Marketing practice quiz questions test #3 – Flashcards
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_____ pricing methods do not recognize the role that consumers or competitors' prices play in the marketplace.
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Cost-based Cost-based methods do not recognize the role that consumers or competitors' prices play in the marketplace. Although relatively simple, compared with other methods used to set prices, cost-based pricing requires that all costs can be identified and calculated on a per-unit basis.
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Some grocery retailers have invested in their own private brands, charging just slightly lower than national brands to signal the quality of the products is good, involving the use of
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Competitor-based pricing A competitor-based pricing method involves a firm setting prices to reflect the way it wants consumers to interpret its own prices relative to the competitors' offerings. For example, setting a price very close to a competitor's price signals to consumers that the product is similar, whereas setting the price much higher signals greater features, better quality, or some other valued benefit.
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Airlines often engage in price wars in an attempt to steal customers away from other airlines. This is an example of which pricing method?
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Competitor-based pricing When airlines engage in price wars in an attempt to steal customers away from the competition, they are engaged in competitor-based pricing as they may set their prices to reflect the way they want consumers to interpret their own prices relative to the competitor's offerings.
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Improvement value and cost of ownership are two approaches to which method of pricing?
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Value-based pricing Improvement value and cost of ownership are two approaches to value-based pricing.
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Using the _____ pricing method, consumers may be willing to pay more for a particular product because, over its entire lifetime, it will eventually be less expensive to own than a cheaper alternative.
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Cost of ownership Using the cost of ownership pricing method, consumers may be willing to pay more for a particular product because, over its entire lifetime, it will eventually be less expensive to own than a cheaper alternative.
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In terms of a pricing strategy, _____ pricing adds value by reducing consumers' search costs; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores.
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Everyday low With an everyday low pricing (EDLP) strategy, companies stress the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer. By reducing consumers' search costs, EDLP adds value; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores.
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A _____ pricing strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.
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High/low An alternative to EDLP is a high/low pricing strategy, which relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.
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A _____ pricing strategy is attractive because it attracts two distinct market segments: those who are not price sensitive and more price-sensitive customers.
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High/low A high/low strategy is attractive because it attracts two distinct market segments: those who are not price sensitive and are willing to pay the "high" price and more price-sensitive customers who wait for the "low" sale price.
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When retailers use _____ pricing, it can create excitement and attract customers through the "get them while they last" atmosphere that occurs.
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High/low High/low sellers can also create excitement and attract customers through the "get them while they last" atmosphere that occurs during a sale.
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Retailers using a high/low pricing strategy often communicate this through the creative use of _____, which is the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.
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Reference Price Sellers using a high/low pricing strategy often communicate their strategy through the creative use of a reference price, which is the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.
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The objective of _____ is to build sales, market share, and profits quickly by providing an incentive to purchase the product immediately.
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Market penetration pricing Firms using a market penetration strategy set the initial price low for the introduction of the new product or service. Their objective is to build sales, market share, and profits quickly. The low market penetration price is an incentive to purchase the product immediately.
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When using a market penetration strategy, as sales continue to grow, the costs continue to drop, allowing even further reductions in the price. This is due to
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Experience curve effects. Although it is not always the case, many firms expect the unit cost to drop significantly as the accumulated volume sold increases, an effect known as the experience curve effect. With this effect, as sales continue to grow, the costs continue to drop, allowing even further reductions in the price.
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In addition to offering the potential to build sales, market share, and profits, _____ discourages competitors from entering the market because the profit margin is relatively low.
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Penetration pricing Penetration pricing discourages competitors from entering the market because profit margins are relatively low.
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_____ is used to market products to innovators who are willing to pay the very highest prices to obtain brand-new examples of technology advances, with exciting product enhancements.
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Price skimming In many markets, and particularly for new and innovative products or services, innovators and early adopters are willing to pay a higher price to obtain the new product or service. This strategy, known as price skimming, appeals to these segments of consumers who are willing to pay the premium price to have the innovation first.
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For _____ to work, the product or service must be perceived as breaking new ground in some way, offering consumers new benefits currently unavailable in alternative products.
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Price Skimming For price skimming to work, the product or service must be perceived as breaking new ground in some way, offering consumers new benefits currently unavailable in alternative products. When they believe it will work, firms use skimming strategies for a variety of reasons.
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Manufacturers like _____ because it allows them to offer price cuts to consumers directly, rolling them out and shutting them off quickly.
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Rebates Manufacturers embrace rebates as a form of price reduction because it lets them offer price cuts to consumers directly. With a traditional wholesale price cut from its vendors, retailers can keep the price on the shelf the same and pocket the difference. Rebates can also be rolled out and shut off quickly.
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When Suddenlink Communications offers its customers a discount when they order their television, Internet, and phone service all with Suddenlink on just one bill, it is an example of
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Price Bundling The practice of selling more than one product for a single, lower price is called price bundling. Firms bundle products or services together to encourage customers to stock up so they won't purchase competing brands.
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Supermarket chains often implement _____, a pricing tactic of selling leading brands of products below their own cost in order to build store traffic.
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Leader Pricing Leader pricing is a tactic that attempts to build store traffic by aggressively pricing and advertising a regularly purchased item, often priced at or just above the store's cost.
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_____ are expressed in the form of a percentage, such as "3/10, n/30," or "3%, 10 days, net 30."
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Cash Discounts A cash discount reduces the invoice cost if the buyer pays the invoice prior to the end of the discount period. Typically, it is expressed in the form of a percentage, such as "3/10, n/30," or "3%, 10 days, net 30," which means the buyer can take a 3 percent discount on the total amount of the invoice if the bill is paid within 10 days of the invoice date; otherwise the full, or net, amount is due within 30 days.
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Criticized by small manufacturers of grocery products, _____ are fees paid to retailers simply to get new products into stores or to gain more or better shelf space for their products.
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Slotting allowances Slotting allowances are fees paid to retailers simply to get new products into stores or to gain more or better shelf space for their products. Some argue that slotting allowances are unethical because they put small manufacturers that cannot readily afford allowances at a competitive disadvantage.
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Savvy consumers often purchase automobiles from dealerships at the end of the quarter or at year-end since dealers who meet their quotas during a particular time period earn _____ in the form of rebates on all the cars they purchased from the manufacturer.
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Cumulative quantity discounts Cumulative quantity discounts provide a reduced price based on the amount purchased over a specified time period, involving numerous transactions. If the dealership can just sell a few more cars to meet its quota, the rebate earned can be substantial.
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When a manufacturer based in New York City charges more to ship to customers in Los Angeles and less to ship to customers in Memphis, it is using
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Zone pricing Zone pricing sets different prices depending on a geographical division of the delivery areas. For example, a manufacturer based in New York City might divide the United States into seven different zones and use different shipping rates for each zone (to Memphis or Los Angeles for example) to reflect the average shipping cost for customers located therein.
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_____ is a form of deceptive price advertising where sellers advertise items for a very low price without intending to sell any of them because they plan to pressure sales of higher-priced items.
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Bait and switch The bait-and-switch tactic is deceptive because the store lures customers in with a very low price on an item (the bait), only to aggressively pressure these customers into purchasing a higher-priced model (the switch) by disparaging the low-priced item, comparing it unfavorably with the higher-priced model, or professing an inadequate supply of the lower-priced item.
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When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is using the illegal practice of
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Predatory Pricing When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is using predatory pricing. Predatory pricing is illegal under both the Sherman Act and the Federal Trade Commission Act because it constrains free trade and represents a form of unfair competition.
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_____ occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) agree to control the prices passed on to consumers.
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Vertical price fixing Vertical price fixing occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) agree to control the prices passed on to consumers.
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Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their manufacturers, warehouses, transportation intermediaries, stores, and
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suppliers Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, distribution centers, stores, and transportation intermediaries into a seamless operation.
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As noted in your text, each participant in a successful marketing channel adds
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Each participant in a successful marketing channel adds value.
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All of the following are examples of the value provided by a supply chain in the production of kitchen stoves EXCEPT
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the product design team develops initial drawings for a new product offering A product design team is not part of the supply chain.
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As the number of transactions in the supply chain falls and transactions are eliminated, the channel and supply chain becomes _____, which impacts customers by making it _____ to purchase merchandise.
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more efficient; less expensive As the number of transactions in the supply chain falls and transactions are eliminated, the channel and supply chain becomes more efficient, which impacts customers by making it more convenient and less expensive to purchase merchandise.
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A _____, which may be operated by retailers, manufacturers, or distribution specialists, is a facility for the receipt, storage, and redistribution of goods to company stores or customers.
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distribution center A distribution center—a facility for the receipt, storage, and redistribution of goods to company stores or customers—may be operated by retailers, manufacturers, or distribution specialists.
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When Clarissa sells the jewelry she makes at craft fairs or on her personal website, she is utilizing a _____ marketing channel.
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direct In a direct marketing channel, there are no intermediaries between the buyer and the seller, such as Clarissa selling her jewelry directly to consumers at craft fairs on her website.
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In _____ marketing channels, one or more intermediaries work with manufacturers to provide goods and services to customers.
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indirect In indirect marketing channels, one or more intermediaries work with manufacturers to provide goods and services to customers.
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When there is disagreement among members at the same level of marketing channels such as when Best Buy and Sears engage in a price war on Maytag appliances, _____ channel conflict can occur.
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horizontal Horizontal channel conflict can occur when there is disagreement or discord among members at the same level of marketing channel, such as two competing retailers or two competing manufacturers.
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When the members of a marketing channel operate to satisfy their own objectives and maximize their own profits, often at the expense of the other members, the channel operates as
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an independent marketing channel. In an independent or conventional supply chain, the independent members independently attempt to satisfy their own objectives and maximize their own profits, often at the expense of the other members.
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As the dominant member of the channel of distribution, Coca Cola holds a lot of power in the relationship with independent grocery stores, and as such, it performs the functions of restocking merchandise, setting up special displays and rotating merchandise. This is an example of
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an administered vertical marketing system. In administered vertical marketing system, there is no common ownership and no contractual relationships, but the dominant channel member controls or holds the balance of power in the channel relationship.
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_____ power is when one channel member threatens to punish or punishes another channel member for not undertaking certain tasks, such as delaying payment for a late delivery.
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Coercive Coercive power is when one channel member threatens to punish or punishes another channel member for not undertaking certain tasks, such as delaying payment for a late delivery.
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The international fashion retailer Zara's parent company, Inditex, owns the manufacturing plants, warehouse facilities, retail outlets, and design studios, which is an example of
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a corporate vertical marketing system. Zara operates under a corporate vertical marketing system. Because Zara's parent company, Inditex, owns the manufacturing plants, warehouse facilities, retail outlets, and design studios, it can dictate the priorities and objectives of that supply chain, and thus conflict is lessened.
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To create strong partnering relationships, supply chain members must develop mutual trust, openly communicate, have compatible goals, recognize the benefits of interdependence, and
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be willing to invest in each other's success. Supply chains also can be effectively managed through strong relationships developed with supply chain partners. To create such relationships, the partners must trust each other, communicate openly, have compatible goals, realize there are benefits in being interdependent, and be willing to invest in each other's success.
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_____ is an electronic document sent by a supplier to a retailer prior to the shipment of a merchandise order.
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An advanced shipping notice An advanced shipping notice is an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.
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Purchase data collected at the point of sale is stored in a data warehouse and can be accessed on three dimensions:
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point in time, merchandise aggregation, and level of the company. Purchase data collected at the point of sale goes into a huge database known as a data warehouse. The information stored in the data warehouse is accessible on various dimensions: level of merchandise aggregation, level of the company, and point in time.
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A(n) _____ involves the computer-to-computer transmission of sales data, purchase orders, invoices, and data about returned merchandise between a retailer and its vendors.
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electronic data interchange Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back. In addition to sales data, purchase orders, invoices, and data about returned merchandise can be transmitted back and forth.
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EDI reduces _____, or the time between the decision to place an order and the receipt of merchandise.
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the cycle time EDI reduces the cycle time, or the time between the decision to place an order and the receipt of merchandise.
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Frito Lay is an example of a company that partners with retailers by implementing a _____ system, involving taking on the responsibility of managing inventory levels at the retailers where its products are sold.
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vendor-managed inventory Vendor-managed inventory (VMI) is an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores.
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In _____ a manufacturer owns the merchandise in a retail store until it is sold by the retailer, at which time the retailer pays for the merchandise, thus reducing inventory levels and generating sales.
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consignment selling Technological advances in supply chain management allows manufacturers to sell merchandise on consignment; the manufacturer owns the merchandise until it is sold by the retailer, at which time the retailer pays for the merchandise. This consignment selling provides an incentive for the manufacturer to pick SKUs and inventory levels that will minimize inventory and generate sales.
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Firms that use a(n) _____ supply chain allocate merchandise to stores based on previous sales forecasts.
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push In a push supply chain, merchandise is allocated to stores on the basis of previous sales forecasts, which is likely to be a collaborative process between the manufacturer, wholesaler, and retailer.
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With a _____ marketing strategy, there is less likelihood of being overstocked or out of stock because the store orders merchandise as needed on the basis of consumer demand.
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pull With a pull marketing strategy, there is less likelihood of being overstocked or out of stock because the store orders merchandise as needed on the basis of consumer demand.
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The _____ is the person who coordinates deliveries to the distribution center.
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dispatcher The dispatcher is the person who coordinates deliveries to the distribution center.
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Radio frequency identification tags are
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tiny computer chips that transmit information about the contents of containers. Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container's contents or individual products. Approximately as large as a pinhead, RFID tags consist of an antenna and a chip that contains an electronic product code that stores far more information about a product than bar (UPC) codes can.
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_____ is a practice in which merchandise cartons are prepackaged by the vendor for a specific store.
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Cross-docking Cross-docking is a practice in which merchandise cartons are prepackaged by the vendor for a specific store.
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JIT inventory systems are associated with all of the following EXCEPT
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more inventory to warehouse. JIT inventory systems deliver less merchandise on a more frequent basis than traditional inventory systems and offers the benefits of reduced lead time, increased product availability and lower inventory investment.
