Archive for March 2022

What is interpersonal communication?

What is interpersonal communication?


a.

long-distance communication between a business and its target market

b.

direct communication between two or more people

c.

nonpaid information such as publicity

d.

paid communication placed in personal media



Answer: B

Frank's RedHot hot sauce created a "Sing the Blues" contest. Participants were asked to write original lyrics about Frank's RedHot sauce set to their favourite tune and submit their songs to the manufacturer. The writer of the winning song received a free all-expense paid trip to a House of Blues. What is this an example of?

Frank's RedHot hot sauce created a "Sing the Blues" contest. Participants were asked to write original lyrics about Frank's RedHot sauce set to their favourite tune and submit their songs to the manufacturer. The writer of the winning song received a free all-expense paid trip to a House of Blues. What is this an example of?


a.

a sales promotion

b.

advertising

c.

a public relations activity

d.

personal selling



Answer: A

According to the text, which statement regarding spam is true?

According to the text, which statement regarding spam is true?



a.

Tough criminal legislation in the United States has been effective in curbing spam.

b.

Spam is an acronym for Specific Program Algorithm Mail

c.

Approximately 37 percent of email that is received by Canadians is spam.

d.

Canada currently has no anti-spam laws.



Answer: D

Which of the following BEST describes publicity?

Which of the following BEST describes publicity?


a.

It is free communication.

b.

It has many internal costs to the company associated with it.

c.

It will never damage a company because it performs the information task of promotion.

d.

It has to be purchased from the mass media.



Answer: B

In 2004, Montreal once again hosted the Peachtree Road Race, a running event that attracts many world-calibre racers. This year, after numerous requests from Quebecers, the race officials sanctioned a race conducted in Iraq so that soldiers from the province would not have to miss the annual event. The winners of the Mideast race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree was an example of which of the following?

In 2004, Montreal once again hosted the Peachtree Road Race, a running event that attracts many world-calibre racers. This year, after numerous requests from Quebecers, the race officials sanctioned a race conducted in Iraq so that soldiers from the province would not have to miss the annual event. The winners of the Mideast race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree was an example of which of the following?


a.

strategic product promotions and resulting sales

b.

a target marketing strategy

c.

sales promotion efforts

d.

a public relations strategy and resulting publicity



Answer: D

What is the marketing function that evaluates public attitudes, identifies areas within the organization that are of public interest, and executes a program of action to gain public understanding?

What is the marketing function that evaluates public attitudes, identifies areas within the organization that are of public interest, and executes a program of action to gain public understanding?



a.

advertising

b.

sales promotion

c.

personal selling

d.

public relations



Answer: D

According to the text, which of the following statements about advertising is true?

According to the text, which of the following statements about advertising is true?


a.

The cost per contact in advertising is low.

b.

The total costs of advertising are typically low.

c.

The signs on the outsides of buses and taxis are not a form of advertising.

d.

Advertising is any form of communication in which the sponsor is identified.



Answer: A

A local exterminator uses the image of a large dead cockroach to communicate its service. The pictures of the dead insect appear on transit boards throughout the community. What is this a form of?

A local exterminator uses the image of a large dead cockroach to communicate its service. The pictures of the dead insect appear on transit boards throughout the community. What is this a form of?


a.

publicity

b.

public relations

c.

sales promotion

d.

advertising



Answer: D

The four major promotional tools are known collectively as which of the following?

a.

the publicity four

b.

the promotional mix

c.

the advertising campaign

d.

the communication model



Answer: B

What does the promotional mix consist of?

What does the promotional mix consist of?



a.

advertising, personal selling, sales promotion, and public relations

b.

advertising, publicity, direct marketing, and personal selling

c.

public relations, direct marketing, personal selling, and publicity

d.

advertising, telemarketing, public relations, and sales promotions



Answer: A

What is the main function of promotion?

What is the main function of promotion?



a.

to convince consumers a firm's products offer competitive advantages over those of its competition

b.

to find a niche in the marketplace for the firm and its products

c.

to guarantee control over the length of the stages of the product life cycle

d.

to provide the firm with research information about the success of its marketing effort



Answer: A

In 2004, the movie company that produced The Bourne Supremacy used advertising, personal selling, public relations, and sales promotion to communicate with its target audience for the movie. What was composed of the movie production company's plan on how to use these tools?

In 2004, the movie company that produced The Bourne Supremacy used advertising, personal selling, public relations, and sales promotion to communicate with its target audience for the movie. What was composed of the movie production company's plan on how to use these tools?



a.

its promotional strategy

b.

its selling plan

c.

its mass communication mix

d.

its marketing mix




Answer: A

What is escalator pricing?

What is escalator pricing?



a.

It is a demand-oriented pricing tactic.

b.

It is similar to price shading.

c.

It is also called postage stamp pricing.

d.

It is similar to delayed-quotation pricing.



Answer: D

Which of the following BEST describes delayed-quotation pricing?

Which of the following BEST describes delayed-quotation pricing?


a.

It requires a seller to submit a bid after the closing date.

b.

It prevents the competitor from submitting an earlier bid.

c.

It allows the final selling price to reflect cost increases incurred between the time the order is placed and the final delivery takes place.

d.

It is also known as price-shading bidding.



Answer: C

Lipton makes several easy-to-prepare side dishes that all use macaroni shells. In promoting this product line, Lipton offers a 50-cents-off coupon that can be used for any of its macaroni-based mixes. Therefore, what must Lipton consider when pricing its mixes?

Lipton makes several easy-to-prepare side dishes that all use macaroni shells. In promoting this product line, Lipton offers a 50-cents-off coupon that can be used for any of its macaroni-based mixes. Therefore, what must Lipton consider when pricing its mixes?



a.

joint costs

b.

potential (or basing) costs

c.

bundling costs

d.

differential costs



Answer: A

Why do consumers sometimes prefer two-part pricing?

Why do consumers sometimes prefer two-part pricing?



a.

Consumers prefer a limited number of choices.

b.

Consumers like to be in control of costs.

c.

Prices have little or no psychological influence on most consumers.

d.

Consumers are uncertain about the number and types of activities that might be used at places like amusement parks.



Answer: D

Kasha has decided to keep her new power boat in a "drystack" storage facility rather than in the water at a marina. The storage facility charges her a fee of $500 per year, plus $25 each time she calls ahead and asks the facility to put her boat in the water for the day or weekend. Which pricing tactic is the facility using?

Kasha has decided to keep her new power boat in a "drystack" storage facility rather than in the water at a marina. The storage facility charges her a fee of $500 per year, plus $25 each time she calls ahead and asks the facility to put her boat in the water for the day or weekend. Which pricing tactic is the facility using?



a.

price bundling

b.

professional services pricing

c.

two-part pricing

d.

price lining



Answer: C

The Terra Vista Airport is a small airport frequently used by people who love skydiving. To help keep costs in line, the airport now charges its customers a small parking fee. At one time, the cost of parking at the airport was included in the price of the jump. What is Terra Vista Airport using?

The Terra Vista Airport is a small airport frequently used by people who love skydiving. To help keep costs in line, the airport now charges its customers a small parking fee. At one time, the cost of parking at the airport was included in the price of the jump. What is Terra Vista Airport using?



a.

unbundling

b.

professional services pricing

c.

potential (or base) pricing

d.

price maintenance



Answer: A

OfficeMax, a retailer of office supplies, is selling a point-and-shoot digital camera, the printer and software needed to print photographs, and a starter package of photograph paper for $230. If purchased separately, the items would cost a total of $250. What has OfficeMax used?

OfficeMax, a retailer of office supplies, is selling a point-and-shoot digital camera, the printer and software needed to print photographs, and a starter package of photograph paper for $230. If purchased separately, the items would cost a total of $250. What has OfficeMax used?



a.

two-part pricing

b.

price bracketing

c.

price lining

d.

price bundling



Answer: D

R.W. Hunt & Sons, a distributor of hunting bows and anything needed for hunting or target practice, has packaged a new range-finder scope with a package of paper targets at one low price. R.W. Hunt is selling the scope slightly below cost, but the paper targets are very profitable. Which pricing technique is R.W. Hunt using?

R.W. Hunt & Sons, a distributor of hunting bows and anything needed for hunting or target practice, has packaged a new range-finder scope with a package of paper targets at one low price. R.W. Hunt is selling the scope slightly below cost, but the paper targets are very profitable. Which pricing technique is R.W. Hunt using?



a.

bait pricing

b.

price bundling

c.

psychological pricing

d.

two-part pricing



Answer: B

Which of the following phrases accurately describes psychological pricing?

Which of the following phrases accurately describes psychological pricing?



a.

It is essentially the same as price shading

b.

It is also called odd-even pricing

c.

It is equally effective on all types of products

d.

It is designed to aid the economy-minded purchaser



Answer: B

The office supply store was selling two-drawer file cabinets for $20, which is a below-market price, to lure customers into the store in hopes that while they are in the store to buy a file cabinet they will also buy other items that have a much higher markup. What is the office supply store using?

The office supply store was selling two-drawer file cabinets for $20, which is a below-market price, to lure customers into the store in hopes that while they are in the store to buy a file cabinet they will also buy other items that have a much higher markup. What is the office supply store using?



a.

price lowballing

b.

leader pricing

c.

price lining

d.

functional pricing



Answer: B

What can leader pricing be used to do?

What can leader pricing be used to do?



a.

attract customers to the store so they will buy other products in addition to the leader product

b.

bundle products together for sale

c.

attract customers to a store so they can be persuaded to buy a more expensive product instead

d.

price products at odd-numbered amounts to stimulate demand



Answer: A

The owner of a flower shop decided to sell a dozen red roses for $13.50. He hopes the below-cost price for the roses will attract current and new customers who will also buy regularly priced items. The manager is encouraging store patronage through which of the following?

The owner of a flower shop decided to sell a dozen red roses for $13.50. He hopes the below-cost price for the roses will attract current and new customers who will also buy regularly priced items. The manager is encouraging store patronage through which of the following?



a.

price lowballing

b.

leader pricing

c.

psychological pricing

d.

variable pricing



Answer: B

In a catalogue targeted to people who like to bake, customers can buy a single yeast bread mix designed specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50. What is this an example of?

In a catalogue targeted to people who like to bake, customers can buy a single yeast bread mix designed specifically to be baked in bread machines for $3.95 each or 12 different mixes for $37.50. What is this an example of?



a.

status quo pricing

b.

penetration pricing

c.

psychological pricing

d.

price bundling



Answer: D

The Hagarty & Adolph funeral home has coffins priced at $1,200, $2,000, $3,500, and $5,000. Why have the owners of the funeral home chosen price lining?

The Hagarty & Adolph funeral home has coffins priced at $1,200, $2,000, $3,500, and $5,000. Why have the owners of the funeral home chosen price lining?



a.

It will enable them to carry a larger total inventory

b.

It will maintain all of the product line at the same stage in the product life cycle.

c.

It will reach several different target market segments.

d.

It will thwart competitors that are trying to sell similar products.



Answer: C

Merck & Co., the manufacturer of the AIDS drug Crixidan, distributes exclusively to one distributor, Stadtlanders Pharmacy. The pharmacy has been criticized for charging too high a price for the drug and exploiting inelastic demand. Stadtlanders claims the charges are ethical because of high staffing costs and associated discounts with various health plans. This situation describes issues associated with which of the following?

Merck & Co., the manufacturer of the AIDS drug Crixidan, distributes exclusively to one distributor, Stadtlanders Pharmacy. The pharmacy has been criticized for charging too high a price for the drug and exploiting inelastic demand. Stadtlanders claims the charges are ethical because of high staffing costs and associated discounts with various health plans. This situation describes issues associated with which of the following?


a.

uniform delivered pricing

b.

flexible pricing

c.

professional services pricing

d.

resale price maintenance



Answer: C

Eustis Lee is a lawyer who handles only drunk-driving cases. No matter how quickly he resolves the case, he charges each customer $5,000. Lee justifies the fee because of his lengthy education and the years he has spent learning how the judicial system operates. Which pricing policy is the lawyer using?

Eustis Lee is a lawyer who handles only drunk-driving cases. No matter how quickly he resolves the case, he charges each customer $5,000. Lee justifies the fee because of his lengthy education and the years he has spent learning how the judicial system operates. Which pricing policy is the lawyer using?



a.

price maintenance

b.

potential (or base) pricing

c.

flexible (or variable) pricing

d.

professional services pricing



Answer: D

Ahmad Jing operates a wedding consultant service. He will often provide essentially the same service to different customers at distinctly different prices depending on how he likes the customer and how much he thinks the customer needs his services. What does Jing use?

Ahmad Jing operates a wedding consultant service. He will often provide essentially the same service to different customers at distinctly different prices depending on how he likes the customer and how much he thinks the customer needs his services. What does Jing use?



a.

two-part pricing

b.

price maintenance

c.

an illegal pricing policy

d.

flexible pricing



Answer: D

What is an advantage associated with a flexible pricing policy?

What is an advantage associated with a flexible pricing policy?



a.

It enables a seller to close a sale with a price-conscious customer.

b.

It causes inconsistent profit margins.

c.

It causes ill will among customers if they discover that other customers are paying lower prices.

d.

It enables salespeople to automatically lower the price to make a sale.



Answer: A

One tactic allows different customers to pay different prices for essentially the same merchandise bought in equal quantities This tactic is often found in the sale of shopping goods, specialty merchandise, and most industrial goods except supply items. What is it?

One tactic allows different customers to pay different prices for essentially the same merchandise bought in equal quantities This tactic is often found in the sale of shopping goods, specialty merchandise, and most industrial goods except supply items. What is it?



a.

psychological (or odd-even) pricing

b.

flexible (or variable) pricing

c.

zoning (or basing) pricing

d.

price maintenance



Answer: B

Which of the following BEST describes single-price selling?

Which of the following BEST describes single-price selling?



a.

It does not benefit the retailer.

b.

It is most effective when used during an inflationary period.

c.

It encourages clerical errors.

d.

It removes price comparisons from the buyer's decision-making process.



Answer: D

A manufacturer of lighting fixtures has six warehouses and a pricing policy of charging freight from the closest warehouse to the customer, regardless of where parts are shipped. For instance, if the customer is in Vancouver, British Columbia, the closest warehouse to the customer is in Seattle, Washington. If the ordered car part actually comes from the Toronto warehouse, the customer still pays freight from Seattle. Which type of pricing is the manufacturer using?

A manufacturer of lighting fixtures has six warehouses and a pricing policy of charging freight from the closest warehouse to the customer, regardless of where parts are shipped. For instance, if the customer is in Vancouver, British Columbia, the closest warehouse to the customer is in Seattle, Washington. If the ordered car part actually comes from the Toronto warehouse, the customer still pays freight from Seattle. Which type of pricing is the manufacturer using?



a.

freight absorption

b.

uniform delivered

c.

zone

d.

basing-point



Answer: D

Landover Carpentry, Inc. currently markets its garden benches in the Ontario market. It would like to expand into the Western Canada market, but the competition there is intense. Which geographic pricing tactic should the Landover use?

Landover Carpentry, Inc. currently markets its garden benches in the Ontario market. It would like to expand into the Western Canada market, but the competition there is intense. Which geographic pricing tactic should the Landover use?



a.

freight absorption pricing

b.

zone pricing

c.

FOB origin pricing

d.

basing-point pricing



Answer: A

Lee Valley, Inc. is a catalogue retailer of woodworking tools used by craftspeople. It uses two different shipping prices. All customers west of Manitoba pay $6.99 shipping and handling costs per order, while all east of Manitoba pay $8.99. This is an example of which type of pricing?

Lee Valley, Inc. is a catalogue retailer of woodworking tools used by craftspeople. It uses two different shipping prices. All customers west of Manitoba pay $6.99 shipping and handling costs per order, while all east of Manitoba pay $8.99. This is an example of which type of pricing?



a.

zone

b.

skimming

c.

freight absorption

d.

basing-point



Answer: A

Green Earth Marketing sells containers for temporary storage of recyclables nationally through its catalogue. The company wants to simplify pricing and reduce its risk. Green Earth also desires some type of difference in price due to distance. Which type of pricing should the company use?

Green Earth Marketing sells containers for temporary storage of recyclables nationally through its catalogue. The company wants to simplify pricing and reduce its risk. Green Earth also desires some type of difference in price due to distance. Which type of pricing should the company use?



a.

freight absorption

b.

two-part

c.

flexible

d.

zone



Answer: D

Which of the following BEST describes uniform delivered pricing?

Which of the following BEST describes uniform delivered pricing?


a.

It is prevalent in the steel, cement, corn oil, and lead industries.

b.

It is common where freight costs are a large portion of total costs.

c.

It is sometimes called "postage stamp pricing."

d.

It creates no geographical price discrimination.



Answer: C

A Toronto-based catalogue retailer features cast-iron skillets. Its customers in New Brunswick are charged one shipping rate, and customers in B.C. are charged a different rate. Customers in Quebec are charged yet another rate. What kind of geographical pricing is the catalogue using?

A Toronto-based catalogue retailer features cast-iron skillets. Its customers in New Brunswick are charged one shipping rate, and customers in B.C. are charged a different rate. Customers in Quebec are charged yet another rate. What kind of geographical pricing is the catalogue using?



a.

zone pricing

b.

FOB origin pricing

c.

freight absorption pricing

d.

FOB factory



Answer: A

What does uniform delivered pricing enable a firm to do?

What does uniform delivered pricing enable a firm to do?



a.

maintain a nationally advertised price

b.

charge each customer the actual cost of shipping its products

c.

charge each customer its fair share of the cost of shipping

d.

discriminate in favour of buyers that are geographically closer to the seller



Answer: A

Shipping fresh-cut flowers to international buyers can be risky because of price changes during the time required for shipment, expense incurred over long distances, and quality of product delivered. To minimize costs, what would a seller likely employ?

Shipping fresh-cut flowers to international buyers can be risky because of price changes during the time required for shipment, expense incurred over long distances, and quality of product delivered. To minimize costs, what would a seller likely employ?



a.

basing-point pricing

b.

freight absorption pricing

c.

FOB origin pricing

d.

uniform delivered pricing



Answer: C

What is the basic assumption behind value-based pricing?

What is the basic assumption behind value-based pricing?



a.

Consumers are more concerned about price than quality.

b.

Additional long-term costs to manufacturers will increase.

c.

Increased profitability for wholesalers will increase the number of services they are willing to perform.

d.

The firm is both customer-driven and competitor-driven.



Answer: D

When a coffee shop in a suburban mall and an upscale cafe in a luxury hotel charge different prices for the same cup of coffee served to customers who find the atmosphere in the hotel worth the difference, what is the pricing method used?

When a coffee shop in a suburban mall and an upscale cafe in a luxury hotel charge different prices for the same cup of coffee served to customers who find the atmosphere in the hotel worth the difference, what is the pricing method used?



a.

demand-based

b.

break-even

c.

value-based

d.

cost-based



Answer: C

Supposed a firm is customer-driven and seeks to understand the attributes customers want in the goods and services they buy and the value customers contribute to those attributes. The firm sets the price of the product at a level that seems to the customer to be a good price compared with the prices of other options. What is this pricing?

Supposed a firm is customer-driven and seeks to understand the attributes customers want in the goods and services they buy and the value customers contribute to those attributes. The firm sets the price of the product at a level that seems to the customer to be a good price compared with the prices of other options. What is this pricing?



a.

price

b.

value-based

c.

market concept

d.

noncumulative



Answer: B

When Janeka purchased a pair of walkie-talkies so she could stay in contact with her 10-year-old son when he was playing in the neighbourhood, she noticed that if she mailed the manufacturer a proof-of-purchase and the cash register receipt showing where and when she had purchased the two-way radio system and how much she had paid, she would receive a cheque for $25. What is this $25 an example of?

When Janeka purchased a pair of walkie-talkies so she could stay in contact with her 10-year-old son when he was playing in the neighbourhood, she noticed that if she mailed the manufacturer a proof-of-purchase and the cash register receipt showing where and when she had purchased the two-way radio system and how much she had paid, she would receive a cheque for $25. What is this $25 an example of?



a.

a rebate

b.

a trade promotion

c.

a cash discount

d.

a reciprocal allowance



Answer: A

When the salesperson from R.W. Hunt & Sons, a distributor of rifles and other items needed for hunting or target practice, calls on retail sporting goods stores, she is authorized to offer the retailers a 15 percent discount from the list price in recognition of activities retailers perform for the distributor. These activities include unpacking, floor display setup, and a repair service. What is this 15 percent discount called?

When the salesperson from R.W. Hunt & Sons, a distributor of rifles and other items needed for hunting or target practice, calls on retail sporting goods stores, she is authorized to offer the retailers a 15 percent discount from the list price in recognition of activities retailers perform for the distributor. These activities include unpacking, floor display setup, and a repair service. What is this 15 percent discount called?



a.

a trade discount

b.

a quantity discount

c.

a promotional allowance

d.

a channel allowance



Answer: A

When a customer of Vegas Sign Company chooses to pay immediately on delivery rather than wait to be billed in 30 days, the buyer receives a 5 percent discount. What is this 5 percent discount an example of?

When a customer of Vegas Sign Company chooses to pay immediately on delivery rather than wait to be billed in 30 days, the buyer receives a 5 percent discount. What is this 5 percent discount an example of?



a.

a rebate

b.

a promotional allowance

c.

a cash discount

d.

a functional discount



Answer: C

Current is a catalogue retailer that sells greeting cards, wrapping paper, and decorative bows. Since its inception, the catalogue retailer has offered three separate prices on each item purchased. The highest price is for purchases of a single item. The middle price is for purchases between two and five of the same item. The lowest price is for purchases over five of the same item. What common form of purchase discount is Current using?

Current is a catalogue retailer that sells greeting cards, wrapping paper, and decorative bows. Since its inception, the catalogue retailer has offered three separate prices on each item purchased. The highest price is for purchases of a single item. The middle price is for purchases between two and five of the same item. The lowest price is for purchases over five of the same item. What common form of purchase discount is Current using?



a.

quantity discount

b.

cash discount

c.

functional discount

d.

promotional allowance



Answer: A

Why are quantity discounts most often used?

Why are quantity discounts most often used?



a.

to increase the sales potential of slow-moving items

b.

to reward a channel intermediary for performing some service

c.

to reward the buyer who pays in cash

d.

to shift the storage function backward to the supplier



Answer: A

One order of over $500 from The Baker's Catalogue earns a 5 percent discount, and one order of $1,000 and over earns a 10 percent merchandise discount. What are these discounts examples of?

One order of over $500 from The Baker's Catalogue earns a 5 percent discount, and one order of $1,000 and over earns a 10 percent merchandise discount. What are these discounts examples of?



a.

promotional allowances

b.

noncumulative quantity discounts

c.

frequent buyer discounts

d.

cumulative quantity discounts



Answer: B

Razer-Edge makes machines for sharpening the blades used by butchers to slice meat. When Razer-Edge priced its Primary Sharpener, its salespeople were told that it would be sold for $1,700, but that there would be room for discounts and flexibility. The $1,700 price is which of the following prices for the Primary Sharpener?

Razer-Edge makes machines for sharpening the blades used by butchers to slice meat. When Razer-Edge priced its Primary Sharpener, its salespeople were told that it would be sold for $1,700, but that there would be room for discounts and flexibility. The $1,700 price is which of the following prices for the Primary Sharpener?



a.

functional

b.

base

c.

channel leader

d.

demand



Answer: B

When Microsoft introduced its Windows NT network operating system, it gave buyers free Web server software. At the same time, Netscape was trying to sell similar Web server software for $4,999. Once Microsoft got a lion's share of the market, and Netscape's market share declined substantially, Microsoft began charging above-market price for its Web server software. Many people thought Microsoft was guilty of which of the following?

When Microsoft introduced its Windows NT network operating system, it gave buyers free Web server software. At the same time, Netscape was trying to sell similar Web server software for $4,999. Once Microsoft got a lion's share of the market, and Netscape's market share declined substantially, Microsoft began charging above-market price for its Web server software. Many people thought Microsoft was guilty of which of the following?



a.

unfair trade practices

b.

price discrimination

c.

price fixing

d.

predatory pricing



Answer: D

Imagine you have developed a device that can be used to tell whether uncooked meat has been irradiated. Several smaller retail chains have agreed to carry your product, but a large discount retailer has asked you to sell the device to it for a substantially lower price. What is the large discount retailer asking you to practise?

Imagine you have developed a device that can be used to tell whether uncooked meat has been irradiated. Several smaller retail chains have agreed to carry your product, but a large discount retailer has asked you to sell the device to it for a substantially lower price. What is the large discount retailer asking you to practise?



a.

price discrimination

b.

channel control pricing

c.

unfair trade practices

d.

price fixing



Answer: A

In Canada, federal legislation prohibits firms from selling to two or more competing buyers on an ongoing basis, within a short period of time, goods of like grade and quality at different prices where the result would be to lessen competition in the marketplace. What is this infraction known as?

In Canada, federal legislation prohibits firms from selling to two or more competing buyers on an ongoing basis, within a short period of time, goods of like grade and quality at different prices where the result would be to lessen competition in the marketplace. What is this infraction known as?



a.

resale price maintenance

b.

predatory pricing

c.

price discrimination

d.

deceptive pricing



Answer: C

K&G Restaurant Supplies sells paper products and commodity items such as flour to for-profit businesses. It charges a substantially lower price to companies that operate multiple locations such as a restaurant chain. It charges a higher price to small or independent operations because they are less profitable customers. What is K&G Restaurant Supplies engaging in?

K&G Restaurant Supplies sells paper products and commodity items such as flour to for-profit businesses. It charges a substantially lower price to companies that operate multiple locations such as a restaurant chain. It charges a higher price to small or independent operations because they are less profitable customers. What is K&G Restaurant Supplies engaging in?



a.

unfair trade practices

b.

price fixing

c.

bait pricing

d.

price discrimination



Answer: D

The Association of Specialty Surgical Practice has published a minimum fee schedule for services and distributed this schedule throughout the medical profession. What is Specialty Surgical encouraging?

The Association of Specialty Surgical Practice has published a minimum fee schedule for services and distributed this schedule throughout the medical profession. What is Specialty Surgical encouraging?



a.

bait pricing

b.

price fixing

c.

predatory pricing

d.

unfair trade practices



Answer: B

General Electric Co. was accused of conspiring with De Beers Centenary AG to set a price for industrial diamonds, which are used on industrial cutting tools. As a result, what were the two companies charged with?

General Electric Co. was accused of conspiring with De Beers Centenary AG to set a price for industrial diamonds, which are used on industrial cutting tools. As a result, what were the two companies charged with?



a.

channel control pricing tactics

b.

unfair trade practices

c.

price discrimination

d.

price fixing



Answer: D

Super-Sav supermarket employees regularly shop at other local supermarkets in order to make certain that Super-Sav is charging prices comparable to the other supermarkets. What type of pricing strategy is Super-Sav using?

Super-Sav supermarket employees regularly shop at other local supermarkets in order to make certain that Super-Sav is charging prices comparable to the other supermarkets. What type of pricing strategy is Super-Sav using?



a.

status quo pricing

b.

leader pricing

c.

preemptive pricing

d.

flexible pricing



Answer: A

The introductory price for the Nintendo Gamecube video game console was $100 lower than the list price of Xbox and Playstation 2, its only two competitors. Given this information, you can assume Nintendo used what type of policy for its Gamecube?

The introductory price for the Nintendo Gamecube video game console was $100 lower than the list price of Xbox and Playstation 2, its only two competitors. Given this information, you can assume Nintendo used what type of policy for its Gamecube?



a.

cost bundling

b.

flexible pricing

c.

penetration pricing

d.

competitive skimming



Answer: C

Dell's new line of computers is selling for up to 20 percent lower than similar computers sold by its largest competitors. Since Dell's goal is to maximize its sales, it is probably using which type of strategy?

Dell's new line of computers is selling for up to 20 percent lower than similar computers sold by its largest competitors. Since Dell's goal is to maximize its sales, it is probably using which type of strategy?



a.

status quo pricing

b.

price lining

c.

penetration pricing

d.

price skimming



Answer: C

For which of the following situations would a price-skimming strategy be most appropriate?

For which of the following situations would a price-skimming strategy be most appropriate?



a.

the elimination of demand for low-wattage light bulbs

b.

the introduction of a Barbie Olympic champion doll by Mattel and the International Olympic Committee

c.

the introduction of a unique, roomy automobile model that has extremely low energy and fuel costs

d.

the introduction of a new brand of bottled water



Answer: C

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products. When does this strategy work best?

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products. When does this strategy work best?


a.

when production capacity is large and flexible

b.

when demand is greater than supply

c.

when supply is greater than demand

d.

when revenues are equal to expenses



Answer: B

The marketing manager of icruise.com (a website targeted to consumers who want a luxury vacation) finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during December. However, the vice-president of finance is committed to reporting a 25 percent return on investment at all times. What does this conflict illustrate?

The marketing manager of icruise.com (a website targeted to consumers who want a luxury vacation) finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during December. However, the vice-president of finance is committed to reporting a 25 percent return on investment at all times. What does this conflict illustrate?



a.

how target markets can be ignored

b.

how pricing operates in a mature marketplace

c.

a lack of corporate concentration on the marketing concept

d.

the need for tradeoffs in pricing objectives



Answer: D

A retail firm that uses leader pricing is:

A retail firm that uses leader pricing is:



Answer: Cutting the regular price on a few items with the hope of attracting customers.

Burroughs-Wellcome, when deciding whether or not to lower the price for AZT, considered several issues before deciding to hold the line on its current price. BW's decision illustrates a classic case of penetration pricing based on the assumption that demand for AZT was highly price elastic.

Burroughs-Wellcome, when deciding whether or not to lower the price for AZT, considered several issues before deciding to hold the line on its current price. BW's decision illustrates a classic case of penetration pricing based on the assumption that demand for AZT was highly price elastic.



Answer: False

Alberton's supermarket prominently displays the prices of its brands side-by-side with prices you may pay at competing grocery stores for the same brand. Albertson's hopes to induce the perception that you are getting a 'deal' to stimulate added sales. Alberston's is using:

Alberton's supermarket prominently displays the prices of its brands side-by-side with prices you may pay at competing grocery stores for the same brand. Albertson's hopes to induce the perception that you are getting a 'deal' to stimulate added sales. Alberston's is using:


1. Psychological pricing

2. Reference pricing

A manufacturer of a very labor-intensive product wishes to employ the 'experience curve' to predict the AVC associated with various levels of cumulative production volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. You may assume that this level of AVC is attained at the point where the first 1,000 units is produced. The producer expects an experience constant or rate of about .9. The producer can expect AVC of ____________ with the third doubling (within $.10).

A manufacturer of a very labor-intensive product wishes to employ the 'experience curve' to predict the AVC associated with various levels of cumulative production volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. You may assume that this level of AVC is attained at the point where the first 1,000 units is produced. The producer expects an experience constant or rate of about .9. The producer can expect AVC of ____________ with the third doubling (within $.10).



Answer: $9.11

A tire retailer is advertising a very low price on a popular size tire. When a customer comes into the store, the clerk says the low-priced item is sold out, and tries to convince the customer to buy the top-of-the-line model--claiming the low priced model is not a very good buy even at the low price. This is an example of:

A tire retailer is advertising a very low price on a popular size tire. When a customer comes into the store, the clerk says the low-priced item is sold out, and tries to convince the customer to buy the top-of-the-line model--claiming the low priced model is not a very good buy even at the low price. This is an example of:



Answer: Bait pricing

A manufacturer of a very labor-intensive product wishes to employ the 'experience curve' to predict the AVC associated with various levels of cumulative production volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. You may assume that this level of AVC is attained at the point where the first 1,000 units is produced. The producer expects an experience constant or rate of about .9. The experience constant or experience rate is interpreted as:

A manufacturer of a very labor-intensive product wishes to employ the 'experience curve' to predict the AVC associated with various levels of cumulative production volume. Based on the first lot of 1,000 units, AVC are $12.50 per unit. You may assume that this level of AVC is attained at the point where the first 1,000 units is produced. The producer expects an experience constant or rate of about .9. The experience constant or experience rate is interpreted as:



Answer: AVC declines by 10% with each doubling of cumulative output

The Wine Cabinet, a store that features fine wines from all over the world, consistently prices The Complete Wine Course at $10.99. It sells this book at a price far below its regular retail price of $25.95 in order to attract wine shoppers to its store and increase its wine sales. This would be an example of:

The Wine Cabinet, a store that features fine wines from all over the world, consistently prices The Complete Wine Course at $10.99. It sells this book at a price far below its regular retail price of $25.95 in order to attract wine shoppers to its store and increase its wine sales. This would be an example of:



Answer: Leader pricing

When Playstation video games were introduced into the United States, they were priced at an introductory price of $299. This price was $100 lower than the Sega games. Playstation used _____ a pricing strategy to quickly gain a large share of the market.

When Playstation video games were introduced into the United States, they were priced at an introductory price of $299. This price was $100 lower than the Sega games. Playstation used _____ a pricing strategy to quickly gain a large share of the market.



Answer: Market penetration

Wendy's fast-food restaurant chain priced several of its more popular menu items at $.99 while raising the price of some of its upgraded meal deals. This pricing strategy is an example of _____ pricing because the chain is trying to improve the customer's perception of the ratio of benefits received to the product's price.

Wendy's fast-food restaurant chain priced several of its more popular menu items at $.99 while raising the price of some of its upgraded meal deals. This pricing strategy is an example of _____ pricing because the chain is trying to improve the customer's perception of the ratio of benefits received to the product's price.



Answer: Value

The expected price for sunscreen is in the $4 to $6 price range. The introductory price for Shade UVA Guard by Schering-Plough was $9.99 to recover its research and development costs. Schering-Plough was using a _____ strategy.

The expected price for sunscreen is in the $4 to $6 price range. The introductory price for Shade UVA Guard by Schering-Plough was $9.99 to recover its research and development costs. Schering-Plough was using a _____ strategy.



Answer: Market-skimming

A profit-oriented manufacturer of a consumer durable product faces a demand curve that is upward sloping to the right until extremely high prices are reached. For these latter prices, the demand curve tips over and is downward sloping. Which of the following pricing approaches is most consistent with the demand curve described?

A profit-oriented manufacturer of a consumer durable product faces a demand curve that is upward sloping to the right until extremely high prices are reached. For these latter prices, the demand curve tips over and is downward sloping. Which of the following pricing approaches is most consistent with the demand curve described?



Answer: Prestige pricing

A manufacturer has set the initial price of its product below the product's AVC. The manufacturer assumes that the low price will be attractive to enough consumers so that market share can be acquired very rapidly. The producer further assumes that, as additional market share is attained, AVC will be reduced substantially. In fact, when total sales hit the 20,000 unit point, the producer expects AVC to drop below price. The manufacturer is most likely making use of:

A manufacturer has set the initial price of its product below the product's AVC. The manufacturer assumes that the low price will be attractive to enough consumers so that market share can be acquired very rapidly. The producer further assumes that, as additional market share is attained, AVC will be reduced substantially. In fact, when total sales hit the 20,000 unit point, the producer expects AVC to drop below price. The manufacturer is most likely making use of:



Answer: Experience curve effects.

Which of the following pricing strategies would you suggest to a retailer that wishes to encourage price-sensitive shoppers to postpone their purchases for those products the retailer intends to place on sale until the planned time of the sale:

Which of the following pricing strategies would you suggest to a retailer that wishes to encourage price-sensitive shoppers to postpone their purchases for those products the retailer intends to place on sale until the planned time of the sale:



Answer: Systematic (periodic) discounting

Last summer Jon and Dave, to earn money for their college tuition, operated a snack booth at Clearwater Beach, Florida for 3 months. They sold soft drinks, chips, crackers, and candy bars. A month before they were planning to open, Jon found a location that rented for $500 a month and a small refrigerator unit which they rented for $40 per month. Dave located local distributors for the food products as well as for the paper products that they would need. Dave also purchased a business license for $200 and bought 3-month's worth of liability insurance for $250. The business license, rental fees, and insurance are all examples of:

Last summer Jon and Dave, to earn money for their college tuition, operated a snack booth at Clearwater Beach, Florida for 3 months. They sold soft drinks, chips, crackers, and candy bars. A month before they were planning to open, Jon found a location that rented for $500 a month and a small refrigerator unit which they rented for $40 per month. Dave located local distributors for the food products as well as for the paper products that they would need. Dave also purchased a business license for $200 and bought 3-month's worth of liability insurance for $250. The business license, rental fees, and insurance are all examples of:



Answer: Fixed costs

Larry and Alan are college students. Last summer, to earn money for their college tuition, they operated a snack booth at Panama City Beach, Florida for 3 months. They sold soft drinks, chips, crackers, and candy bars. A month before they were planning to open, Larry found a location that rented for $400 a month and a small refrigerator unit which they rented for $50 per month. Alan found distributors for the food products as well as for the paper products that they would need. Alan also purchased a business license for $100 and bought 3-month's worth of liability insurance for $150. 20. The cups, straws, napkins, and extra sales people needed to staff the stand are all examples of:

Larry and Alan are college students. Last summer, to earn money for their college tuition, they operated a snack booth at Panama City Beach, Florida for 3 months. They sold soft drinks, chips, crackers, and candy bars. A month before they were planning to open, Larry found a location that rented for $400 a month and a small refrigerator unit which they rented for $50 per month. Alan found distributors for the food products as well as for the paper products that they would need. Alan also purchased a business license for $100 and bought 3-month's worth of liability insurance for $150. 20. The cups, straws, napkins, and extra sales people needed to staff the stand are all examples of:



Answer: Variable cost

Humphrey Studio sells reproductions of European antiques. Last year sales were disappointing. The studio owner decided to increase the price of each item by about 25%. The next year there was a 20% increase in units sold. The studio apparently experienced:

Humphrey Studio sells reproductions of European antiques. Last year sales were disappointing. The studio owner decided to increase the price of each item by about 25%. The next year there was a 20% increase in units sold. The studio apparently experienced:



Answer: Inverse demand.

The total fixed costs for a manufacturer of road maps is $25,000, and its unit variable cost is $3. The company sells 20,000 maps and just breaks even. What is the map's selling price? (round to the nearest penny. Include the dollar sign)

The total fixed costs for a manufacturer of road maps is $25,000, and its unit variable cost is $3. The company sells 20,000 maps and just breaks even. What is the map's selling price? (round to the nearest penny. Include the dollar sign)



Answer: $4.25

High Meadow Mfg. Co. sold its product through wholesalers and retailers--allowing the wholesalers a markup of 25 percent and retailers a markup of 40 percent. If the retail selling price is $100 and the manufacturer's cost is $30, what markup in dollars did High Meadow receive on the sale of this product? (round to the nearest penny. Include the dollar sign in your answer)

High Meadow Mfg. Co. sold its product through wholesalers and retailers--allowing the wholesalers a markup of 25 percent and retailers a markup of 40 percent. If the retail selling price is $100 and the manufacturer's cost is $30, what markup in dollars did High Meadow receive on the sale of this product? (round to the nearest penny. Include the dollar sign in your answer)



Answer: 


$15.00

$5.00

The typical markup (percent) is the:

The typical markup (percent) is the:



Answer: Selling price minus the cost of the item, divided by the selling price--times 100.

Aristo Industries in South Dakota makes 1,000 pies per day. The total cost per raspberry-apple pie is $3.25. Its average fixed costs equal $.75 per pie. The company has calculated that if its charges $4.25 per pie, it will realize a 30 percent profit on the total cost of each pie. What pricing method is Aristo Industries using?

Aristo Industries in South Dakota makes 1,000 pies per day. The total cost per raspberry-apple pie is $3.25. Its average fixed costs equal $.75 per pie. The company has calculated that if its charges $4.25 per pie, it will realize a 30 percent profit on the total cost of each pie. What pricing method is Aristo Industries using?



Answer: Cost-plus pricing

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item? (round to the nearest penny. Include the dollar sign)

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item? (round to the nearest penny. Include the dollar sign)



Answer: $31.50

A manufacturer sells a product for $35 to a wholesaler, and the wholesaler sells it to a retailer. The wholesaler's normal markup (based on selling price) is 20%. The retailer prices the item to consumers to include a 30% markup (also based on selling price). What is the selling price to the consumer? (Round your answer to the nearest penny. Include the dollar sign.)

A manufacturer sells a product for $35 to a wholesaler, and the wholesaler sells it to a retailer. The wholesaler's normal markup (based on selling price) is 20%. The retailer prices the item to consumers to include a 30% markup (also based on selling price). What is the selling price to the consumer? (Round your answer to the nearest penny. Include the dollar sign.)



Answer: $62.50

On May 15, Ann's Café received a $265 invoice for restaurant supplies. The invoice offered the following terms, "3/14, n/30." If Ann pays the invoice by May 25, she should make her check out for: (Round to the nearest penny. Include the dollar sign.)

On May 15, Ann's Café received a $265 invoice for restaurant supplies. The invoice offered the following terms, "3/14, n/30." If Ann pays the invoice by May 25, she should make her check out for: (Round to the nearest penny. Include the dollar sign.)



Answer: $257.05

In order to offset the competitive disadvantage of FOB mill pricing, Tate Marble Company in Georgia could use _____ pricing to ship its products to building contractors and furniture restorers in any part of the United States.

In order to offset the competitive disadvantage of FOB mill pricing, Tate Marble Company in Georgia could use _____ pricing to ship its products to building contractors and furniture restorers in any part of the United States.



Answer: Freight-absorption

Yesterday Phoenix Press in Arizona shipped 112 books to a retailer in Tennessee, 54 books to a retailer in Florida, and 9 books to a customer in Alaska, yet Phoenix Press paid no freight charges. Which geographic pricing strategy did Phoenix use?

Yesterday Phoenix Press in Arizona shipped 112 books to a retailer in Tennessee, 54 books to a retailer in Florida, and 9 books to a customer in Alaska, yet Phoenix Press paid no freight charges. Which geographic pricing strategy did Phoenix use?



Answer: FOB plant pricing

Cherokee Cable Corporation, sells heavy wire cable to large construction companies around the country. Customers pay shipping from a central warehouse in Dallas. Recently, a new competitor in Atlanta has been taking away some of Cherokee Cable's Southern customers. If Cherokee Cable wants to compete in those distant markets, but not increase the cost of its product to other customers, it would probably switch to

Cherokee Cable Corporation, sells heavy wire cable to large construction companies around the country. Customers pay shipping from a central warehouse in Dallas. Recently, a new competitor in Atlanta has been taking away some of Cherokee Cable's Southern customers. If Cherokee Cable wants to compete in those distant markets, but not increase the cost of its product to other customers, it would probably switch to



Answer: Freight absorption pricing.

Almay's cosmetics paid one-half of the advertising cost for Gwen's Boutique to run a series of ads on the local radio station. Each of the radio ads emphasized that the boutique carried the complete line of Almay products. This would be an example of a:

Almay's cosmetics paid one-half of the advertising cost for Gwen's Boutique to run a series of ads on the local radio station. Each of the radio ads emphasized that the boutique carried the complete line of Almay products. This would be an example of a:



Answer: Promotional allowance.

Bob lives in Alaska and is a frequent buyer of books on Internet auction sites. He is used to paying higher shipping costs than his brother who lives in Florida and who also likes to buy books on the Internet. The price differential is most likely because:

Bob lives in Alaska and is a frequent buyer of books on Internet auction sites. He is used to paying higher shipping costs than his brother who lives in Florida and who also likes to buy books on the Internet. The price differential is most likely because:



Answer: The seller was using zone-delivered pricing.

In a corporate vertical marketing system,

In a corporate vertical marketing system,



Answer: A firm at one level of the channel owns the firms at the next level or owns the entire channel.

A vertical marketing system:

A vertical marketing system:



Answer: Is used to improve the channel operating efficiency and effectiveness.

Ralston-Purina, with its lines of cereal, snack foods, and pet foods has such brand equity and market position that it is able to coordinate distribution activities through is market power. Its distribution illustrates a(n):

Ralston-Purina, with its lines of cereal, snack foods, and pet foods has such brand equity and market position that it is able to coordinate distribution activities through is market power. Its distribution illustrates a(n):



Answer: Administered VMS

The Olympics Store is the only place in Chicago where a collector of Olympic memorabilia can buy a set of eight Olympic pins priced at $300,000. (They are made of diamonds, rubies, and other precious stones). What kind of distribution coverage strategy is being used?

The Olympics Store is the only place in Chicago where a collector of Olympic memorabilia can buy a set of eight Olympic pins priced at $300,000. (They are made of diamonds, rubies, and other precious stones). What kind of distribution coverage strategy is being used?



Answer: Exclusive

A tying contract may be legal if:

A tying contract may be legal if:



Answer: A new, small company is trying to enter the market

When Ed Titus decided to sell 5 acres of land, he contacted Lenora Smalley. She showed the land to a young couple who wanted to build a home on a site, explained to them about the market for land in the area, and negotiated the sales terms. She left the final decision about the sale up to Titus and the young couple. Smalley is most likely a:

When Ed Titus decided to sell 5 acres of land, he contacted Lenora Smalley. She showed the land to a young couple who wanted to build a home on a site, explained to them about the market for land in the area, and negotiated the sales terms. She left the final decision about the sale up to Titus and the young couple. Smalley is most likely a:



Answer: Broker

A grocery store chain has decided to sell a small assortment of fast moving auto repair items--but is not certain what stock to carry in which stores and does not want to leave the decision to the local store manager. The chain should probably get help from a

A grocery store chain has decided to sell a small assortment of fast moving auto repair items--but is not certain what stock to carry in which stores and does not want to leave the decision to the local store manager. The chain should probably get help from a



Answer: Rack jobber

Gobbler's Inc. is a small manufacturer of cookers for smoking turkeys. The company does not have its own sales force and has just introduced a cooker which will hold two birds. The cooker will most likely be distributed by a:

Gobbler's Inc. is a small manufacturer of cookers for smoking turkeys. The company does not have its own sales force and has just introduced a cooker which will hold two birds. The cooker will most likely be distributed by a:



Answer: Manufacturers agent

Milt's Supply stocks electronic repair parts and related supplies and tools from various producers. Milt's sells primarily to small TV and electronic repair shops throughout the country that only want to order one or two items at a time. Orders are usually shipped out on UPS trucks. It appears that Milt's is a

Milt's Supply stocks electronic repair parts and related supplies and tools from various producers. Milt's sells primarily to small TV and electronic repair shops throughout the country that only want to order one or two items at a time. Orders are usually shipped out on UPS trucks. It appears that Milt's is a



Answer: Limited line (specialty) wholesaler.

Debbie Wood sells food products to grocery wholesalers and large retail grocery chains in Tallahassee. She sells for several manufacturers with noncompeting lines of food products--earning a 5 percent sales commission. She neither handles nor owns the products she sells. Debbie is a:

Debbie Wood sells food products to grocery wholesalers and large retail grocery chains in Tallahassee. She sells for several manufacturers with noncompeting lines of food products--earning a 5 percent sales commission. She neither handles nor owns the products she sells. Debbie is a:



Answer: Manufacturers agent

Cole Smithers sells fiberglass resins and fiberglass wire to the many small sailboat manufacturers in southern California. He takes title to the products but does not handle them. Instead, the resins are shipped in 50 gallon barrels directly from the producer to the sailboat manufacturers. Cole is a:

Cole Smithers sells fiberglass resins and fiberglass wire to the many small sailboat manufacturers in southern California. He takes title to the products but does not handle them. Instead, the resins are shipped in 50 gallon barrels directly from the producer to the sailboat manufacturers. Cole is a:



Answer: Drop shipper

Saul Monehan sells a wide assortment (in small quantities) of "emergency" home repair items (fuses, electrical tape, small packets of nails) to grocery and convenience stores. He owns the products he handles, and displays them for his customers. Saul is a:

Saul Monehan sells a wide assortment (in small quantities) of "emergency" home repair items (fuses, electrical tape, small packets of nails) to grocery and convenience stores. He owns the products he handles, and displays them for his customers. Saul is a:



Answer: Rack jobber

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