Question 1In 2005, KitenAid offered purchasers of any Kenmore brand major appliance a refund of $100 if they mailed Kenmore the receipt showing where and when they had purchased the appliance. Kenmore offered a:rebatereciprocal allowancecash discountfunctional discounttrade promotion4 points Question 2For which of the following situations would a price-skimming strategy be most appropriate?the addition of a new comic book series with an obviously gay herothe introduction of a new brand of bottled waterthe elimination of demand for low wattage light bulbsthe introduction of a unique, roomy automobile model that has extremely low energy and fuel coststhe introduction of a Barbie Olympic champion doll by Mattel and the International Olympic Committee4 points Question 3An Internet picture frame manufacturer offers retailers reduced prices on any combination of size or style frames purchased. The discount is shown as they shop and adjusted as the quantity of frames purchased increases. What common form of purchase discount is the frame manufacturer using?rebatecash discountquantity discountpromotional allowancefunctional discount4 points Question 4The Toronto Convention and Visitors Association offers tourists a promotion in which they can buy one night in a Toronto hotel, two tickets to a Blue Jays baseball game, two tickets to a theatrical production, and dinner for two at an upscale restaurant for a substantially lower price than if the components were purchased separately. The Toronto Convention and Visitors Association is using a pricing technique called:price liningtwo-part pricingpsychological pricingprice bundlingbait pricing4 points Question 5Two effective pricing tactics, which can be used during a recession, to hold or build market share are:flexible pricing and price shadingprice shading and price liningunbundling and price shadingvalue-based pricing and bundlingprice lining and escalator pricing4 points Question 6Consumers sometimes prefer two-part pricing because:prices are often perceived as quality indicatorsconsumers like to be in control of costsconsumers are uncertain about the number and types of activities they might use at places like amusement parksconsumers prefer a limited number of choicesprices have little or no psychological influence on most consumers4 points Question 7Art SuppliesIt’s September and Sophia wants to buy some arts and crafts supplies for an after-school program she is developing for her daughter’s elementary school. In her Sunday newspaper was a flyer from Michael’s, an arts and crafts retailer. As she looked through the newspaper insert, she noticed that if she purchased three or more bottles of Alene’s Tacky Glue, the regular price of $1.50 each was reduced to $1.15 each. She also saw that the store priced its plastic storage boxes at $1.99, $3.99, and $5.99. She thought they would be useful for storing each individual child’s projects. On the front page of the flyer was an ad for Funky Girls Gel Pens, something she knew her daughter would love to use. The price at Michael’s was $6.99 lower than the price she had found at the other stores that carried the pens. She thought that some of the older girls might like to start a scrapbook and was pleased to find that Michael’s had a scrapbook starter kit, which includes scissors, book, pages, and stickers for only $15. The items could be purchased separately for $19.99. The flyer also announced that all flag-related items leftover from its Fourth of July sale were reduced by 40 percent.Refer to Art Supplies. Which type of discount is being using to price the tacky glue?noncumulative quantity discountpromotional allowanceseasonal discountcash discountcumulative quantity discount4 points Question 8The Association of Specialty Surgical Practice has published a minimum fee schedule for services and distributed this schedule throughout the medical profession. Specialty Surgical is encouraging:price fixingbait pricingunfair trade practicesservice autonomy pricingpredatory pricing4 points Question 9A company’s pricing strategy should do all of the following EXCEPT:give direction for price movements over the product life cycledefine the initial priceignore the targeting and positioning strategy of the companyset a competitive priceinteract with the other elements of the marketing mix4 points Question 10Kule, Inc. produces three different lines of car racks for transporting large, bulky items.BicycleLuggageSkisSales$140,000$100,000$160,000Less: cost of goods sold110,000110,000140,000Gross margin30,000(10,000)20,000Total company net annual profit = $40,000Included in the cost of goods sold is $12,000 of annual rent (a fixed cost) that is distributed equally among the three product lines. As a consultant to Kule, will you recommend that it drop the luggage rack line?No, dropping the line will actually decrease overall net profits.Yes, dropping the line will increase company net profits.No, dropping the line will result in increased fixed costs.Yes, dropping the line will reduce joint costs.Yes, dropping the line will reduce cost of goods sold and increase revenues.4 points Question 11Shipping 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 risks and costs, a seller would likely employ:freight absorption pricinguniform delivered pricingzone pricingbasing-point pricingFOB origin pricing4 points Question 12For 2006, the price of a single ticket in the infield box at an Atlanta Braves baseball game was $35 although if you elected to buy a season pass for the same seat, the ticket price was reduced or discounted. This $35 is an example of a _____ price.basezonedemandchannel leaderfunctional4 points Question 13Most demand curves slope:horizontallyupward and to the rightdownward and to the leftverticallydownward and to the right4 points Question 14Queeg Industries sells all types of artists’ paintbrushes. When the owner of Queeg learned that Patterson Art, one of its biggest competitors in the Northeast region, had lowered its prices on all synthetic brushes by 5 percent, he did the same. This is an example of _____ pricing.status quotarget returnmarket sharepredatorycost-plus4 points Question 15What is the biggest advantage associated with markup pricing?its simplicityits inability to be decoded by customersthe way that the technique considers demandthe fact that merchandise is never underpriced with this techniqueits reliance on marginal costs4 points Question 16Richelieu Foods, Inc. decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on its new line of organic pizzas. This pricing strategy is designed to do all of the following EXCEPT:encourage retailers to advertise this high-margin itemgive dealers an incentive to promote the new organic pizzasdevelop wide and convenient distributionmaximize profit margin for the producerencourage trial by consumers if the pizzas are priced low by retailers4 points Question 17Consumer Buying HabitsIn a sluggish economy, consumers will buy even the most modest of products with the same discretion once shown only to big-ticket items, like computers, air fares, and designer clothes. The results are a growing popularity of cheaper private-label products and the likelihood that price wars among consumer goods could lead to the same kind of consolidation that occurred in the airline and electronics industries. Moreover, analysts say changing buying habits will force premium brand marketers to lower their prices to protect their positions. These companies may also upgrade products to distinguish them from private labels and promote their brands more aggressively than ever.One analyst says that consumers are forcing product innovation. Products have to be sold on merit. As a result, there will be fewer brands of significance, but the significant brands will be stronger. Brand loyalty is believed to exist only when, or if, value is provided. How do the significant brands compete? One analyst says that a combination
of sensible pricing and innovation with a strong brand name can stabilize market share. Reformulated or repackaged products are typical examples of innovative attempts to solidify market share.Refer to Consumer Buying Habits. Changing consumer buying habits will force premium brand marketers to lower their prices to protect their positions (maintain the same revenue). This suggests that demand for premium products is:elasticdevariatehighly elasticfixedunitary4 points Question 18Grove City Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Frankie Alonza, its owner, does not have the cash to pay the current loan installment due on the building and inventory. Alonza has decided to reduce all merchandise prices by at least 50 percent for a weekend sale so he can earn enough to make his loan payment. His pricing objective can be classified as:market share maximizationsatisfactory profitsasset maximizationsales maximizationtarget ROI4 points Question 19Which of the following statements about price is true?Price and revenue are synonyms.Price always equals some monetary figure.Price is not necessarily based on the satisfaction consumers receive from a product.High prices result in high profits.All of these statements about price are true.4 points Question 20Regency, Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing 10 cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units.6507651,3004,33413,0004 points Question 21Many consumers, especially when faced with an uncertain purchase decision, think that a high price:is a signal of qualityis an indication that consumers are being ripped offwill always lead to major price discounts to wholesalers and retailers that distribute itis a sign of the company’s overall market shareindicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth4 points Question 22_____ pay for every activity of the company.RevenuesInvestmentsRetained earningsProfitsPrices4 points Question 23Bill Needles makes and sells customized silver belt buckles for $225 each. He has determined that his fixed costs are $8,000, and his average variable costs per buckle are $145. What is his fixed cost contribution per buckle?$45$80$88.89$125$1704 points Question 24Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:illegal pricingselling against the brandprice pressurizationbrand cuttingprivate-label cannibalization4 points Question 25Monthly output at Leisure-Time, Inc. changed from 12 to 13 prefabricated gazebos, and the total costs changed from $9,000 to $10,500. What is the marginal cost for this company?$1,500$2,000$1,200$10,000$12,000