Scenario 20.1
Use the following to answer the questions.
Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands.
Refer to Scenario 20.1. Ray-Ban's plan of gathering information about the other brands sold in department stores, including their prices, would most likely be used in a ____ basis for pricing.
A) cost
B) competition
C) demand
D) customer
E) market
Question 2Pricing strategies and methods
A) help direct and structure the selection of a final price.
B) are the last decisions made for a new product.
C) are the same for all of a company's products.
D) are the most important decisions made for a product.
E) require limited planning on the part of management.
Question 3The manager at Target puts a sign up next to a Samsung audio system that reads, Only 299.99 60 less than at Best Buy. This is an example of what type of pricing strategy?
A) Random discounting
B) Periodic discounting
C) Comparison discounting
D) Penetration pricing
E) Everyday low prices
Question 4Showing a product's price along with its previous price, the price of a competing brand, or the price at another retail outlet is called
A) competition-based pricing.
B) reference pricing.
C) comparison discounting.
D) captive pricing.
E) psychological pricing.
Question 5Chris is planning three sales during the third quarter of the year at Toys R Us. The first is at the beginning of the school year, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to be
A) psychological pricing.
B) calendar discounting.
C) sales promotion pricing.
D) special-event pricing.
E) captive pricing.
Question 6Which of the following pricing strategies often results in a retailer losing money on the product?
A) Price leader
B) Psychological discounting
C) Penetration pricing
D) Special-event pricing
E) Ethical pricing
Question 7To attract customers into a store, Safeway advertises its milk at less than cost, hoping that customers will purchase other groceries as well. This pricing strategy is called
A) price lining.
B) special-event pricing.
C) differential pricing.
D) comparison discounting.
E) price leader pricing.
Question 8A product is a price leader when
A) it is sold at the highest price.
B) its price maximizes profits.
C) an increase or decrease in price leads to increased revenue or lower costs.
D) it is sold at less than cost in the hope that sales of other products will increase.
E) its price leads the industry in sales.