Chapter 15

Frannie’s Housewares has set very low prices for its products in an attempt to drive its competitor, George’s Housewares, out of business. This is known as

• price fixing.

• monopolistic pricing.

• predatory pricing.

• bait and switch.

• price discrimination.

When Deena’s Discount communicates to consumers that, for any given group of often-purchased items, its prices will tend to be lower than that of any other competitor, Deena’s Discount is exhibiting what type of pricing strategy?

• high/low

• bait and switch

• EDLP

• uniform delivered pricing

• price skimming

The pricing method that considers what consumers may be willing to pay for a particular product based on the value received over the product’s entire lifetime is the ________ pricing method.

• reference-based

• market-based

• improvement value

• cost of ownership

• cost-based

One of the benefits of offering a size discount to consumers is they will purchase more of a marketer’s product and

• earn a cash discount.

• will not fall prey to predatory pricing.

• will be less likely to switch brands.

• will be able to take advantage of zone-pricing benefits.

• capitalize on the experience curve effect.

What is one of the drawbacks of using a price skimming strategy?

• It is difficult to lower prices on an introductory product.

• Firms must consider the high costs associated with producing a small volume of product.

• Price skimming does not work well with new-to-the-market, innovative products.

• Price skimming allows competitors to easily enter the market.

• Price skimming is often challenged as being illegal.

Several airlines have agreed to charge the same fare for a single route. The airlines are using

• vertical price fixing.

• loss-leader pricing.

• horizontal price fixing.

• vertical price discrimination.

• horizontal price discrimination.

Mario is the first retailer in town to sell games for Sony’s latest version of its PlayStation gaming console. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a ________ pricing strategy.

• penetration

• reference

• price fixing

• bundling

• skimming

The improvement value method and the cost of ownership method are two approaches for setting prices that are ________ methods.

• market-based

• production-based

• competitor-based

• value-based

• cost-based

Renata estimates the average cost of her floral arrangements is $12 regardless of whether she is making 5 or 25 arrangements that day. She adds a standard markup to the $12 estimate to determine her price. Renata is using a(n) ________ pricing method.

• EDLP

• improvement value

• reference-based

• cost-based

• value-based

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year’s supply. Burroughs Wellcome was probably pursuing a(n) ________ pricing strategy.

• slotting allowance

• market penetration

• cost-based

• skimming

• introductory