Kotler Chapter 11

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 ) pricing bundle Ans!er" B Diff" 1 #age $ef" %11 &'ill" Concept (bective" 11-1 *) Companies facing the challenge of setting prices for the first time can choose bet!een t!o  broad strategies" mar'et-penetration pricing and ________. A) mar'et-level pricing B) mar'et-competitive pricing C) mar'et-s'imming pricing D) mar'et-price lining ) mar'et-price filling Ans!er" C Diff" * #age $ef" %1* &'ill" Concept (bective" 11-1 %) (f the follo!ing, !hich statement !ould +( support a mar'et-s'imming policy for a ne!  product A) he products /uality and image support its higher price. B) nough buyers !ant the products at that price. C) Competitors are not able to undercut the high price. D) Competitors can enter the mar'et easily. ) C and D Ans!er" D Diff" % #age $ef" %1* &'ill" Concept (bective" 11-1

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5) A firm is using ________ !hen it charges a high, premium price for a ne! product !ith the intention of reducing the price in the future. A) price s'imming B) trial pricing C) value pricing D) mar'et-penetration pricing ) prestige pricing Ans!er" A Diff" * #age $ef" %1* &'ill" Concept (bective" 11-1 6) ________ pricing is the approach ap proach of setting a lo! initial price in order to attract a large number of buyers /uic'ly and !in a large mar'et share. A) 7ar'et-s'imming B) 7ar'et-penetration C) Belo!-mar'et D) 8alue-based ) 9eader  Ans!er" B Diff" 1 #age $ef" %1% &'ill" Concept (bective" 11-1 :) Accent &oft!are faces the conditions belo!, all of !hich support Accents use of a mar'et penetration pricing strategy ;C# that ________. A) the mar'et is highly price sensitive B) production and distribution costs !ill fall as sales volume increases C) the products /uality and image support suppo rt a high price D) a lo! price !ould help 'eep out the competition ) A and C Ans!er" C Diff" % #age $ef" %1% &'ill" Concept (bective" 11-1

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5) A firm is using ________ !hen it charges a high, premium price for a ne! product !ith the intention of reducing the price in the future. A) price s'imming B) trial pricing C) value pricing D) mar'et-penetration pricing ) prestige pricing Ans!er" A Diff" * #age $ef" %1* &'ill" Concept (bective" 11-1 6) ________ pricing is the approach ap proach of setting a lo! initial price in order to attract a large number of buyers /uic'ly and !in a large mar'et share. A) 7ar'et-s'imming B) 7ar'et-penetration C) Belo!-mar'et D) 8alue-based ) 9eader  Ans!er" B Diff" 1 #age $ef" %1% &'ill" Concept (bective" 11-1 :) Accent &oft!are faces the conditions belo!, all of !hich support Accents use of a mar'et penetration pricing strategy ;C# that ________. A) the mar'et is highly price sensitive B) production and distribution costs !ill fall as sales volume increases C) the products /uality and image support suppo rt a high price D) a lo! price !ould help 'eep out the competition ) A and C Ans!er" C Diff" % #age $ef" %1% &'ill" Concept (bective" 11-1

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%0) #romotional pricing can have all of the follo!ing adverse effects ;C# ________. A) creating deal-prone customers B) eroding the brands value in the eyes of customers C) giving pricing secrets a!ay to competitors D) becoming addicting to both the customer and business ) instigating industry price !ars Ans!er" C Diff" * #age $ef" %* &'ill" Concept (bective" 11-% %=) he most li'ely effect of the fre/uent use of promotional pricing is an industry ________. A) e?pansion B) price !ar  C) erosion D) cooperation ) imbalance Ans!er" B Diff" * #age $ef" %* &'ill" Concept (bective" 11-% %>) )  Copyright 2 *1 #earson ducation, 3nc. #ublishing as #rentice 4all

05) Iailure to enter the current price into a retailers system may result in charges of ________. A) predatory pricing B) scanner fraud C) retail maintenance pricing D) discriminatory pricing ) price-fi?ing Ans!er" B Diff" * #age $ef" %% AAC&B" Jse of 3 &'ill" Concept (bective" 11-5 06) Comparison pricing claims are legal if they are truthful. 4o!ever, sellers should not advertise a price reduction unless ________. A) it is a saving from the usual retail price B) a KfactoryK price, if listed, is !hat it is claimed to be C) a K!holesaleK price, if listed, is !hat it is claimed to be D) Kcomparable value itemsK are not actually imperfect goods ) all of the above Ans!er"  Diff" 1 #age $ef" %% AAC&B" thical $easoning &'ill" Concept (bective" 11-5 0:) 8aleo Iashions has ust introduced a ne! line of fashion dresses for teens. hey !ill initially enter the mar'et at high prices in a ________ pricing strategy. A) mar'et-penetration B) mar'et-s'imming C) competitive mar'et D) psychological ) demographic Ans!er" B Diff" * #age $ef" %1* AAC&B" $eflective hin'ing &'ill" Application (bective" 11-1

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00) 7ar'et-s'imming pricing !ould li'ely be most effective in selling ________. A) any convenience item B) an electronic device for !hich research and development must be recouped C) shampoo and bath soap D) anything easily copied by competitors ) most items at D9# retailers such as ) 5 Copyright 2 *1 #earson ducation, 3nc. #ublishing as #rentice 4all

=:) A manufacturer offers %1, net %, terms to a !holesaler for a recent purchase. he !holesaler may deduct ________ percent if the bill is paid !ithin ________ days. A) 1@ % B) 1@ % C) %@ % D) %@ 1 ) 0@ 1 Ans!er" D Diff" % #age $ef" %1: AAC&B" Analytic &'ills &'ill" Application (bective" 11-% =0) ) 9ancaster $ecycling has a history of problems !ith customers !ho do not pay their bills on time. 9ancaster $ecycling !ants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. he company might consider !hich of the follo!ing forms of pricing A) by-product B) inflation-adusted C) cash discounts D) captive-product ) penetration Ans!er" C Diff" % #age $ef" %1: AAC&B" $eflective hin'ing &'ill" Application (bective" 11-% >1) &ecret &nea'er !ill give anyone E1 for their old snea'ers, regardless of condition, !hen  purchasing a ne! pair of snea'ers. he end result is essentially reducing the price of the ne! snea'ers by E1. : Copyright 2 *1 #earson ducation, 3nc. #ublishing as #rentice 4all

>*) Bose prices its most e?pensive noise reduction earphones at E%>>.>6, !hich is a full E1. more than its ne?t most e?pensive earphones. 3t costs Bose only a fe! dollars more to ma'e the most e?pensive earphones. Bose is using ________ pricing. A) customer-segment B) product-form C) s'imming D) penetration ) captive-product Ans!er" B Diff" % #age $ef" %1: AAC&B" $eflective hin'ing &'ill" Application (bective" 11-% >%) he Chicago Bears organiation charges different prices for seats in different areas of the &oldier Iield, even though the costs are the same. his form of pricing is called ________. A) location pricing B) s'imming pricing C) product form pricing D) fle?ible pricing ) penetration pricing Ans!er" A Diff" * #age $ef" %1: AAC&B" $eflective hin'ing &'ill" Application (bective" 11-% >5) 7anor Cinemas has announced that seniors over : years of age can enter the theater for free  prior to 5" p.m. !hen accompanied by a paying customer. his is an e?ample of ________. A) promotional pricing B) discounts and allo!ances C) by-product pricing D) product bundle pricing ) none of the above Ans!er" A Diff" * #age $ef" %* AAC&B" $eflective hin'ing &'ill" Application (bective" 11-%

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>6) he HC 0) Big 7i'es 4ealth Iood &tore sells nutritional energy-producing foods. he price of the  products sold varies according to individual customer accounts and situations. Ior e?ample, long-time customers receive discounts. his strategy is an e?ample of ________. A) price elasticity B) cost-plus pricing C) dynamic pricing D) value pricing ) penetration pricing Ans!er" C Diff" % #age $ef" %** AAC&B" $eflective hin'ing &'ill" Application (bective" 11-%

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>=) &avings for Mou, a discount retail chain, is highly competitive.