Title: Pricing Strategies
Course: Question Banks

Q: Jack uses several criteria to determine how much he is willing to spend to satisfy his needs. His preference is to pay ________.
- as much as possible
- a price that is between too much and too little
- as little as possible
A: as little as possible

Q: What are the components of the Price-Value Equation?
- Value = Perceived Benefits + Perceived Costs
- Perceived Costs = Perceived Benefits - Value
- Value = Perceived Benefits - Perceived Costs
A: Value = Perceived Benefits - Perceived Costs

Q: Sam, a buyer for a small warehouse company, is looking to purchase a forklift from Caterpillar or Komatsu. He is looking for a reliable, narrow forklift to fit between the warehouses’ smaller aisles and that is a lower price. Sam doesn’t need added-on services; he is well-versed in using and maintaining large equipment. He evaluates the forklift types and decides on a Komatsu. Sam chooses the Komatsu for its perceived reliability and it is $1500 less than the Caterpillar forklift. Which approach that Komatsu took was a success for Sam as a customer?
- Komatsu diminished the value-added perceived benefits to meet and exceed customer expectations
- Komatsu reduced the value added benefits and those benefits competed well head-to-head with Caterpillar’s value added benefits
- Komatsu reduced its perceived costs enough to undercut its competitors perceived values
A: Komatsu reduced its perceived costs enough to undercut its competitors perceived values

Q: An electronics store introduces three new types of music players to its customers. Each of the new music players are priced at $99, $79, and $59. Which psychological pricing approach is the store using to price the music players?
- inviting price comparisons
- providing pricing options
- validating the case for the number nine
A: validating the case for the number nine

Q: A dating website offers a deluxe package of $200 for 12 months of matches or a classic package of $50 for one month of matches. Most customers don’t want the higher cost or they don’t think they will use the site for a year and end up purchasing the classic package. The customers sign up feeling like they just saved $150 and they still have full access. Which type of psychological pricing was the cloud storage company using?
- validating the case for the number nine
- inviting price comparisons
- anchoring and providing pricing options
A: anchoring and providing pricing options

Q: Shortcutz hair salon offers inexpensive haircuts for $10. They create a marketing campaign extolling the cheap price while showing customers how expensive other salons are in comparison. The campaign encourages consumers shop around and compare prices. Shortcutz focuses solely on price and mentions little about the quality of its haircuts. Which type of psychological pricing communication does Shortcutz use?
- anchoring and providing pricing options
- validating the case for the number nine
- inviting price comparisons
A: inviting price comparisons

Q: ________ places an emphasis on the finances of the product and business.
- Customer-oriented pricing
- Competitor-oriented pricing
- Profit-oriented pricing
A: Profit-oriented pricing

Q: A company copies the competitor’s pricing strategy by setting prices almost completely according to its competitor’s prices or by using price as one of the features that differentiates the product. Which type of pricing strategy does this describe?
- customer-oriented pricing
- profit-oriented pricing
- competitor-oriented pricing
A: competitor-oriented pricing

Q: If a company charges the highest price supporting the value received by the customer and considers the full price-value equation in making that pricing decision, the company is using which pricing strategy?
- profit-oriented pricing
- competitor-oriented pricing
- customer-oriented pricing
A: customer-oriented pricing

Q: The correct equation to calculate the break-even price which includes fixed and variable costs is expressed as:
- n = FC / (p – V)
- pn = Vn + FC
- p = (Vn + FC) / n
A: p = (Vn + FC) / n

Q: The correct equation to calculate the break-even quantity, which includes fixed and variable costs, is expressed as:
- pn = Vn + FC
- p = (Vn + FC) / n
- n = FC / (p – V)
A: n = FC / (p – V)

Q: Which pricing strategy is used when a company wishes to match its competitors’ prices?
- pricing below competitors
- pricing above competitors
- pricing to meet competitors
A: pricing to meet competitors

Q: Which pricing strategy is often used when a company wishes to compete by capturing a larger sales volume and is willing to deal with lower profit margins per unit?
- pricing to meet competitors
- pricing above competitors
- pricing below competitors
A: pricing below competitors

Q: Which pricing process is based primarily on a customer’s idea of value rather than on a competitor’s pricing or production costs of a product or service?
- break-even pricing
- competitor impact on pricing
- value-based pricing
A: value-based pricing

Q: A company chooses to price its products by value-based pricing. In order for this type of pricing to be most effective, what additional tactics should be included with the price?
- employ a general market approach to pricing which considers what the market as a whole sees as valuable in a product or service
- offer a middle price point with the established price and tout the singularity of the product’s value
- use a value-based price in conjunction with all elements of the marketing mix communicating value to the customer
A: use a value-based price in conjunction with all elements of the marketing mix communicating value to the customer

Q: A company introduces a new technology product to the market. It sets the product’s price at the highest price it thinks customers will pay. Which type of pricing strategy is the company using?
- penetration pricing
- break-even pricing
- skim pricing
A: skim pricing

Q: If a company is using a skim pricing strategy and prices its product at a premium price, what happens with demand for its product?
- demand increases
- demand remains steady
- demand decreases
A: demand decreases

Q: Which type of product is the most appropriate one for a company to use with a skimming strategy?
- a new hammer
- a new pair of glasses
- a new high-quality laptop
A: a new high-quality laptop

Q: Which pricing strategy assumes customers will switch to a new product because of the lower pricing and has the purpose of increasing its market share by taking advantage of economies of scale?
- break-even pricing
- skim pricing
- penetration pricing
A: penetration pricing

Q: A company decided to price its product with the penetration strategy. What advantage does the company potentially create by selecting this type of pricing strategy?
- It encourages competitors to enter the market.
- It can result in a predictably steady diffusion and adoption throughout the product's life cycle.
- It can generate demand from word of mouth by the goodwill created among innovators and early adopters.
A: It can generate demand from word of mouth by the goodwill created among innovators and early adopters.

Q: A store picks a pricing goal in relation to a specific gross margin, producing a desirable profit margin. What is this type of pricing called?
- markup
- skim pricing
- cost-plus
A: cost-plus

Q: A middleman is receiving either a dollar amount or percentage difference between the average cost and the price of an individual item or of all merchandise in stock for a specific department. The amount the retailer is receiving is known in the business as a ________?
- cost-plus price
- discounting
- markup
A: markup

Q: A pet supply company offers a base price reduction for a retail buyer who purchases a prearranged amount of pet merchandise. This deal aids the pet supply company to keep the retail buyer as a repeat customer. Which type of discounting strategy did the pet supply company use?
- seasonal discounting strategy
- cash discounting strategy
- quantity discounting strategy
A: quantity discounting strategy

Q: A mattress manufacture paid its retailer, Bed Head, a sum of money to have Bed Head feature its mattresses in its weekly advertising flyers, radio spots, newspaper ads, and email campaigns. This is an example of a manufacturer giving ________ to its retailer.
- trade-in allowances
- trade discounts
- personal allowances
A: personal allowances

Q: A measure of sensitivity or responsiveness to price is the definition of ________?
- competitor impact pricing
- break-even pricing
- elasticity
A: elasticity

Q: If a business discovered that changing the price of its muffins created an absolute value of .35 < 1, what did its price change mean?
- muffin demand is elastic
- muffin pricing is very sensitive
- muffin demand is inelastic
A: muffin demand is inelastic

Q: The Mailgorilla email marketing company increases its membership prices by $5.00 a month. The original price was $10.00 and is now $15.00. Mailgorilla’s email account members drop from 5000 members to 1500 member in one month. This is a 70% change in demand from a 33% price increase. What is the correct answer as to its customer’s price sensitivity?
- 2.12 > 1 customers price sensitivity is inelastic
- .47 < 1 customers price sensitivity is elastic
- 2.12 > 1 customers price sensitivity is elastic
A: 2.12 > 1 customers price sensitivity is elastic

Q: If a product exists in a highly competitive market, it is likely to have an elastic demand. What type of factor affecting elasticity does this represent?
- absolute price
- importance of use
- competitive dynamics
A: competitive dynamics

Q: If a buyer has a critical or more important use of the product then the inelasticity of the demand increases. What factor is affecting elasticity in this scenario?
- absolute price
- substitutes
- importance of use
A: importance of use

Q: Which step of the organizational buying process involves qualified suppliers who are invited by a company in a B2B scenario to submit a bid to become its supplier?
- supplier selection step
- supplier search step
- proposal solicitation step
A: proposal solicitation step

Q: Which two stages are included in the competitive bidding procurement process for a B2B scenario?
- product specification and supplier search processes
- supplier selection and order-routine specification processes
- proposal solicitation and supplier selection processes
A: proposal solicitation and supplier selection processes

Q: For a business-to-business competitive bid process, which type of opportunity is created that is different than a business-to-consumer competitive pricing process?
- There will be large market competitive pricing and impersonal pricing for the B2B and a specific price tailoring for a B2C pricing.
- There will be both B2B and B2C that will receive the same type of competitive bid process and pricing.
- There will be specifically tailored pricing for a specific business customer’s needs rather than a generic competitive pricing.
A: There will be specifically tailored pricing for a specific business customer’s needs rather than a generic competitive pricing.

Q: What is a marketer’s specific goal when creating a competitive bid proposal?
- to maximize the role of price in the proposal
- to place price on equal footing as other benefits in the proposal
- to minimize the role of price in the proposal
A: to minimize the role of price in the proposal

Q: If a company competes on price alone in a competitive bidding scenario, then what type of problems can this create?
- It can cause a company to lose discipline and include too much of the marketing mix.
- It can create a price is a sustainable competitive advantage, but the competitors will have difficulty copying price.
- It can create a low price, jeopardizing a company’s ability to deliver its services or products without cutting into its profits.
A: It can create a low price, jeopardizing a company’s ability to deliver its services or products without cutting into its profits.