Marketing Final Exam

Statements is not true with regard to trade ins a

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Unformatted text preview: following statements is NOT true with regard to trade-ins? a. Flexible pricing and trade-ins often go hand in hand. b. If a trade-in is involved, the consumer must negotiate two prices, one for the new product and one for the existing product. c. Research found that trade-in customers tend to care more about the trade-in value they receive than the price they pay for the new product. d. About 95 percent of all new car sales involve a trade-in. e. On average, customers who trade-in an automobile when purchasing a new one end up paying more than customers who simply buy a new car from a dealer. ANS: D A little over one half (57 percent) of all new car sales involve a trade-in. PTS: 1 REF: 329 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Analysis 72. Eustis Lee is a lawyer who only handles DUI cases. No matter how quickly he resolves the case, he charges each customer $5,000. Lee justifies the fee because of his lengthy education and the years he has spent learning how the judicial system operates. Which pricing policy is the lawyer using? a. Professional services b. Potential (or base) c. Price maintenance d. Psychological e. Flexible (or variable) ANS: A Professional services pricing is used by people with lengthy experience, training, and often certification by a licensing board. PTS: 1 REF: 329 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application 73. Often a seller will establish a series of prices for a family of merchandise items. There may be several different models at specific price points but no prices in between. This policy is called: a. price lining b. price bracketing c. family pricing d. variable pricing e. price bundling ANS: A Price lining is the practice of offering a product line with several items at specific price points. PTS: 1 REF: 329 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Comprehension 74. At the Greenville Florist, there are four different prices for funeral bouquets. The smallest bouquet sells for $30; there is also a $40 version and a $75 version. For those who want to express their grief through the purchase of a dramatic floral arrangement, the florist also offers a $150 version. The owner of the florist shop has chosen price lining because it will: a. enable the shop to carry a larger total inventory b. maintain all of the product line at the same stage in the product life cycle confuse customers and allow salespeople to sell more of the expensive models reach several different target market segments thwart competitors that are trying to sell similar products c. d. e. ANS: D Price lining allows a retailer to appeal to several different target markets. It is not an uncommon strategy, and competitors probably use it. It should not affect inventory overall and will not confuse customers. PTS: 1 REF: 329 Thinking KEY: CB&E Model Pricing OBJ: 20-3 TOP: AACSB Reflective MSC: BLOOMS Application 75. Why is price...
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This document was uploaded on 09/29/2013.

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