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Essay Questions:

11-1. Discuss the two new product strategies of market-skimming and market-penetration.

11-2. Characterize each of the product mix pricing strategies shown in the chapter.

ASSIGNMENT 11

Choose (a, b, c, d, or e) that best satisfies each question. Please click the button of your answer. A question left unanswered will be considered incorrect.

Multiple Choice

11-1. A company that plans to develop pricing strategies relative to product positioning for an imitative product can choose a strategy that produces a good quality product but charges a low price. This strategy is called:
a. the good-value strategy.
b. the premium strategy.
c. the economy strategy.
d. the best-buy strategy.
11-2. According to the four price-quality strategies described in the chapter, Rolex watches would be an illustration of which of the following strategies?
a. Good-value strategy.
b. Premium strategy.
c. Overcharging strategy.
d. Snob strategy.
11-3. Companies bringing out an innovative, patent-protected product face the challenge of setting prices for the first time. They can choose between two strategies:
a. good-value and a premium pricing strategy.
b. market-skimming and market-penetration pricing.
c. market-competitive and market-loss pricing.
d. good-value and economy pricing strategy.
11-4. When Intel develops a strategy whereby they develop and introduce a newer, higher margin microprocessor chip every 12 months and send the older models down the industry food chain to feed demand at lower price points (their new chips can sell for as much as a $1000 a piece), they are using which of the following pricing strategies?
a. Market-layer pricing.
b. Market-segmentation pricing.
c. Market-saturation pricing.
d. Market-skimming pricing.
11-5. Market-penetration pricing refers to the practice of:
a. setting a high initial price and then penetrating the market with successive prices for each price sensitive layer.
b. setting a low initial price to penetrate the market quickly and attract a large number of buyers to win a large market share.
c. pricing to attract low volume in many segments so as to gradually penetrate the market as a whole.
d. pricing products very high to penetrate deeply and quickly into large profits for the company.
11-6. Using a low sticker price on automobiles to attract customers and then selling models with additional accessory features to meet customer needs is a form of which of the following pricing strategies?
a. Optional-product pricing.
b. Captive-product pricing.
c. By-product pricing.
d. Product line pricing.
11-7. ______________ is setting a price for products that must be used along with a main product, such as blades for a razor.
a. Optional-product pricing
b. Captive-product pricing
c. By-product pricing
d. Product line pricing
11-8. Combining several products and offering them together at a reduced price is called:
a. Product-bundle pricing.
b. Optional-product pricing.
c. Captive-product pricing.
d. By-product pricing.
11-9. Payments or price reductions to reward dealers for participating in advertising and sales-support programs are called:
a. trade-in allowances.
b. functional discounts.
c. promotional discounts.
d. bribes.
11-10. When consumers pay $100 for a bottle of perfume that only contains $3 worth of ingredients, they are participating in:
a. upscale pricing.
b. discriminatory pricing.
c. psychological pricing.
d. promotional pricing.
11-11. Even small differences in price can suggest product differences. If a stereo priced at $300 is compared to one that costs $299.95, the $299.95 is considered much cheaper than the $.05 price difference. This difference and the perception on the part of the consumer would be part of which of the following pricing strategies?
a. Reference pricing.
b. Psychological pricing.
c. Basing-point pricing.
d. Segmented pricing.
11-12. The type of promotional pricing that uses a few products with very low prices to attract customers into the store in the hope that they will then buy regularly priced items is called:
a. special-event pricing.
b. cash rebates.
c. loss leaders.
d. low-value pricing.
11-13. If a company is based in Tennessee and ships merchandise to customers in Atlanta and Los Angeles at the same freight rate, then the company is practicing:
a. FOB-origin pricing.
b. uniform-delivered pricing.
c. zone pricing.
d. basing-point pricing.
11-14. Companies often face situations in which they must initiate price changes or respond to price changes by competitors. All of the following situations may lead a firm to consider cutting its price EXCEPT:
a. excess capacity.
b. cost inflation.
c. falling market share.
d. attempting to dominate a market with a lower-price strategy through lower costs.
11-15. In response to a price reduction by a competitor, a company can introduce a "fighting brand." A good definition of a "fighting brand" would be one that:
a. raises a price to offer a high price alternative.
b. raises quality and increases price.
c. becomes a lower-priced brand or line to combat the competitor's price reduction.
d. copies the competitor's brand to confuse the buyer.


Please check your answers before you submit your assignment. You cannot change any answer after you submit your assignment.
Chapter 11 | Back to Index | Course Outline