Marketing Final Exam

Be aware of its existence the market is price

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Unformatted text preview: most of the large market for this new product would be aware of its existence. The market is price sensitive, and there is some potential competition. The appropriate strategy would be: a. price skimming b. penetration pricing c. status quo d. cost bundling e. price lining ANS: B The market for the new product is price sensitive. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 13. Jones Soda Company and Big Sky Brands have introduced Jones Soda Carbonated Candy, a candy that delivers a blast of the most popular Jones Soda flavors along with an oddly enjoyable tongue-tingling sensation. Which pricing strategy would be appropriate if the company wants to convince price-sensitive consumers to try it and not buy some other brand? a. Price lining b. Price fixing c. Status quo pricing d. Penetration pricing e. Price skimming ANS: D Consumers are price sensitive in this market. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 14. Pharmacies are a new addition to Sam’s Clubs. They could exert a greater influence on the marketplace for prescription drugs than their newness indicates. Sam’s has a stated philosophy of marking up merchandise a maximum of 14 percent. When that philosophy is applied to prescription drugs, especially generics, warehouse club prices can be dramatically lower than those of conventional drugstores, supermarkets, or discount store pharmacies. Sam’s is using a _____ strategy to convince consumers to use its pharmacies rather than its competitors. a. penetration pricing b. price-insensitive demand c. price skimming d. price elasticity e. cost bundling ANS: A When a firm introduces a new product at a relatively low price because it hopes to reach the mass market, it is following a penetration pricing strategy. The low price is designed to capture a large share of a substantial market and produce lower production costs. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 15. A penetration strategy tends to be effective in a price-sensitive market. Thus, one of the purposes of penetration pricing is to: a. recoup product development costs quickly b. discourage competitors from entering the market c. produce a large margin of profit per unit d. develop exclusive distribution e. attract the price-insensitive buyer who demands the latest in technology ANS: B A low price will mean a low profit margin and will only be attractive if a large volume of business can be seized. The first company on the market that uses penetration pricing has a great advantage. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 16. A penetration pricing strategy tends to be most effective: a. when demand is relatively inelastic b. under unitary conditions c. in price-sensitive markets d. when the company can only perform sm...
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This document was uploaded on 09/29/2013.

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