Marketing Pricing Strategies Quiz
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What is the primary goal of market-penetration pricing?

  • To gain a large market share through low initial pricing (correct)
  • To maximize profits immediately from a small customer base
  • To price the product according to its perceived value
  • To create a high-quality image of the product

    • What is the primary consideration in product line pricing?

  • The geographical market where the products are sold
  • The exclusivity of the products in the line
  • The cost differences, customer evaluations, and competitor prices (correct)
  • The production method used for each product

    • Which of the following is NOT a characteristic of market-skimming pricing?

  • Skimming revenues from different market layers
  • Targeting price-sensitive customers (correct)
  • Setting high initial prices
  • Supporting product quality and image

    • Which pricing strategy sets prices for products that must be used with a main product?

    <p>Captive product pricing</p> Signup and view all the answers

    What is the purpose of by-product pricing?

    <p>To assign a price to waste products to enhance the competitiveness of the main product</p> Signup and view all the answers

    Which of the following strategies falls under product mix pricing?

    <p>Captive product pricing</p> Signup and view all the answers

    What is the primary goal of adjusting prices for different types of customers?

    <p>To maximize profits from all customer segments</p> Signup and view all the answers

    Which of the following is NOT a type of price adjustment strategy mentioned?

    <p>Market penetration pricing</p> Signup and view all the answers

    What is a seasonal discount?

    <p>A price reduction for off-season purchases</p> Signup and view all the answers

    Which type of pricing strategy involves setting prices for a set of products that are related to one another?

    <p>Product line pricing</p> Signup and view all the answers

    Which pricing strategy involves charging customers differently based on their location?

    <p>Geographic pricing</p> Signup and view all the answers

    What is a key issue related to initiating price changes?

    <p>Predicting customer response to price increases</p> Signup and view all the answers

    Which of the following pricing strategies allows companies to charge different prices for complementary products?

    <p>Captive product pricing</p> Signup and view all the answers

    What type of discount is offered for bulk purchases?

    <p>Quantity discount</p> Signup and view all the answers

    Promotional pricing is primarily used to achieve which of the following?

    <p>Encourage immediate sales through limited-time offers</p> Signup and view all the answers

    What legislation could significantly impact a company's pricing decisions?

    <p>Consumer protection laws</p> Signup and view all the answers

    What is a potential drawback of promotional pricing strategies?

    <p>They may diminish the perceived value of the brand.</p> Signup and view all the answers

    What does FOB-origin pricing indicate about the buyer's responsibilities?

    <p>The buyer is responsible once the seller ships the product.</p> Signup and view all the answers

    Which geographical pricing strategy involves charging the same price plus freight to all customers?

    <p>Uniform-delivered pricing</p> Signup and view all the answers

    How does zone pricing function in a pricing strategy?

    <p>It creates multiple zones with the same pricing within each zone.</p> Signup and view all the answers

    What is one characteristic of freight-absorption pricing?

    <p>The seller pays for part or all of the shipping costs.</p> Signup and view all the answers

    Which pricing strategy places risk on the buyer for any damage that occurs during transportation?

    <p>FOB-origin pricing</p> Signup and view all the answers

    In geographical pricing, what does the term 'basing-point pricing' typically refer to?

    <p>Using a fixed location to determine shipping charges.</p> Signup and view all the answers

    What effect does frequent use of coupons in promotional pricing have on customer perception?

    <p>Normalizes discount shopping among consumers.</p> Signup and view all the answers

    What is the primary purpose of trade-in allowances in price adjustment strategies?

    <p>To incentivize recycling of old products</p> Signup and view all the answers

    Which of the following best describes customer-segment pricing?

    <p>Charging different prices to different groups for the same product</p> Signup and view all the answers

    What is a characteristic feature of psychological pricing?

    <p>It emphasizes the psychological perception of prices</p> Signup and view all the answers

    Which type of pricing involves selling products at different prices in different geographic areas?

    <p>Location-based pricing</p> Signup and view all the answers

    What is the main purpose of promotional pricing?

    <p>To clear out old inventory</p> Signup and view all the answers

    What distinguishes time-based pricing from other segmented pricing strategies?

    <p>It changes prices according to seasonal or temporal factors</p> Signup and view all the answers

    What is the likely effect of reference prices in psychological pricing?

    <p>They assist customers in making decisions based on comparisons</p> Signup and view all the answers

    Which of the following pricing strategies involves consciously pricing multiple product versions differently?

    <p>Product-form pricing</p> Signup and view all the answers

    What is the main purpose of retail price maintenance for manufacturers?

    <p>To ensure a consistent pricing strategy across different retailers</p> Signup and view all the answers

    Which of the following statements accurately reflects consumer perceptions regarding pharmaceutical pricing?

    <p>Consumers understand the necessity of higher prices for beneficial drugs but desire fairness in pricing.</p> Signup and view all the answers

    What constitutes deceptive pricing?

    <p>Using comparison prices that do not represent actual availability to consumers.</p> Signup and view all the answers

    Why might pharmaceutical companies like GSK face challenges in their pricing strategies?

    <p>They need to align their pricing with societal expectations and broader considerations.</p> Signup and view all the answers

    Which of the following is NOT an example of deceptive pricing?

    <p>Offering a genuine discount on a product's normal price</p> Signup and view all the answers

    What is the primary reason for implementing discount and allowance pricing strategies?

    <p>To reward customer behaviors such as early payment or bulk purchasing</p> Signup and view all the answers

    What could be a likely consequence of a company enacting a price cut due to excess capacity?

    <p>Possible negative perceptions regarding quality</p> Signup and view all the answers

    Which pricing strategy focuses on the psychological impact of pricing rather than the actual cost?

    <p>Psychological pricing</p> Signup and view all the answers

    Why might a company choose to implement geographical pricing?

    <p>To cater specifically to local economic conditions and consumer ability to pay</p> Signup and view all the answers

    Which factor is typically NOT a reason for price increases?

    <p>Excess inventory</p> Signup and view all the answers

    What consideration might a competitor evaluate upon observing a price cut by another company?

    <p>Whether the price cut was accompanied by new product announcements</p> Signup and view all the answers

    What does dynamic and personalized pricing primarily aim to address?

    <p>Tailoring prices based on individual customer characteristics and market conditions</p> Signup and view all the answers

    Which of the following strategies would be most appropriate for temporarily boosting sales during a slow season?

    <p>Promotional pricing</p> Signup and view all the answers

    Study Notes

    Pricing Strategies: Advanced Topics

    • This chapter covers advanced pricing strategies for new and existing products.
    • It covers pricing strategies for a portfolio of products to maximize profits.
    • The chapter also describes how to adjust prices to cater to various customer types and situations.
    • It discusses the complexities of initiating and responding to price changes, along with relevant public policy considerations and legal frameworks.

    Learning Objectives 1-5

    • Objective 1: Outline the major strategies for pricing new products (market-skimming and market-penetration pricing).
    • Objective 2: Explain how companies select a portfolio of prices to maximize total product mix profits.
    • Objective 3: Discuss price adjustment strategies (discount and allowance, segmented, psychological, promotional, geographical, dynamic, and international pricing).
    • Objective 4: Examine the key issues related to initiating and responding to price changes by customers.
    • Objective 5: Understand major public policy issues, and key legislative details influencing pricing decisions (price fixing, predatory pricing, price discrimination, and deceptive pricing).

    New Product Pricing Strategies

    • Market-skimming pricing: Setting high initial prices to maximize revenue from eager early adopters. -Product quality and image must support the price. -Buyers must want the product at the price.

    • Market-penetration pricing: Setting low initial prices to attract a large customer base quickly. -Gillette's Fusion ProGlide pack uses this strategy to attract a large share, making money on sales of high-margin refill blades.

    Product Mix Pricing Strategies

    • Product line pricing: Setting prices across various products in a line taking into account cost differences, customer evaluations of product features, and competitors’ prices.

    • Optional product pricing: Pricing essential accessory products alongside the main product.

    • Captive product pricing: Pricing products intended for use with the main product (e.g., printer cartridges).

    • By-product pricing: Pricing waste products from the production process to make the main product more competitive. (Example: Chicken feet from poultry processing).

    -Product bundle pricing: Combining multiple products for a reduced price.

    Price Adjustment Strategies

    • Discount and allowance pricing: Reducing prices to respond to customer actions like early payment or high volume purchases; includes cash discounts, quantity discounts, functional discounts, and seasonal discounts. -Trade-in allowances for turning in old items (Example: for electronic goods) -Promotional allowances to reward dealers based on advertising or sales support activities.

    • Segmented pricing: Adjusting prices based on different customers, product versions, locations, and times.

    • Customer-segment pricing: Customers of distinct segments pay different prices for the same product or service.

    • Product-form pricing: Products vary in form and are priced differently.

    • Location-based pricing: Products are differently priced depending on locations.

    • Time-based pricing: Product prices fluctuate based on time of year, day, or the time of day.

    • Psychological pricing: Using prices to create an emotional impact; it is not simply about the cost but also considers buyers' emotional perceptions.

    • Reference pricing: Buyers evaluate products based on reference prices they already have.

    • Promotional pricing: Temporarily pricing products below the listing price, sometimes even below cost to boost short-term sales.

    • Geographical pricing: Adjusting prices based on location, employing FOB (free on board) pricing, Uniform-delivered pricing, Zone pricing, Basing-point pricing and Freight-absorption pricing.

    • Dynamic/Internet pricing: Adjusting prices continually to match customers' situations & needs.

    • International pricing: Setting prices based on many country-specific factors; Example: Apple sells high-end products for affluent customers, while also introducing lower-priced models to appeal to mid-range customers.

    Price Changes

    • Initiating pricing changes: Triggered by factors like excess capacity, increased market share, cost inflation, increased demand or lack of supply.

    • Buyer reactions to pricing changes: Buyer reactions to price increases/decreases, (e.g., product popularity, company greed, new models, quality issues).

    • Competitor reactions to pricing changes: Analyzing competitor responses (why, permanent/temporary changes, company objectives).

    • Responding to competitor pricing changes: (e.g., holding current price, reducing/ increasing price, improve quality and increase prices, introduce other models/fighter brand). -The decision of whether to hold current prices, reduce, or raise prices depends on whether a lower price would negatively impact market share and profits.

    Public Policy and Pricing

    • Public policy concerns and legislation: Price fixing, predatory pricing, price discrimination, deceptive pricing, Robinson-Patman Act (unfair price discrimination) and retail price maintenance.

    • Pricing within channel levels: Price fixing legislation, predatory pricing legal considerations, and deceptive pricing issues.

    • Ethical considerations: Responsible pharmaceutical pricing; balancing short-term financial goals with societal concerns when pricing pharmaceutical drugs.

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    Related Documents

    Principles Of Marketing (19th Edition) PDF

    Description

    Test your knowledge on various pricing strategies used in marketing, from product line pricing to seasonal discounts. This quiz covers essential concepts that will help you understand how businesses develop their pricing models to attract different customer segments. Perfect for students of marketing and business management.

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