MKTG 437 FINAL EXAM QUESTIONS
AND ANSWERS
Difficulty of Pricing Decisions - Correct Answers -1. Increased Competition
2. Increasing Wholesale Prices
3. Increase in Customer "Price Sensitivity"
4. Expanded Use of "High-Low" Pricing
price sensitivity - Correct Answers -The degree to which the price of a product affects
consumers' purchasing behavior.
showrooming - Correct Answers -the practice of examining merchandise in a physical
retail location without purchasing it, and then shopping online for a better deal on the
same item
Retailer has to understand various factors concerning their target customer(s)... -
Correct Answers -1. Reservation Prices
2. Price Sensitivity
3. Price Quality Associations
Reservation prices - Correct Answers -the price that people expect to pay and probably
willing to pay if they were in the market for a product
zone of tolerance - Correct Answers -price you expect to pay, above and below there is
a reason why you won't buy a product
Price quality association - Correct Answers -higher prices link with higher quality
product assumption- neither may be the case
Economical shopper - Correct Answers -looks for value
Personalizing shopper - Correct Answers -price is less important (better selection and
personal service is more important)
pricing facts to consider - Correct Answers -1. Target Customer
2. Company Objectives
3. Government
4. Supplier's Distribution Policies
5. Competition
, Company Long Term Objectives - Correct Answers -Above, with or below the market
General Pricing Strategies
Discount Pricing
Every Day Low vs High Low Pricing
Image and Reputation
Company Short Term Objective - Correct Answers -Cash Flow Generation
Survival
Maximize Profits
Market under 3 basic strategies - Correct Answers -1. Price with the market
2. Price above the market (want to be higher priced than competition)
3. Price below the market (charge lower prices than competitors to get more customers)
Cash flow generation - Correct Answers -I've got all this inventory, and I gotta pay my
bills, so I got to find a way to get people in here to buy the product- offer a short term
bargain
Survival - Correct Answers -keep margins rather low so that we can at least break even
Maximize profits - Correct Answers -value pricing as high as we think we can to
maximize profits (things are good now)
Government and Pricing Strategy - Correct Answers -All 3 levels of Government
(Federal, State, Local) can affect prices and pricing strategy.
Laws
-Sherman Anti Trust, Vertical & Horizontal Price Fixing,
Price Discrimination, Minimum Price, Bait & Switch
Taxes
-State & local sales taxes
Enforcement Policies
Horizontal price fixing - Correct Answers --Competitors get together and artificially agree
on prices they are going to use (collusion)
Vertical price fixing (Clayton wheeler act) - Correct Answers --Some cases where it is
legal
-Conventional planning systems
-Manufacturer can control the retailer price to give the consumer
-Legal is there is a signed agreement
-Levi's used to practice this
Bate and switch - Correct Answers --putting a product out there and bating people to
buy it as a very good deal but switching them up to a higher quality, more expensive
product- illegal if they never have opportunity for what is bated.
AND ANSWERS
Difficulty of Pricing Decisions - Correct Answers -1. Increased Competition
2. Increasing Wholesale Prices
3. Increase in Customer "Price Sensitivity"
4. Expanded Use of "High-Low" Pricing
price sensitivity - Correct Answers -The degree to which the price of a product affects
consumers' purchasing behavior.
showrooming - Correct Answers -the practice of examining merchandise in a physical
retail location without purchasing it, and then shopping online for a better deal on the
same item
Retailer has to understand various factors concerning their target customer(s)... -
Correct Answers -1. Reservation Prices
2. Price Sensitivity
3. Price Quality Associations
Reservation prices - Correct Answers -the price that people expect to pay and probably
willing to pay if they were in the market for a product
zone of tolerance - Correct Answers -price you expect to pay, above and below there is
a reason why you won't buy a product
Price quality association - Correct Answers -higher prices link with higher quality
product assumption- neither may be the case
Economical shopper - Correct Answers -looks for value
Personalizing shopper - Correct Answers -price is less important (better selection and
personal service is more important)
pricing facts to consider - Correct Answers -1. Target Customer
2. Company Objectives
3. Government
4. Supplier's Distribution Policies
5. Competition
, Company Long Term Objectives - Correct Answers -Above, with or below the market
General Pricing Strategies
Discount Pricing
Every Day Low vs High Low Pricing
Image and Reputation
Company Short Term Objective - Correct Answers -Cash Flow Generation
Survival
Maximize Profits
Market under 3 basic strategies - Correct Answers -1. Price with the market
2. Price above the market (want to be higher priced than competition)
3. Price below the market (charge lower prices than competitors to get more customers)
Cash flow generation - Correct Answers -I've got all this inventory, and I gotta pay my
bills, so I got to find a way to get people in here to buy the product- offer a short term
bargain
Survival - Correct Answers -keep margins rather low so that we can at least break even
Maximize profits - Correct Answers -value pricing as high as we think we can to
maximize profits (things are good now)
Government and Pricing Strategy - Correct Answers -All 3 levels of Government
(Federal, State, Local) can affect prices and pricing strategy.
Laws
-Sherman Anti Trust, Vertical & Horizontal Price Fixing,
Price Discrimination, Minimum Price, Bait & Switch
Taxes
-State & local sales taxes
Enforcement Policies
Horizontal price fixing - Correct Answers --Competitors get together and artificially agree
on prices they are going to use (collusion)
Vertical price fixing (Clayton wheeler act) - Correct Answers --Some cases where it is
legal
-Conventional planning systems
-Manufacturer can control the retailer price to give the consumer
-Legal is there is a signed agreement
-Levi's used to practice this
Bate and switch - Correct Answers --putting a product out there and bating people to
buy it as a very good deal but switching them up to a higher quality, more expensive
product- illegal if they never have opportunity for what is bated.
