Marketing Final Exam

It used penetration to gain market share ans t pts 1

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Unformatted text preview: considerably lower than lesser-known competitors. It used penetration to gain market share. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Application REF: 321 OBJ: 20-1 KEY: CB&E Model Pricing 8. One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products. ANS: F Penetration pricing has low profit margins on each unit sold. This is seen as an advantage because it discourages potential customers from entering the market. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 9. There are two limousine services that drive customers from communities in North Georgia to the Atlanta airport. Whenever one reduces its fare, its competitor reduces its fares by the same amount. This is an example of status quo pricing. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Application REF: 322 OBJ: 20-1 KEY: CB&E Model Pricing 10. Price fixing is only illegal in some instances. ANS: F Price fixing is illegal under the Sherman Act and the Federal Trade Commission Act. Price fixing is one area where the law is quite clear, and the Justice Department’s enforcement is vigorous. PTS: 1 REF: 323 Thinking KEY: CB&E Model Pricing OBJ: 20-2 TOP: AACSB Reflective MSC: BLOOMS Comprehension 11. Price discrimination can sometimes be justified. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension REF: 323-324 OBJ: 20-2 KEY: CB&E Model Pricing 12. A winery that makes a huge profit on merlot wines may lower its price on pinot noir wines to cause damage to wineries that only produce pinot noir. This is an example of predatory pricing. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Application REF: 324 OBJ: 20-2 KEY: CB&E Model Pricing 13. Manufacturers know the approximate price level they can expect when establishing a product price. This approximate price is called the base price. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge REF: 324-325 OBJ: 20-3 KEY: CB&E Model Pricing 14. A retailer of furniture for babies that is allowed to deduct 3 percent from its total bill if it pays by a specific date is receiving a promotional discount. ANS: F This is describing a cash discount. PTS: 1 REF: 325 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application 15. Functional discounts are typically calculated as the wholesale price times the accumulated margin percentages. ANS: F Functional discounts are typically a percentage discount from the base price. PTS: 1 REF: 325 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Comprehension 16. Sears and John Deere run major sales on their lines of riding lawn mowers every fall. This is an example of a seasonal discount. ANS: T PTS: 1 TOP: AACSB Reflective Thinking MSC: BLOOMS Application REF: 325 OBJ: 20-3 KEY: CB&E Model Pricing...
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This document was uploaded on 09/29/2013.

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