Pricing Strategies: Additional Considerations

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Question 1
Free
Multiple Choice

Companies set not a single price, but a pricing ________ that covers different items in its line and changes over time as products move through their life cycles.

Choose correct answer/s
A

by-product

B

structure

C

loop

D

cycle

E

bundle

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Question 2
Free
Multiple Choice

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________ pricing.

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A

comparative

B

competitive

C

market-skimming

D

market-segmentation

E

cost-plus

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Question 3
Free
Multiple Choice

A market-skimming pricing strategy should NOT be used for a new product when ________ .

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A

the product's quality and image support its higher price

B

enough buyers want the products at that price

C

competitors are unable to enter the market

D

competitors can undercut prices easily

E

producing a smaller number of goods is feasible

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Question 4
Free
Multiple Choice

When a company sets a high price for a new product with the intention of reducing the price in the future, it is using the ________ pricing strategy.

Choose correct answer/s
A

market-skimming

B

cost-plus

C

market-segmentation

D

market-penetration

E

competitive

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Question 5
Free
Multiple Choice

Midnight Magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using?

Choose correct answer/s
A

market-penetration pricing

B

market-skimming pricing

C

competitive pricing

D

cost-plus pricing

E

product-line pricing

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Question 6
Multiple Choice

Which of the following is true of price skimming?

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A
It is effective in situations in which competitors are able to undercut prices easily.
B
It can be profitably used when the product's quality and image support its price.
C
It involves underpricing products so that companies make larger sales.
D
It is ineffective in situations in which competitors are unable to enter the market easily.
E
It leads to a situation in which the company completes more, though less profitable, sales.
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Question 7
Multiple Choice

Companies that set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy.

Choose correct answer/s
A
market-skimming pricing
B
market-penetration pricing
C
cost-plus pricing
D
inclusive pricing
E
exclusive pricing
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Question 8
Multiple Choice

A market-penetration pricing policy should LEAST likely be used for a new product when ________ .

Choose correct answer/s
A
the market is highly price sensitive
B
production and distribution costs fall as sales volume increases
C
the product's quality and image support a high price
D
a high price helps keep out the competition
E
there are few or no competitors in the market
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Question 9
Multiple Choice

Which of the following is true of market-penetration pricing?

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A
It should be used when the product's quality and image support a high price.
B
It involves setting a high price for a new product to appeal to the elite in society.
C
It results in drawing in large numbers of buyers quickly, winning a large market share.
D
It is best used in conjunction with a market-skimming pricing strategy.
E
It results in the company making fewer and less profitable sales.
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Question 10
Multiple Choice

In a bid to attract more customers in a market that has several competitors, Barrymore's Bakery slashed the prices of all its products by 50 percent. Managers at the firm reasoned that lower prices would draw in even more customers, making up for the reduction in price several times over. Which of the following pricing strategies are they using?

Choose correct answer/s
A
market-skimming pricing
B
market-penetration pricing
C
captive-product pricing
D
cash discount pricing
E
by-product pricing
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Question 11
Multiple Choice

Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal?

Choose correct answer/s
A
market-skimming pricing
B
market-penetration pricing
C
market-segmentation pricing
D
cost-plus pricing
E
captive-product pricing
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Question 12
Multiple Choice

Electrowhip, a company that manufacturers blenders and electric whisks, has decided to use a market penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?

Choose correct answer/s
A
Electrowhip's competitors utilize social media for marketing their products.
B
Electrowhip sells products whose image and quality support high prices.
C
Electrowhip operates in a market with many competitors.
D
Electrowhip does not operate in a price sensitive market.
E
Electrowhip's products are intended to appeal to the elite in society.
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Question 13
Multiple Choice

For a market penetration-price strategy to succeed, which of the following is LEAST likely to be true?

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A
Production costs decrease as sales volume increases.
B
A low price triggers market growth.
C
Distribution costs decrease as sales volume increases.
D
Low prices must inhibit competition from entering the market.
E
The strategy can be changed quickly, to a higher-priced position, with no negative impact.
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Question 14
Multiple Choice

Refer to the scenario below to answer the following question(s).
Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market quickly.
-Which of the following best supports a market-penetration strategy for Champion?

Choose correct answer/s
A
Production costs increase as sales volume increases.
B
It is very difficult for competitors to enter the market.
C
The cost of producing a smaller volume is negligible.
D
The quality of the products supports high initial prices.
E
The market for the products is highly price sensitive.
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Question 15
True/False

Pricing strategies tend to change and evolve as the average product passes through its life cycle.

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True
False
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Question 16
True/False

For market skimming to be successful, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.

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True
False
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Question 17
True/False

When The Candy Store sets a low initial price in order to get its "foot in the door" and to quickly attract a large number of buyers, the company is using market-skimming pricing.

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True
False
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Question 18
True/False

After entering a market by using market-penetration pricing, a company can easily raise its price and maintain its market share.

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True
False
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Question 19
Essay

Differentiate between market-skimming and market-penetration pricing strategies. Explain the conditions within which they are effective.

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Question 20
Essay

For what types of products might marketers use market-skimming pricing?

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