Marketing Final Exam

A not all costs are easily categorized because a cost

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Unformatted text preview: , which is difficult to calculate. e. It can only be expressed as a break-even point in dollar amounts. ANS: A Not all costs are easily categorized because a cost may be fixed when viewed in the short term but variable when considered over a longer period of time. PTS: 1 REF: 313 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Analysis 91. Which of the following statements about pricing strategies throughout the product life cycle is NOT true? a. During product decline, prices may also decline until there is only one competitor left in the market. b. Price increases during the maturity stage are cost initiated instead of demand initiated. c. The maturity stage often brings about price decreases. d. e. Prices stabilize when the product enters the growth stage. With inelastic demand, price will be set low in the introduction stage. ANS: E With inelastic demand, prices are set high at introduction. PTS: 1 REF: 313 Thinking KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Analysis 92. When Apple, Inc. developed and introduced the iPhone, it was unique as it essentially combined a cellular phone with an iPod, an Internet browser, and e-mail capabilities. As such, in the short run, it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be: a. low initial price, rising slightly when entering the growth stage b. high initial price, falling slightly when entering the growth stage c. high price, continuing through growth and maturity d. low price, continuing through growth and maturity e. low price initially, rising constantly through growth and into maturity ANS: B A high initial price is used when a new product faces little competition, needs to recoup research and development costs, and has inelastic demand. Prices will fall slightly when entering the growth stage. PTS: 1 REF: 313 Thinking KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Application 93. In the mature and highly competitive furniture industry, you would expect furniture manufacturers to engage in: a. a price war b. price escalation c. prestige pricing d. above-market pricing e. geographical pricing ANS: A In the maturity stage, with heavy competition, below-market pricing leads to price wars. PTS: 1 REF: 313 Thinking KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Application 94. Kroger 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: a. illegal pricing b. selling against the brand c. price pressurization d. brand cutting e. private label cannibalization ANS: B Selling against the brand with private labels causes sales of the higher-priced brands to decline. PTS: 1 REF: 314 Thinking KEY: CB&E Model Pricing OBJ: 19-6 TOP: AACSB Reflective MSC: BLOOMS Application 95. Manufacturers can...
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