CONCEPT
QUESTIONS
Multiple
Choice
1. ________ communicates to the
market the comp any’s intended value
positioning of its product or brand.
a. Packaging
b. Price
c.
Place
d. Promo tion
e. Physical evidence
Answer: b
2. Price has operated as the major determinant
of buyer choice amo ng poorer
nations, amo ng poorer groups , and with ________ products.
a. identical
b. over the Internet
c. similar
d. commo dity-type
e. none of the above
Answer: d
3. Comp anies
price their products in a number of ways. Small comp anies
prices are set by the boss, in larger comp anies,
pricing is handled by division and product-line managers. In industries where
price is a key factor, comp anies
often establish a ________ department reporting to other internal departments.
a. financial
b. pricing
c. sales
d. marketing
e. distribution
Answer: b
4. One of the
commo n mistakes made are: Price is
not revised often enough to capitalize on market changes; price is set ________
of the rest of the marketing mix rather than an intrinsic element of a
marketing-positioning strategy.
a. divergently
b. too high
c. intrinsically
d. independently
e. concurrently
Answer: d
5. “Power prices” use price as a key strategic
tool. These “power pricers” have discovered the highly ________ effect of price
on the bottom line.
a. dramatic
b. abrasive
c. leveraged
d. direct
e. soothing
Answer: c
6. Purchase decisions are based on how consumers
perceive prices and what they consider to be the ________ price—not the marketer’s stated price.
a. current actual
b. last purchased price
c. current sale price
d. referent price
e. none of the above
Answer: a
7. The definition of ________
prices is: In considering an observed price, consumers often comp are it to an internal memo ry
reference price or an external frame of reference (such as a posted “regular retail
price”).
a. historical
b. reference
c. promo tional
d. everyday
low price
e. none of the
above
Answer: b
8.
Many consumers use price as an indicator of ________. Image pricing is
especially effective with ego-sensitive products such as perfumes and expensive
cars.
a. status
b. quality
c. ability
d. capability
e. size
Answer: b
9. Pricing cues, such as sale
signs and prices that end in a 9, become less effective the mo re they are emp loyed.
Anderson and Simester maintain that they must be used judiciously on those
items where consumers’ price knowledge may be poor. Which of the following is NOT one of these signs?
a. Quality or sizes vary across stores.
b. Product designs vary over time.
c. The store caters to low-involvement shoppers.
d. Customers are new.
e. Customers purchase the item
infrequently.
Answer: c
10. A firm must set a price for the first time when
it develops a new product, when it
introduces its regular product into a new distribution channel or geographical
area, and when it ________.
a. needs to increase bottom line
results
b. raises prices due to cost
escalation
c. rolls out an imp roved product
d. enters bids on new contract
work
e. changes styles
Answer: d
11.
Consumers often rank brands according to price tiers in a category. Within any
tier, there is a range of acceptable prices, called ________. These provide
managers with some indication of the flexibility and breadth they can adopt in
pricing their brands within a particular price tier.
a. price bands
b. price clusters
c. price groups
d. price cues
e. none of the above
Answer: a
12.
A firm has to consider many factors in setting its pricing policy. We list
these as a six-step process. Which of the following is NOT one of these steps ?
a. Determining demand.
b. Selecting the pricing objective.
c. Researching reference prices in the target
market.
d. Selecting the final price.
e. Selecting a pricing method.
Answer: c
13. A firm first decides where it wants to
position its market offering. A comp any
can pursue any of five major objectives through pricing. Which of the following
is NOT one of these
objectives?
a. Predatory pricing
b. Survival
c. Maximum current profit
d. Maximum market share
e. Product-quality leadership
Answer: a
14.
In market-penetration pricing, the comp any’s
objective in pricing is to ________, believing that higher sales volume will
lead to lower unit costs and higher long-run profits.
a. block comp etitive
launches
b. maximize their market share
c. minimize their market share
d. maximize volume
e. none of the above
Answer: b
15. Market-skimming prices make sense under the
following conditions EXCEPT ________.
a. the high price communicates
high value
b. the high initial price blocks comp etition
from entering the market
c. the unit costs of producing
a small number of units is high
d. the product is a “me-too”
and contains no new technology or points of difference
e. a sufficient number of
buyers have a high current demand
Answer: d
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