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One advantage of non-price competition is that a. a firm can react quickly to competitive efforts. b. market share becomes less important. c. a firm can build customer loyalty. d. marketing efforts are completely eliminated e. pricing is no longer a factor. 1

1 c. a firm can build customer loyalty. (p. 243) Home

Which of the following is most likely to have an inelastic demand curve? a. automobile b. vacation c. nonelective surgery d. recreational vehicle e. computer 2

2 c. nonelective surgery (pp )

Running a big sale in order to generate enough cash flow to pay creditors is typical in a situation in which a firm’s primary pricing objective is a. status quo b. profit c. survival d. market share e. recovery 3

3 c. survival (p. 266)

The pricing of Clinique makeup, considerably higher than brand such as Cover Girl, Revlon, and Maybelline, is used to communicate _______________, which is the company’s primary pricing objective. a. market share b. product quality c. status quo d. profitability e. cash flow. 4

4 b. product quality (p. 268)

If PepsiCo sets its six-pack price at $1.25 to match the price charged by Coca-cola, Pepsi is using which of the following pricing methods? a. demand-based b. cost-based c. reference pricing d. competition based e. price leader 5

5 d. competition based (p. 272)

True or False: Differential pricing means different buyers pay different prices for the same quality and quantity of product. 6

6 True: Differential pricing can occur in several ways: it can be negotiated; it can involve secondary markets, or periodic or random discounting. Pages

7 True or False: Price skimming is designed to yield maximum unit sales volume.

7 False: Price skimming, charging the highest possible price, is designed to maximize initial cash flow and cover development costs for new products. Page 274

8 True or False: Captive pricing, premium pricing, bait pricing, and price lining are all strategies aimed at maximizing the profits of an entire product line rather than an individual product.

8 True: A thorough answer to this question should explain how each of the above strategies maximizes overall profit of the line. Page 276

9 True or false:. A psychological price is designed to encourage purchases on the basis rational response rather than on the basis of emotional reactions.

9 False: psychological price strategies such as reference pricing, bundle pricing, multiple-unit pricing, edlp, odd-even pricing, customary pricing and prestige pricing try to influence the perception of price. Pages