the resale prices that retailers charge for their products.
		A)	True
		B)	False


6	The great risk in penetration pricing is:
		A)	underestimating market potential.
		B)	that cost-volume assumptions are not realized.
		C)	driving competitors out of the market and charges of predatory pricing.
		D)	attracting too many customers.
		E)	all of the above.


7	Which of the following is NOT a "something" that might be offered to consumers in the price equation?
		A)	packaging
		B)	repair facilities
		C)	warranty
		D)	stocking allowance
		E)	service


8	The major disadvantage of excessive seasonal discounting is:
		A)	loss of overall annual sales revenue.
		B)	it doesn't work well for service firms facing irregular demand.
		C)	it encourages customers to postpone purchasing until the annual sale occurs.
		D)	customers stocking products earlier than required.
		E)	it complicates pricing, confusing potential customers.


9	A pricing objective that seeks a specific level of profit is a:
		A)	sales-oriented objective.
		B)	status quo objective.
		C)	target return objective.
		D)	profit maximization objective.
		E)	value objective.


10	Charging "all the traffic will bear" is a ______________objective
		A)	meeting competition.
		B)	target return.
		C)	profit maximization.
		D)	growth in market share.
		E)	nonprice competition.


11	The problem with sales-oriented pricing objectives is that:
		A)	sales growth usually leads to declining profits.
		B)	many managers are evaluated by their level of sales.
		C)	larger sales don't necessarily lead to higher profits.
		D)	the number of units sold does not consider possible growth in the market.
		E)	all of the above.


12	Prices are "administered" when:
		A)	firms consciously set their own prices.
		B)	they are set by bargaining between buyers and sellers.
		C)	government regulators set prices.
		D)	they fall below "suggested list price."
		E)	consumers can ask for price changes.


13	A business products producer that has given its salespeople the right to adjust prices when necessary to get new business is using a _______________ policy.
		A)	skimming
		B)	one-price
		C)	penetration pricing
		D)	target return pricing
		E)	flexible price


14	Dow is introducing a new brand of car window cleaner in a mature market. To speed its entry into the market—without encouraging price competition—Dow should use:
		A)	a skimming pricing policy.
		B)	a penetration pricing policy.
		C)	a flexible price policy.
		D)	a one-price policy.
		E)	introductory price dealing.


15	A producer's price level decision is made by the market in:
		A)	a monopoly.
		B)	pure competition.
		C)	monopolistic competition.
		D)	all of the above.
		E)	none of the above.


16	Regarding price-level policies:
		A)	charging a lower price than competitors may not mean a firm is selling "below the market."
		B)	meeting competition is the only sensible policy in monopolistic competition.
		C)	a firm in pure competition may increase profit by pricing "below the market."
		D)	in an oligopoly situation, pricing "above the market" usually leads to an increase in profit.
		E)	All of the above are true.


17	Offering a cumulative quantity discount seeks to:
		A)	encourage the buyer to make additional purchases.
		B)	reduce the seller's shipping costs.
		C)	shift some of the storing function to the buyer.
		D)	eliminate some marketing function.
		E)	all of the above.


18	A retailer might expect a stocking allowance:
		A)	if the manufacturer can't fill an order by the promised delivery date.
		B)	to offset the handling costs for a new product.
		C)	to pass along to retail salesclerks who aggressively sell the product.
		D)	for paying the supplier's invoice before the product is delivered.
		E)	none of the above—stocking allowances only apply to wholesalers.


19	Uniform delivered pricing:
		A)	is just an extension of F.O.B. pricing.
		B)	usually results in higher delivered prices for everyone.
		C)	is most often used when transportation costs are relatively low.
		D)	results in all buyers paying less than the actual transportation costs.
		E)	All of the above are true.


20	Price discrimination:
		A)	is legal on the basis of quantities of goods purchased.
		B)	by firms selling to final consumers is illegal, but is usually legal in selling to intermediaries.
		C)	is always illegal.
		D)	is not covered by federal laws, but in some provinces it is illegal.
		E)	None of the above is true.

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