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Chapter 19 Pricing Strategies MATCHING Match each item with the .rtf


									                                                     Chapter 19
                                                  Pricing Strategies

        Match each item with the correct statement below.

        a.   competitive bidding                        i.   bundle pricing
        b.   penetration pricing strategy               j.   odd pricing
        c.   list price                                 k.   transfer price
        d.   allowance                                  l.   profit center
        e.   psychological pricing                      m.   skimming pricing strategy
        f.   promotional pricing                        n.   competitive pricing strategy
        g.   loss leader                                o.   zone pricing
        h.   cannibalization                            p.   market price
   1.   A(n) _____ involves the use of a high price relative to competitive offerings.
   2.   The use of a relatively low-entry price compared with competitive offerings is called a(n) _____.
   3.   A(n) _____ is designed to de-emphasize price as a competitive variable in the marketing mix.
   4.   The established price normally quoted to potential buyers is the _____.
   5.   The _____ is what a consumer or marketing intermediary actually pays for a product after subtracting any
        discounts, allowances, or rebates from the list price.
  6.    A trade-in is an example of a(n) _____.
  7.    A uniform-delivered pricing system used by companies such as FedEx and UPS is _____.
  8.    _____ is based on the belief that certain prices or price ranges make a product more appealing to buyers.
  9.    A price of $9.99 is an example of _____.
 10.    The pricing policy in which a lower-than-normal price is used as a temporary ingredient in a firm’s
        marketing strategy is called _____.
 11.    A(n) _____ is a product priced below cost to attract consumers to stores in the hope they will buy higher-
        priced merchandise.
 12.    Quoted prices on proposed purchases, that reflect the lowest price available, from a group of sellers are
        determined through _____.
 13.    A(n) _____ is a part of an organization to which revenues and costs can be assigned.
 14.    A manufacturer sells a product to a company-owned warehouse. The price charged is called (n) _____.
 15.    _____ is the loss of sales of an existing product due to competition from a new product in the same line.
 16.    Offering a printer along with a personal computer at a single price is an example of _____.


1. Which of the following is not an advantage of skimming pricing?
      a. It allows a manufacturer to quickly recover its research and development costs.
      b. It permits marketers to control demand in the introductory stages of a product’s life cycle.
      c. Potential competitors see innovative firms reaping large financial returns and decide to
          enter the market.
      d. It permits marketers to adjust productive capacity to match changing demand.
2. Penetration pricing works best when the demand for a product is:
      a. elastic.
      b. highly elastic.
      c. inelastic.
      d. highly inelastic.
3. A strategy of offering prices that are consistently lower than those of competitors is called _____ pricing.
       a. penetration
       b. skimming
       c. everyday low
       d. competitive
4. Retailers such as Home Depot and Lowe’s, who offer to meet or beat the best price offered by their
       competitors, use the strategy of _____ pricing.
       a. skimming
       b. penetration
       c. competitive
       d. cost-plus
5. Discounts off the list price given to channel members for performing marketing functions are called _____
      a. cash
      b. trade
      c. quantity
      d. transportation
6. A product’s market price is ordinarily the:
      a. same as the product’s list price.
      b. list price less any allowances and discounts that may be involved in the purchase.
      c. list price less any discounts and allowances plus any geographic considerations that may
      d. price that consumers pay using a credit card.
7. Discounts off the list price given for large-volume purchases are known as _____ discounts.
      a. cash
      b. trade
      c. quantity
      d. functional
8. In a recent special offer, any customer who brought in a toaster oven, working or not, was given a $50 credit
       toward the purchase of a new Amana microwave oven. This is an example of:
       a. psychological pricing.
       b. a promotional allowance.
       c. a cash discount.
       d. a trade-in.
9. Refunds of a portion of the purchase price usually given by manufacturers to purchasers of new products are
      known as:
      a. loss leaders.
      b. rebates.
      c. shipping charges.
      d. trade-ins.
10. An important geographic consideration in setting and quoting prices is the cost of:
      a. transportation.
      b. quality.
      c. flexibility.
      d. buyer involvement.
11. The type of geographical pricing that allows the firm to adjust the price by allowing the buyer to subtract
      transportation expenses from the bill is called _____ pricing.
      a. uniform-delivered
      b. basing point
      c. freight absorption
      d. FOB plant
12. When a manufacturer quotes the same price for goods (including freight charges) to a buyer in Miami,
     another in Los Angeles, and a third in Dallas, the seller is quoting a _____ price.
     a. uniform-delivered
     b. destination
     c. zone
     d. basing point
13. Unit pricing is:
      a. stating the price in terms of quantities of measure or numerical count.
      b. the opposite of odd pricing.
      c. the same as uniform delivered pricing.
      d. displayed in even dollar units, such as $5 or $8.
14. The practice of marketing merchandise at a limited number of prices is called _____ pricing.
      a. product-line
      b. odd
      c. one-price
      d. limited
15. In the absence of other cues:
       a. many buyers interpret low prices as signals of high-quality products.
       b. price offers no clue of a product's quality to prospective purchasers.
       c. price is an important indicator of product quality to consumers.
       d. the relationship between price and quality holds true only in declining economies.
16. Buyers and sellers often set purchase terms using negotiated contracts when:
      a. only one available supplier exists.
      b. there are a multitude of suppliers.
      c. research and development work is not necessary.
      d. purchases exceed $5,000.
17. Large-scale enterprises often have a dilemma with setting the _____ price, which is the price they charge
      themselves when sending goods from one company profit center to another.
      a. list
      b. transfer
      c. removal
      d. basing
18. For the purpose of transfer pricing, any part of the organization to which revenue and controllable costs can
      be assigned, such as a department, is referred to as a:
      a. profit center.
      b. revenue center.
      c. controllable costs center.
      d. sales department.
19. Transfer pricing becomes especially complex when the global market is involved because:
      a. a firm with activities in several countries can use transfer pricing as a tax-avoidance
          device and governments frown upon such activities.
      b. issues of quality control can be serious, even when divisions of the same firm are
      c. shipping materials across national lines involves payment of duties and taxes, and these
          become part of the total price of the goods.
      d. the temperature and humidity differences between origins and destinations often damage
          the products.
20. If a company is expanding into the global market and will be facing rather low foreign marketing costs,
       which is the recommended price approach?
       a. Standard worldwide price
       b. Dual pricing
       c. Market-differentiated pricing
       d. Transfer pricing
21. Online marketers run the risk of cannibalization when they:
      a. compete with off-price houses on the Net.
      b. self-inflict price cuts by creating competition among their own products.
      c. construct new stores alongside their Web sites.
      d. hold onto tradition in the face of new technology.
22. The use of bots to search out price quotes on specified products forces Internet marketers to:
      a. keep prices low.
      b. install “bot-stoppers.”
      c. use printer-disabling viruses.
      d. close their Web sites.

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