Marketing Final Exam

Costs to determine profit pts 1 ref 320 thinking key

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Unformatted text preview: geographic pricing heuristics ANS: B Managers will need to know costs to determine profit. PTS: 1 REF: 320 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 3. Which of the following is a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion? a. Penetration pricing b. Price skimming c. d. e. Price capping Profit pricing Price maximization ANS: B This is the definition of price skimming, which is sometimes called a “market-plus” approach to pricing because is denotes a high price relative to the prices of competing products. PTS: 1 REF: 320 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Knowledge 4. A 16-ounce bottle of Prairie Herb vinegar sells for $4.95, and a 16-ounce bottle of Heinz vinegar costs $1.05. Prairie Herb vinegar is new to the market, perceived to be of higher quality, and provides a unique flavor to foods even though it is used in the same way as Heinz vinegar. Prairie Herb vinegar is most likely using a _____ policy. a. penetration pricing b. status quo pricing c. price skimming d. bundling cost pricing e. geodemographic pricing ANS: C Price skimming is common for products in the introductory stage of their product life cycle. PTS: 1 REF: 320 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 5. A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin, which can be used effectively as a blood replacement. The manufacturer of the product has put a high price on the product in order to recoup its research and development costs. The manufacturer of Oxyglobin is using a _____ policy. a. price banding b. penetration pricing c. price lining d. bundling costs e. price skimming ANS: E Price skimming is a pricing policy whereby a firm charges a high introductory price. PTS: 1 REF: 320 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 6. The price skimming strategy is sometimes called a “market-plus” approach to pricing because it denotes a high price relative to the prices of competing products. This strategy works best when: a. competition is abundant b. revenues are equal to expenses c. d. e. supply is greater than demand production capacity is large and flexible demand is greater than supply ANS: E Price skimming denotes a high price; therefore, the demand must be great. PTS: 1 REF: 320-321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 7. When the Mosquito Magnet was introduced, it was designed to rid the immediate area of mosquitoes and other annoying insects. The technology for the Mosquito Magnet had taken years to develop. It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die. What type of pricing policy would you re...
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This document was uploaded on 09/29/2013.

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