Apple iPhone: Apple, Inc.'s iPhone first went on sale on June 29, 2007.
Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products, and the iPhone enjoyed a tremendous amount of buzz before its introduction. As expected, the iPhone entered the market at what many believed to be a high price ($599). However, within weeks, the price was reduced to $399. By the end of 2007, over eight million iPhones had sold in the U.S. marketplace. By most, if not all measures, the original iPhone was a huge success for Apple and its then-exclusive U.S. carrier AT&T. On July 11, 2008, Apple, Inc. released the iPhone 3G, which it advertised as being twice as fast as the original iPhone for half the cost.
However, in order to obtain an iPhone at the new price of $199, buyers had to agree to a two-year service contract with AT&T. This approach succeeded, and over a million iPhone 3Gs were sold during the introductory weekend. In 2011, the iPhone 4S—the fifth generation iPhone—led cellular phone sales with more than 25 million units sold. Several Android-based phones manufactured by Samsung were not far behind, however.
- Refer to Apple iPhone. When the iPhone 3G was released at half the cost of the current iPhone, it appeared that Apple's strategic focus had shifted from maximizing profits to gaining market share. Its lowered price was consistent with the approach.
a. price bracketing
b. penetration pricing
c. price lining
d. price-fixing
e. price skimming
ANSWER: b
- Refer to Apple iPhone. When Apple introduced the iPhone at a high price, it was probably using a ___ strategy to maximize profits.
a. price bracketing
b. penetration pricing
c. price lining
d. price-fixing
e. price skimming
ANSWER: e
- Refer to Apple iPhone. Samsung recently introduced the Galaxy S III cellular phone, apparently to compete directly with the iPhone 4S. If Samsung checked the price of the iPhone at the Apple Store and leading cellular carrier locations and then set the price of the Galaxy S III to match the iPhone's price, it would be using a ___ pricing approach.
a. bracketing
b. penetration
c. status quo
d. retain maintenance
e. skimming
ANSWER: c
- Refer to Apple iPhone. Best Buy also carries the iPhone. If Best Buy, Apple, and leading cellular carriers meet to agree on a price for the iPhone, they are likely guilty of ___.
a. price fixing
b. retail price maintenance
c. price discrimination
d. penetration pricing
e. price skimming
ANSWER: a
- Refer to Apple iPhone. Apple has several options available for competing with Samsung and its Galaxy S III phone. If Apple chooses to compete by pricing its product at a low price to drive Samsung out of the market, this would be considered:
a. price fixing
b. retail price maintenance
c. price discrimination
d. predatory pricing
e. fair competition
ANSWER: d
- Refer to Apple iPhone. HSBC Group is the world's largest banking group. When the iPhone 3G was released, HSBC considered switching from BlackBerry handsets to iPhone 3Gs. This would mean ordering 200,000 iPhones, so HSBC would probably receive special pricing incentives, including a:
a. functional discount.
b. cash discount.
c. seasonal discount.
d. rebate.
e. quantity discount.
ANSWER: e
- Refer to Apple iPhone. For one fee, the basic AT&T cellular package includes 450 minutes of cellular calls, with free nights and weekend minutes, unlimited data, visual voice mail, 200 text messages, rollover minutes, and unlimited mobile-to-mobile service within the AT&T network. AT&T is using price:
a. bundling
b. skimming
c. baiting
d. leading
e. lining
ANSWER: a
- Refer to Apple iPhone. Consumers who agree to the two-year AT&T service contract are required to pay a cancellation fee if they leave AT&T prior to the end of the two-year period. This fee is a consumer:
a. bundling.
b. penalty.
c. lining.
d. stimulus.
e. markdown.
ANSWER: b
Learn More :
Marketing Chapter 21
- The Great Brands campaign, developed by the American Advertising Federation, promoted the economic power of advertising by:
- Which of the following can be identified as the American advertising industry's primary trade organization?
- The _____ has been running a campaign for several years to convince consumers around the world of the economic value of advertising.
- Which of the following statements can be used to refute the argument that advertising reduces the number of choices available to consumers?
- Which of the following beliefs takes a positive view of advertising's economic effects?
- Which of the following statements show how advertising can increase the cost of a product?
- Which of the following is the major reason why the American Advertising Federation created and implemented an integrated marketing communications campaign?
- Marketers who believe that advertising equals _____ sees advertising as providing consumers with useful facts of the products, increasing their price sensitivity, and increasing competition in the market.
- If a marketer for an established company believes potential entrants to the marketplace must overcome established brand loyalty and spend relatively more on advertising, then he or she must believe that advertising equals:
- The belief that advertising equals _____ reflects traditional economic thinking that views advertising as a way to change consumers' tastes, lower their sensitivity to price, and build brand loyalty among buyers of the advertised brand.
- Identify the statement that supports the advertising equals information concept?
- Many argue that industry prices decrease as a result of advertising. Which of the following concepts supports this view?
- Which of the following statements support the advertising equals market power ideology?
- ____ is a good example of a relatively homogeneous product, which through advertising has achieved perceived brand differentiation.
- From an economic perspective, advertising might lower the cost of a product by:
- Consumer advocates argue that:
- Some critics say advertising hampers consumer choice. Which of the following justifications could potentially silence them?
- For many years Rolex watches and Colt firearms spent very little money on advertising yet were successful brands. The success of these products can be interpreted as evidence that:
- Some economists argue the reason Nike has such a high market share in the athletic shoe industry is because the company spends much more on media advertising and for endorsement contracts than other shoe manufacturers. This makes it difficult for new companies to enter the industry and compete against Nike because it has created:
- Barriers to entry mainly refer to:
- Large advertisers usually sell more of a product or service, which means they may have lower production costs and can allocate more monies to advertising, so they can afford the costly but more efficient media like network television. Which of the following phenomena describes this effect?
- Procter & Gamble spends over $2 billion annually on advertising for its various consumer products and can make large media purchases at rates lower than its smaller competitors. This is an example of how a large advertiser can achieve a competitive advantage based on:
- Advertising creates makes the products or services of large advertisers are perceived as unique or as better than competitors' products. This process can be referred to as:
- Larger companies often end up charging higher prices and achieve a more dominant position in the market than smaller firms that cannot compete against them and their large advertising budgets. When this occurs, advertising:
- Some critics say advertising hampers consumer choice. Identify the most reasonable justification for this argument.