Marketing Final Exam

Market a status quo pricing b penetration pricing c

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Unformatted text preview: commend the company use to introduce this product to the market? a. Status quo pricing b. Penetration pricing c. Price skimming d. Flexible pricing e. Leader pricing ANS: C The price skimming strategy will recoup the research and development costs quickly. Also, patents will limit or prohibit direct competition. PTS: 1 REF: 320-321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 8. For which of the following situations would a price skimming strategy be most appropriate? a. The addition of a new comic book series with an obviously gay hero b. The introduction of a new brand of bottled water c. The elimination of demand for low-wattage light bulbs d. The introduction of a unique, roomy automobile model that has extremely low energy and fuel costs e. The introduction of a Barbie Olympic champion doll by Mattel and the International Olympic Committee ANS: D The automobile will justify a price skimming strategy because the manufacturer will need to recoup research and development costs, and it will take several years for the competition to catch up. PTS: 1 Thinking REF: 320-321 OBJ: 20-1 TOP: AACSB Reflective KEY: CB&E Model Pricing MSC: BLOOMS Analysis 9. The DCS Stainless Steel Gas Grill for outside cooking costs $3,995. The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers. There is no potential competitor for this grill. The _____ strategy is probably best. a. price skimming b. penetration pricing c. status quo d. cost bundling e. price lining ANS: A Like products in the introductory stage of the product life cycle, this grill has no competition. PTS: 1 REF: 320-321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 10. When a firm introduces a new product at a relatively low price because it hopes to reach the mass market, it is following a _____ strategy. The low price is designed to capture a large share of a substantial market and produce lower production costs. a. penetration pricing b. price-insensitive demand c. price skimming d. price elasticity e. cost bundling ANS: A Penetration pricing means charging a relatively low for a product in order to reach the mass market. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Knowledge 11. Marketers must take care when using _____ since a lower price often signals to consumers that product quality is also low. a. price skimming b. status quo pricing c. penetration pricing d. unbundling e. cost sharing ANS: C Penetration pricing uses low prices to gain market share. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 12. The market for turkey products is large. If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savory dressing,...
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