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Multiple Choice Fragen zur Vorlesung von Frau Bienert und Frau Brambach. Gute Vorbereitung für die Klausur. Ideal zur Bearbeitung mit dem Skript....

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Chapter 14: Developing Pricing Strategies and Programs

Chapter 14: Developing Pricing Strategies and Programs

GENERAL CONCEPT QUESTIONS Multiple Choice 1. ________ communicates to the market the company’s intended value positioning of its product or brand. a. Packaging b. Price c. Place d. Promotion e. Physical evidence Answer: b Page: 431 Level of difficulty: Easy 2. Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products. a. identical b. over the Internet c. similar d. commodity-type e. none of the above Answer: d Page: 432 Level of difficulty: Medium 3. Companies price their products in a number of ways. Small companies prices are set by the boss, in larger companies, pricing is handled by division and product-line managers. In industries where price is a key factor, companies often establish a ________ department reporting to other internal departments. a. financial b. pricing c. sales d. marketing e. distribution Answer: b Page: 433 Level of difficulty: Easy

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Part 5: Shaping the Market Offerings

4. Executives often complain that pricing is a big headache. One of the common 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 Pages: 433–434 Level of difficulty: Medium 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 Page: 434 Level of difficulty: Medium 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 Page 434 Level of difficulty: Medium 7. The definition of ________ prices is: In considering an observed price, consumers often compare it to an internal memory reference price or an external frame of reference (such as a posted “regular retail price”). a. historical b. reference c. promotional d. everyday low price e. none of the above Answer: b Page: 434 Level of difficulty: Hard

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Chapter 14: Developing Pricing Strategies and Programs

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 Page: 435 Level of difficulty: Easy 9. Pricing cues, such as sale signs and prices that end in a 9, become less effective the more they are employed. 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 Page: 437 Level of difficulty: Hard 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 improved product d. enters bids on new contract work e. changes styles Answer: d Page: 436 Level of difficulty: Medium 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 Page: 437 Level of difficulty: Medium

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Part 5: Shaping the Market Offerings

12. A firm has to consider many factors in setting its pricing policy. We list these as a sixstep 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 Page: 437 Level of difficulty: Hard 13. A firm first decides where it wants to position its market offering. A company 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 Page: 437 Level of difficulty: Medium 14. In market-penetration pricing, the company’s objective in pricing is to ________, believing that higher sales volume will lead to lower unit costs and higher long-run profits. a. block competitive launches b. maximize their market share c. minimize their market share d. maximize volume e. none of the above Answer: b Page: 438 Level of difficulty: Easy 15. Market-skimming prices make sense under the following conditions EXCEPT ________. a. the high price communicates high value b. the high initial price blocks competition 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 Page: 438 Level of difficulty: Hard

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Chapter 14: Developing Pricing Strategies and Programs

16. The first step in estimating demand is to understand what affects price sensitivity. Generally speaking, customers are most price sensitive to products that cost a lot or are ________. a. priced low to begin with b. low-cost c. bought frequently d. bought infrequently e. none of the above Answer: c Page: 439 Level of difficulty: Easy 17. Consumers ________ to low-cost products or items they buy infrequently. a. prefer the lowest total cost of ownership b. remember prices of products c. are ambivalent to prices d. are more price sensitive e. are less price sensitive Answer: e Page: 439 Level of difficulty: Easy 18. The concept of the lowest ________ means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining, operating, and servicing the product over its lifetime. a. prestige pricing b. total cost of ownership c. convenience pricing d. key price points e. none of the above Answer: b Page: 439 Level of difficulty: Medium 19. If demand hardly changes with a small change in price, we say that the demand is ________. a. equal

b. marginal c. inelastic d. elastic e. none of the above Answer: c Page: 440

Level of difficulty: Easy

20. If demand changes considerably, we say that the demand is ________. a. equal b. elastic c. inelastic d. marginal e. none of the above Answer: b Page: 440 Level of difficulty: Easy

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21. Price elasticity depends on the magnitude and direction of the price change. If may differ for a price cut versus a price increase. When the price changes have little or no effect there might exist a ________ for your product. a. selective price b. price indifference band c. substitute product d. promotional price e. collective price Answer: b Page: 441 Level of difficulty: Hard 22. ________ sets a ceiling on the price the company can charge for its products. a. Government regulations b. Market forces c. Costs d. Demand e. Competition Answer: d Page: 441 Level of difficulty: Easy 23. A company’s costs take two forms. ________ are costs that do not vary with production or sales revenue. a. Fixed b. Variable c. Adjusted d. Attributed e. None of the above Answer: a Page: 441 Level of difficulty: Easy 24. ________ costs amounts differ greatly depending upon the level of production. a. Fixed b. Adjusted c. Attributed d. Unknown e. Variable Answer: e Page: 441 Level of difficulty: Easy 25. ________ consists of the sum of the fixed and variable costs for any given level of production. a. Total costs b. Manufacturing costs c. Delivery costs d. Fixed costs e. Variable costs Answer: a Page: 442 Level of difficulty: Easy

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Chapter 14: Developing Pricing Strategies and Programs

26. Today’s companies try to adapt their offers and terms to different buyers. ________ accounting tries to identify the real costs associated with serving each customer. It allocates indirect costs to the activities that use them and are tagged back to each customer. a. Cost accounting b. Experience cost c. Target costing d. Direct product profitability e. Activity-based cost Answer: e Page: 443 Level of difficulty: Hard 27. The three major considerations in price setting includes, costs set as the “floor,” ________, and customers’ assessment of unique features establishing the price ceiling. a. competitors’ prices and the price of substitutes provide an orientation point b. competitors’ prices establishes a “target price” goal c. the price of substitutes establishes a “target price” d. the price of competitors and substitutes does not enter into the pricing considerations. e. none of the above Answer: a Page: 444 Level of difficulty: Hard 28. An increasing number of companies now base their price on the customer’s ________ of their products. a. usage b. EDLP pricing c. everyday value pricing d. perceived value e. value proposition Answer: d Page: 445 Level of difficulty: Easy 29. The key to perceived-value pricing is to deliver more value than your competitors and to ________ this to prospective buyers. a. demonstrate b. communicate c. advertise d. promote e. convince Answer: a Page: 446 Level of difficulty: Easy

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30. Value pricing is not a matter of simply setting lower prices; it is a matter of reengineering the company’s operations to become a low-cost producer without sacrificing quality; and lowering prices significantly to attract a large number of ________ customers. a. expert customers b. price-orientated c. value-conscious d. product-orientated customers e. none of the above Answer: c Page: 447 Level of difficulty: Medium 31. When a firm charges the same, more, or less than its major competitors do, it is using a pricing strategy that is called ________. a. perceived value pricing b. value pricing c. high-low pricing d. everyday low pricing e. going-rate pricing Answer: e Page: 447 Level of difficulty: Medium 32. Auction-type pricing is becoming very popular today due to the Internet. The three types of auction-types of pricing include sealed-bid auctions, descending bids auctions, and ________. a. EDLP b. ascending bids c. high-low bids d. going-rate bidding e. value pricing Answer: b Page: 448 Level of difficulty: Medium 33. Pricing methods narrow the range from which the company selects its final price. In selecting that price, the company must consider additional factors, including the impact of other marketing activities, company pricing policies, gain-and-risk-sharing pricing, and the impact of price on ________. a. other parties b. channels of distribution c. channel partners d. marketing activities e. none of the above Answer: a Page: 448 Level of difficulty: Medium

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Chapter 14: Developing Pricing Strategies and Programs

34. In ________ pricing, the company decides how to price its products to different customers in different locations and countries. a. specialty b. geographical c. offset d. regional e. none of the above Answer: b Page: 450 Level of difficulty: Easy 35. A ________ is offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and record keeping. a. functional discount b. quantity discount c. allowance d. cash discount e. none of the above Answer: a Page: 452 Level of difficulty: Easy 36. ________ occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs a. Psychological pricing b. Loss-leader pricing c. Product-form pricing d. Customer-segment pricing e. Price discrimination Answer: e Page: 453 Level of difficulty: Medium 37. When supermarkets and department stores drop the price on well-known brands to stimulate store traffic, this is called ________. a. EDLP b. loss-leader pricing c. special-event pricing d. net pricing e. none of the above Answer: b Page: 453 Level of difficulty: Easy 38. Companies often adjust their basic price to accommodate differences in customers, products, locations, and so forth. Examples of these differentiated prices include all of the following EXCEPT ________. a. new product pricing b. customer-segment pricing c. product form pricing d. channel pricing e. none of the above Answer: a Pages: 453-454 Level of difficulty: Easy

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39. Companies sometimes initiate price cuts in a drive to dominate the market through lower costs. A price-cutting strategy involves possible traps. One of these “traps” is ________. a. secure target market customer b. consistent high quality consumer c. dependence on a firm market d. loyal customer market e. shallow-pockets Answer: e Page: 455 Level of difficulty: Hard 40. A major circumstance provoking price increases is ________. a. market demand b. profitability versus target c. cost inflation d. price versus competition e. stock price versus target price Answer: c Page: 455 Level of difficulty: Easy 41. Generally, consumers prefer ________ price increases on a regular basis to sudden, sharp increases. a. large b. consistent c. small d. reciprocal e. trade Answer: c Page: 457 Level of difficulty: Easy 42. Given strong consumer resistance to price hikes, marketers go to great lengths to find alternative approaches that will allow them to postpone a price increase. Which of the following is NOT one of these approaches? a. Reduce or eliminate some product features. b. Reduce or eliminate some services like free delivery. c. Shrink package sizes. d. Demand upfront payment before shipping goods. e. None of the above. Answer: d Page: 458 Level of difficulty: Hard 43. Your competitor has reduced prices on his entire line of products. You can interpret these price cuts by assuming that your competitor is trying to gain market share, that the company is doing poorly and wants to increase revenue quickly, and ________. a. signals an end to price/promotion wars b. signals that price is no longer a competitive advantage c. wants the whole industry to reduce prices d. wants you to reduce your prices below his e. none of the above Answer: c Page: 459 Level of difficulty: Medium

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Chapter 14: Developing Pricing Strategies and Programs

44. In markets that are characterized by products that are highly homogenous, how should a firm react to a competitor’s price decline? a. Reduce product performance levels. b. Enhance services. c. Reduce services. d. Reduce product characteristics. e. Augment the product. Answer: e Page: 460 Level of difficulty: Hard 45. There are ways that brand leaders can respond to competitors’ price declines. These include all of the following EXCEPT ________. a. maintain your price b. maintain your price and add value c. reduce your price d. increase price and improve quality e. decrease price and decrease quality Answer: e Page: 460 Level of difficulty: Medium 46. Some of the considerations that company’s face when deciding to match a competitor’s price decline include the product’s importance in the company’s portfolio, the competitor’s intentions, and the ________. a. reaction by the channels of distribution b. shareholder value c. market’s price and quality sensitivity d. ordering time frames for the product e. ordering ease for the product Answer: c Page: 461 Level of difficulty: Medium 47. Research on reference prices has found that “unpleasant surprises”—when perceived price is lower than the stated price—can have a ________ impact on purchase likelihood than pleasant surprises. a. brand switching b. less significant c. greater d. lesser e. none of the above Answer: c Page: 435 Level of difficulty: Hard 48. To maximize market share, a firm may use _____________ pricing which sits on the theory that as sales volume increases, unit costs will decrease. a. market-penetration b. market-skimming c. value pricing d. demand pricing e. price bands Answer: a Page: 438 Level of difficulty: Medium

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49. ________ is the result of a concentrated effort by designers, engineers, and purchasing agents to reduce the product’s overall costs. a. Learning curve b. Target costing c. Least cost producer d. Experience curve e. None of the above Answer: b Page: 443 Level of difficulty: Hard 50. In recent years, companies have adopted ________ where they try to win loyal customers by charging a fairly low price for a high-quality offering. a. EDLP b. high-low pricing c. value pricing d. everyday low pricing e. none of the above Answer: c Page: 446 Level of difficulty: Easy 51. In ________ the retailer charges higher prices on an everyday basis but then runs frequent promotions in which prices are temporarily lowered below the EDLP level. a. going-rate pricing b. EDLP pricing c. value pricing d. high-low pricing e. everyday low pricing Answer: d Page: 447 Level of difficulty: Easy 52. ________ is the direct exchange of goods, with no money and no third party involved. a. Co-optation b. Buyback c. Barter d. Offset e. Compensation Answer: c Page: 451 Level of difficulty: Easy 53. The seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment in a ________. a. buyback arrangement b. co-optation c. barter d. offset e. none of the above Answer: a Page: 451 Level of difficulty: Hard

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Chapter 14: Developing Pricing Strategies and Programs

54. Most companies will ________ their list price and give discounts and allowances for early payments, volume purchases, and off-season buying. a. list two prices b. increase c. reduce d. adjust e. none of the above Answer: d Page: 451 Level of difficulty: Medium 55. A(n) ________ is a price reduction to buyers who pay their bills promptly. a. Allowance b. seasonal allowance c. dash discount d. quantity discount e. none of the above Answer: c Page: 452 Level of difficulty: Easy 56. When different customer groups are charged different prices for the same product or service, it is called ________. a. price discrimination b. customer-segment pricing c. illegal d. product-form pricing e. channel pricing Answer: b Page: 453 Level of difficulty: Medium 57. Prices that vary by time of the day, the season of the year, or the day of the week are called ________. a. discounting b. time pricing c. price discrimination d. product form pricing e. channel pricing Answer: b Page: 454 Level of difficulty: Medium 58. One of the traps of instituting a price decrease is when that low price buys market share in the short term. The same customers will shift to any lower-priced product that may come along. This trap is called ________. a. low price trap b. market loyalty trap c. shallow-pockets trap d. low-quality trap e. fragile-market-share trap Answer: e Page: 455 Level of difficulty: Medium

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59. All of the following EXCEPT _____________ are conditions that must exist for price discrimination to work. a. the practice must not be illegal b. the practice must not breed customer resentment c. competitors must not be able to undersell the firm in the high segment d. market must be homogeneous e. none of the above Answer: d Page: 455 L...