Multiple Choice Questions Unit 1: New Product Development and Product Life Cycle 1. he product life cycle descri!

es the sta"es a new product "oes throu"h in the #.. a$ introduction phase !$ test market c$ product development d$ mar%etplace &. Durin" the introduction sta"e of the PLC' sales "radually increase and ##. a$ competition becomes tough !$ Profit is minimal c$ more investors are needed d$ sales people are brought to push the product (. he mar%etin" o!)ective for the maturity sta"e of the PLC is to ##.. a$ maintain !rand loyalty !$ stress differentiation c$ harvest d$ deletion *. he sta"e of the PLC where competitors appear is ##.. a$ introduction !$ decline c$ competition is always there d$ "rowth +. ,utomo!iles and -.s are in ##..sta"e of the PLC. a$ introduction !$ growth c$ post-growth d$ maturity /. 0hen a company retains the product !ut reduces mar%etin" support costs then it is ###. sta"e of the PLC. a$ decline !$ maturity c$ growth d$ introduction 1. , company will follow one of two strate"ies to handle a declinin" product: deletion or ###.... a$ modification !$ harvestin" c$ enhancement d$ market change 2. 3ow lon" does it ta%e to "o throu"h a PLC4 a$ 1 day to 365 days !$ 1 year to 5 years

c$ almost &5( years d$ No set time 6. , product life cycle that rises and falls several times is an indication of ##. product type. a$ fads !$ fashion "oods c$ low learning products d$ all are the same cycle 17. , PLC curve that rises rapidly then falls 8uic%ly is indication of a ## a$ fashion product !$ low learning product c$ fad d$ high learning product 11. he main !enefit of !randin" to consumers is ## a$ they !ecome more efficient shoppers. !$ they have more product choices. c$ they get confused. d$ they like the new designs. 1&. ,n or"ani9ation usin" a name' phrase' desi"n' sym!ols' or com!ination of these to identify its products is ##.#. a$ forming family units !$ trade-marking products c$ patenting product d$ !randin" products 1(. ####.product life cycle sta"e features an emphasis on informative promotion' development of distri!ution channels' and low sales. a$ Mar%et introduction. !$ Market growth. c$ Market maturity. d$ ales decline. 1*. 0hen purchasin" consumer electronics or other hi"h5technolo"y products' most consumers are aware that within a year after ma%in" a purchase' it is li%ely that a new model or an entirely new product idea55 will offer more features for the same amount of money. his phenomenon is a "ood e:ample of the fact that' in "eneral' ##. a$ product life cycles are getting longer !$ product life cycles are "ettin" shorter c$ the product life cycle can tell a manager precisely how long the cycle will last. d$ all of the above. 1+. , %ey difference !etween a fashion product and a fad product is that ##.. a$ a fashion product tends to have a shorter life cycle than a fad product. !$ a fashion product appeals to a more narrowly defined tar"et audience than a fad product. c$ a fad product tends to have a shorter life cycle than a fashion product. d$ none of the above.

1/. ##### is the development of ori"inal products' product improvements' product new !rands throu"h the firm;s own <=D efforts. a$ !dea generation !$ "oncept testing c$ #est marketing d$ New product development 11. New5product development starts with ####.. a$ idea screening !$ idea "eneration c$ concept development and testing d$ marketing strategy development 12. Ma)or sources of new product ideas include ####.. a$ internal sources$ using company %&' !$ creative approaches$ using both (method and madness( approaches c$ watching and listening to customers d$ all of the a!ove are sources of new product ideas

modifications' and

16. he first idea reducin" sta"e is ##..#.. ' which helps spot "ood ideas and drop poor ones as soon as possi!le. a$ idea generation !$ idea screenin" c$ concept development and testing d$ marketing strategy development &7. >n the ##.## of new5product development' often products under"o ri"orous tests to ma%e sure that they perform safely and effectively or that consumers will find value in them. a$ business analysis stage !$ idea generation c$ concept development and testing stage d$ product development phase &1. >n the product concept sta"e of new5product development' the product is merely a #..##.. a$ word description !$ crude mock-up c$ drawing d$ all of the a!ove &&. >ntroducin" a new product into the mar%et is called ??????????. a$ commerciali9ation !$ test marketing c$ new product development d$ e)perimenting &(. , review of the sales' costs and profit pro)ections for a new product to find out whether they satisfy the company;s o!)ectives refers to which one of the followin" concepts ###..#. a$ *usiness feasibility !$ +easibility study

c$ @usiness analysis d$ ,roduct acceptance &*. ,nythin" that can !e offered to a mar%et for attention' ac8uisition' use' or consumption that mi"ht satisfy a want or need is called as ###..#. a$ idea. !$ demand. c$ product. d$ service &+. @roadly defined' products include all of the followin" e:cept##.#. a$ money and payments. !$ services. c$ ideas. d$ persons. &/. , ####. is a form of product that consists of activities'!enefits' or satisfactions offered for sale that are essentially intan"i!le and do notresult in the ownership of anythin". a$ service !$ demand c$ need d$ physical ob-ect &1. Products purchased fre8uently' immediately' and with a minimum of comparison and !uyin" effort are called #### a$ consumer products. !$ convenience products. c$ shopping products. d$ specialty products. &2. Products that the consumer usually compares with others on price' suita!ility' 8uality' and style are typically called ###.. a$ convenience products. !$ specialty products. c$ shoppin" products. d$ unsought products. &6. , ####. is a product !ou"ht !y the final consumer for personal consumption. a$ consumer product !$ industrial product c$ psychological product d$ stress-sensitive product (7. Consumer "oods with uni8ue characteristics or !rand identification often re8uirin" a special purchase effort are called ##..#. a$ custom products. !$ specialty products. c$ convenience products. d$ shopping products.

(1. Consumer "oods that the consumer does not %now a!out or does not normally thin% a!out !uyin" are called ##.#. a$ unsou"ht products. !$ custom products c$ specialty products d$ shopping products (&. he primary distinction !etween a consumer product and an industrial product is !ased on the ###.. a$ cost !$ si.e c$ description d$ purpose for which the product is !ou"ht ((. #### are industrial products that aid in the !uyer;s production or operations' includin" installations and accessory e8uipment. a$ "omputer software goods !$ Materials and parts c$ Capital items d$ upplies and services (*. Aood ###. contri!utes to a product;s usefulness as well as to its loo%s. a$ style !$ design c$ brand enhancement d$ features (+. , ##### is a name' term' si"n' sym!ol' or desi"n' or a com!ination of these' that identifies the ma%er or seller of a product or service. a$ product feature !$ sponsorship c$ !rand d$ logo (/. 0hen a !rand has achieved an impressive reputation for loyalty' performance' and 8uality' it can !e said to have ## a$ brand endurance. !$ !rand e8uity. c$ brand bonding. d$ brand prestige. (1. ####. is the practice of usin" the esta!lished !rand names of two differentcompanies on the same product. a$ /icensed branding !$ National branding c$ tore branding d$ Co5!randin" (2. ######is the activities of desi"nin" and producin" the container or wrapper for a product. a$ /abeling

!$ Pac%a"in" c$ ,roduct support services d$ ,roduct line decisions (6. raditionally' the primary function of the pac%a"e was to ##. a$ promote the product. !$ introduce the product to a new market. c$ contain and protect the product. d$ describe the product and attract attention. *7. , "roup of products that are closely related !ecause they function in a similar manner is called a #### a$ product line. !$ brand line. c$ brand family. d$ product position. *1. Bne distin"uishin" factor !etween a !rand name and a !rand mar% is that a !rand name ### a$ creates customer loyalty. !$ consists of words. c$ identifies only one item in the product mi). d$ implies an organi.ation0s name. *&. he followin" is not a !enefit of multiple pac%a"in" ##.. a$ +acilitates special price offers !$ !ncreases demand c$ !ncreases consumer acceptance of the product d$ Provides an overall ima"e of the firm *(. La!elin" is important for three reasons' includin" promotional' le"al reasons and ##..## a$ Marketing !$ *randing c$ trategic d$ >nformational **. ####. pass throu"h four sta"es: distinctiveness' emulation' mass fashion' and decline. a$ Cashions !$ tyles c$ +ads d$ ,roduct life cycles *+. >n a #### pattern of the product life cycle' sales "row rapidly when the product is first introduced and then fall to a DpetrifiedD level. a$ cycle-recycle !$ scalloped c$ "rowth5slump5maturity d$ fashion */. he new product development process involves a num!er of sta"es. he !est estimate of the new product.s li%ely profita!ility is li%ely to !e made at ##..

a$ !dea generation !$ !dea evaluation c$ Mar%et testin" d$ *rainstorming *1. o have value' a !rand must offer ###. a$ 1 simple product range with a defined set of features !$ 1 comple) product range with a defined set of features c$ Consistency' a reduced level of perceived ris% for the !uyer' and a ran"e of functional and emotional attri!utes which are of value to !uyers d$ 1n identity through which the customer can trace the party responsible for supplying the product *2. ,n e:ample of a convenience consumer product is ##.. a$ stereo e2uipment. !$ petrol. c$ a motorcycle. d$ a bicycle. *6. ###.. calls for testin" new5product concepts with "roups of tar"et consumers. a$ "oncept development !$ Concept testin" c$ !dea generation d$ !dea screening +7. , ###. is the way consumers perceive an actual or potential product. a$ product idea !$ product concept c$ product ima"e d$ test market +1. 0hen !ac%ed !y !uyin" power' wants !ecome ?????. a$ ocial needs !$ Demands c$ ,hysical needs d$ elf esteem needs e$ 3)changes +&. he product life cycle presents two ma)or challen"es. Cirst' a firm must !e "ood at developin" new products to replace a"in" ones. Eecond' a firm must !e "ood at: a$ adaptin" its mar%etin" strate"ies in the face of chan"in" tastes' technolo"ies' and competition as products pass throu"h life5cycle sta"es. !$ image building to ensure that products sell well. c$ primary demand forecasting so product winners can be chosen rather than making poor with product losers. investments

d$ ac2uisition of other companies since this is the only real way to ensure new product success--go with what has worked in the past. +(. Bri"inal products' product improvement' product modifications' and new !rands that a firm develops throu"h its own research and development efforts are called : a$ New Products

!$ "oncept ,roducts c$ 1ltered ,roducts d$ upplemental products +*. >f a new product has hi"her 8uality' new features' and hi"her value in use than its competition ' then it is called an: a$ Uni8ue superior product !$ ynergistic ,roduct c$ ,ositioned product d$ ,re 4/aunch ,roduct. 0hich of the followin" would !e a %ey success factor in developin" new products4 a$ , well F defined product concept. !$ 1 product priced well below market or industry standards c$ 1 product that appeals to the late ma-ority d$ 1 product that can be sold over the internet with a minimum of e)planation. ++. o create successful new products' a company must understand consumers' mar%ets and competitors and : a$ 'evelop a great advertising campaign. !$ 5ave a strong 6eb site to push the product. c$ 1dopt a push rather than pull promotional concept d$ Develop products that deliver superior value to consumers. 0hich of the followin" !est descri!es the first sta"e of new F product development process 4 a$ !dea creening !$ "oncept 'evelopment and #esting c$ >dea Aeneration d$ *usiness 1nalysis he systematic search for new5product ideas is characteristic of which sta"e in the new5 product development process 4 a$ !dea creening !$ "oncept 'evelopment and #esting c$ >dea Aeneration d$ *usiness 1nalysis +/. ,fter idea "eneration has occurred in the new5product development process' the ne:t sta"e is most li%ely to !e : a$ !dea 7eneration !$ >dea Ecreenin" c$ "oncept 'evelopment and #esting d$ #est Marketing ,ll of the followin" are thou"ht to !e sources of new product ideas GHCGP : a$ !nternal ources !$ "ustomers c$ "ompetitors

d$

he local Li!rary

he search for new5product ideas should !e systematic rather than hapha9ard. Bne way to ensure that the process is systematic is to install an : a$ ,roduct ,lanning "ommittee !$ 8enture "apital #eam c$ >dea Mana"ement Eystem d$ 'elphi idea system +1. ???????????? is screenin" new5product ideas in order to spot "ood ideas and drop poor ones as soon as possi!le. a$ !dea 7eneration !$ "oncept 'evelopment and #esting c$ >dea Ecreenin" d$ *rain torming Bne reason that idea screenin" is a critical sta"e in the new5product development process is that : a$ Product F development costs rise "reatly in later sta"es and the company only wants those products that can succeed. !$ "ompetitors can 2uickly steal ideas so the company wants only those ideas that can be protected by patents. c$ Markets demand that all ideas be culturally sensitive. d$ None of the above +2. Bne reason that idea screenin" is a critical sta"e in the new5product development process is that : e$ Product F development costs rise "reatly in later sta"es and the company only wants those products that can succeed. f$ "ompetitors can 2uickly steal ideas so the company wants only those ideas that can be protected by patents. "$ Markets demand that all ideas be culturally sensitive. h$ None of the above +6. , ?????????? is an idea for a possi!le product that the company can see itself offerin" to the mar%et. a$ Product >dea !$ ,roduct !mage c$ ,roduct "oncept d$ ,roduct +eature /7. , ?????????? is a detailed version of the idea stated in meanin"ful consumer terms. a$ ,roduct !dea !$ ,roduct !mage c$ Product Concept d$ ,roduct +eature /1. , ?????????? is the way consumers perceive an actual or potential product. a$ ,roduct !dea !$ Product >ma"e c$ ,roduct "oncept d$ ,roduct +eature

/&. >f oyota descri!es one of its cars of the future as !ein" Ia moderately priced su!compact desi"ned as a second family car to !e used around town' the car is ideal for runnin" errands and visitin" friends' Ithen the company has )ust started a potential new product in terms of a : a$ ,roduct !dea !$ ,roduct !mage c$ Product Concept d$ ,roduct +eature /(. Presentin" new Fproduct ideas to consumers in sym!olic or physical ways to measure their reactions occurs durin" which of the followin" sta"es4 a$ !dea 7eneration !$ Concept estin" c$ Marketing trategy d$ a$ creening !dea creening /*. Desi"nin" an initial mar%etin" strate"y for a new product !ased on the product concept is called: !$ *usiness 1nalysis c$ ,roduct 'evelopment d$ Mar%etin" Etrate"y Development /+. he sta"e in the new5product development process in which the anticipated sales' mar%et share' and profit "oals for the first few years are descri!ed is called : a$ !dea 7eneration !$ Mar%etin" Etrate"y Development c$ *usiness 1nalysis d$ ,roduct 'evelopment //. 0hen a company reviews sales' costs and profit pro)ections for a new product to find out whether factors satisfy the company o!)ectives' they are in which of the followin" new5product development sta"es4 a$ !dea 7eneration !$ Mar%etin" Etrate"y Development c$ *usiness 1nalysis d$ ,roduct 'evelopment /1. Loo%in" at the sales history of similar products and surveyin" mar%et opinion are tools used at which sta"e in the new5product development process4 a$ concept development and testing !$ commerciali.ation c$ !usiness analysis d$ marketing strategy development /2. , company is in the ?????????????? sta"e of the new5product development process when the company develops the product concept into a physical product in order to assure that the product idea can !e turned into a wor%a!le product. a$ product development !$ commerciali.ation c$ marketing strategy

d$ business analysis /6. <=D and en"ineerin" first produce the product concept into a physical product durin" which of the followin" sta"es of the new5product development process4 a$ concept development and testing !$ marketing strategy c$ business analysis d$ product development 17. Bne of the uni8ue considerations durin" the product development phase of the new product development process is that the ??????????????? developed durin" this phase should have the re8uired functional features and also convey the intended psycholo"ical characteristics so consumer testin" can !e !eneficial and meanin"ful. a$ program !$ placebo c$ prototype d$ process 11. >ntroducin" a new product and mar%etin" pro"ram to more realistic mar%et settin"s followin" functional and consumer approval is carried out at which new5product development sta"e a$ idea generation !$ screening c$ marketing strategy d$ test mar%etin" 1&. >f a company wishes to test its positionin" strate"y' advertisin"' distri!ution' pricin"' !randin" and pac%a"in"' and !ud"et levels' it can do so durin" which of the followin" sta"es of the new5product development process4 a$ commerciali.ation !$ test mar%etin" c$ product development d$ marketing strategy development 1(. >ntroducin" the new product into the mar%et ta%es place in which sta"e of the new product development process4 a$ commerciali9ation !$ test marketing c$ marketing strategy d$ product development 1*. he C><E decision that must !e reached !y the company that is introducin" a new product is: a$ where to introduce. !$ the distribution process. c$ the timin" of the introduction. d$ the number of outlets to be included in the rollout. 1+. 0ith respect to developin" new products' if a company chooses to introduce its new products city5!y5 city and re"ion5!y5re"ion' then the company is pro!a!ly usin" which of the followin" methods for launchin" new products4 a$ blit. !$ blanket

c$

mar%et rollout

d$ market blister 1/. , new5product development approach in which one company department wor%s to complete its sta"e of the process !efore passin" the new product alon" to the ne:t department and sta"e is called: a$ se8uential product development. !$ retrograde product development. c$ simultaneous product development. d$ reactive product development. 11. Bverlappin" steps in the new5product development process to save time and increase effectiveness across the various departments involved is called: a$ se2uential product development. !$ retrograde product development. c$ simultaneous product development. d$ reactive product development. 12. he simultaneous approach to new5product introduction does have several limitations. ,ll of the followin" would !e considered to !e amon" those limitations GHCGP : a$ it is riskier than other forms of introduction. !$ it is more costly in many instances. c$ it is too slow for many mar%eters. d$ it has increased organi.ational tension and confusion. 16. he course of a product;s sales and profits over its lifetime is called: a$ the sales chart. !$ the dynamic growth curve. c$ the adoption cycle. d$ the product life cycle. 27. he ?????????????? is characteri9ed !y five distinct sta"es: product development' "rowth' maturity' and decline. a$ adoption cycle !$ fashion process c$ product life cycle d$ style curve 21. 0ith respect to the product life cycle' the ????????????? !e"ins when the company finds and develops a new5product idea. a$ product development sta"e !$ introduction stage c$ growth stage d$ maturity stage 2&. 0ith respect to the product life cycle' the ?????????????? is a period of slow sales "rowth as the product is introduced in the mar%et. a$ product development stage !$ introduction sta"e c$ growth stage d$ maturity stage introduction'

2(. 0ith respect to the product life cycle' the ??????????????? is a period of rapid mar%et acceptance and increasin" profits. a$ product development stage !$ introduction stage c$ "rowth sta"e d$ maturity stage 2*. 0ith respect to the product life cycle' the ???????????????? is a period of slow down in sales "rowth !ecause the product has achieved acceptance !y most potential !uyers. a$ product development stage !$ introduction stage c$ growth stage d$ maturity sta"e 2+. 0ith respect to the product life cycle' the ?????????????????? is the period when sales fall off and profits drop. a$ decline sta"e !$ introduction stage c$ growth stage d$ maturity stage 2/. he product life cycle concept has many varied uses. the followin" GHCGP : a$ a product class. !$ a product form. c$ a product shape. d$ a product brand. 21. ?????????????? have the lon"est product life cycles. a$ ,roduct forms !$ ,roduct brands c$ ,roduct genres d$ Product classes 22. >n terms of special product life cycles' a ????????????? is a !asic and distinctive mode of e:pression. a$ genre !$ style c$ fashion d$ fad 26. >n the ???????????? of the PLC' mar%eters price to penetrate the mar%et. a$ !ntroduction tage !$ Arowth Eta"e c$ Maturity tage d$ ,roduct 'evelopment tage 67. >n the ???????? of the PLC' mar%eters !uild product awareness amon" early adopters and dealers. a$ 7rowth stage !$ >ntroduction sta"e he PLC can descri!e all of

c$ Maturity tage d$ 'ecline 61. he !est e:ample of a product towards the end of the maturity sta"e and or decline sta"es of the product life cycle is ????????. a$ "ellular phones !$ 5igh 'efinition #elevision c$ (.+ I Cloppy Dis%s d$ 3lectric "ars 6&. est mar%etin" is not needed normally under the followin" conditions e:cept which one4 a$ 6hen simple e)tensions are introduced !$ 6hen copies of successful competitor products are marketed. c$ 6hen management is already confident about the new product. d$ 0hen introducin" a new product re8uires a !i" investment. 6(. Bften in the decline sta"e of the PLC' mana"ement decides to reduce costs Jplant and e8uipment' < = D' advertisin" and hopes sales hold up. his is an e:ample of ???? the product. a$ 3arvestin" !$ Maintaining c$ 'ropping d$ !gnoring 6*. Bften mana"ement may decide to sell a product to another firm or simply li8uidate it at salva"e value in the ?????????? of the PLC. a$ 7rowth stage !$ Maturity tage c$ ,roduct 'evelopment tage d$ Decline Eta"e 6+. he product life cycle sta"e' in which sales plun"e to aero or drop to a low level at which they continue for many years' is the ????????? a$ !ntroduction tage !$ 7rowth tage c$ Maturity tage d$ Decline Eta"e Multiple Choice Questions Unit &: Price

1) Common pricin" mista%es include ????????????????.

a$ 'etermining costs and only taking traditional margins !$ failing to revise process to capitali.e on market changes c) setting price independently of the rest of the marketing mi) d$ all of the listed errors ,nswer Jd$ &$ <esearch has shown that consumers often use a reference process to assess what price they find accepta!le. ypical reference prices include ?????????????? a$ fair prices

!$ typical market prices c$ last amount paid d$ all of these ,nswer Jd$ ($ Mar%et s%immin" ma%es sense under four of the followin" conditions !ut NB when ??????????????????? . a$ the high price communicates the image of a superior product. !$ the unit costs of producing small volume are not so high that they neutrali.e what the traffic will stand. c$ many buyers have a low current interest and level of demand d$ a sufficient number of buyers have a high current demand ,nswer Jc$ *$ 0hich of the followin" factors does NB lead to less price sensitivity4 a$ 6hen part of the cost is shared with a second party. !$ 1 lack of customer knowledge of cheaper alternatives c$ 6hen buyers can compare prices of substitutes d$ 6hen the product9market offering cannot be stored ,nswer Jc$ +$ 0hich of the followin" is NB a commonly adopted pricin" method4 a$ 3veryday low pricing :3'/,; !$ "ost plus and arbitrary percentage c$ ,erceived-value pricing d$ #arget-return pricing ,nswer J!$ /$ Bther pricin" methods include four of the followin" !ut NB ???????????? . a$ open-bids< !$ 3nglish auctions :ascending bids; c$ dutch auctions :descending bids; d$ auction-type pricing ,nswer Jc$ 1$ 0hich of the followin" is NB normally reco"nised as a leadin" form of price discountin"4 a$ +unctional discount !$ =uantity discount c$ "ash discount d$ ,ersonal discount ,nswer Jd$ 2$ , price cuttin" strate"y can lead to ?????????????????? . a$ low-2uality trap !$ shallow-pockets trap c$ price-war trap d$ all of these traps

,nswer Jd$ 6$ here are a num!er of factors that need to !e ta%en into account when pricin" products and services "lo!ally which can !e "enerally cate"ori9ed into: a$ +irm level$ product specific$ channel specific and retailer type. !$ +irm level$ product specific$ market specific and environmental. c$ *rand image$ channel specific and environmental. d$ *rand positioning$ product specific$ market specific and environment. ,nswer J!$ 17$ he minimum sellin" price that a firm can sustain for a product is determined !y: a$ 6hat it costs to produce. !$ "ompetitors prices. c$ 6hat customers are prepared to pay for it. d$ "ompetitive parity. ,nswer Jd$ 11$ Price discrimination !y a firm implies that it: a$ Matches selling prices closely to production costs. !$ "harges some groups more than others. c$ Minimi.es its costs. d$ ,ublishes price lists. ,nswerJ!$ 1&$ , company enterin" a new mar%et with low initial prices is most li%ely to !e influenced in the short5term !y which type of o!)ectives4 a$ ocial ob-ectives !$ ,ersonal ob-ectives c$ Market share ob-ectives d$ ,rofit ma)imi.ation ob-ectives ,nswer Jc$ 1($ ,???????? strate"y offers the fle:i!ility which allows or"ani9ations to char"e differential prices' accordin" to mar%et conditions' and may offer the !est lon" term pricin" solution. a$ !$ "orridor pricing tandardi.ation

c$ 1daptation d$ ,oly centric ,nswer Ja$ 1*$ Price escalation is: a$ "arrying out price increases. !$ "hanges in price due to inflation. c$ 1dditions to the basic selling price due to all intermediates adding a margin for services. d$ 1dditions to the basic selling price because retailers and wholesalers add their margins. ,nswer Jc$ 1+$ #ransfer pricing is due to> a$ #he operations of parallel or 0grey0 marketers.

!$ "ounter trading by countries. c$ 1 way for !nternational marketers to avoid paying ta). d$ !nternational marketers transferring goods and services in their organi.ation between different countries. ,nswer Jd$ 1/$ 1 fi)ed-price policy is one where> a$ 'ifferent prices are charged to buyers based on the individual customers and situations. !$ ,rice fi)ing is allowed by the government. c$ etting one price for all buyers is the norm. d$ 'ifferent prices are charged based on barter or negotiation. ,nswer Jc$ 11$ 1ll of the following would be considered to be among the internal factors that affect price decisions 3?"3,#> a$ Marketing ob-ectives. !$ @rgani.ational considerations. c$ "osts. d$ "ompetition. ,nswer Jd$ 12$ 1ll of the following would be considered to be among the e)ternal factors that affect price decisions 3?"3,#> a; "osts. !$ Nature of the market and demand. c$ 3nvironmental factors such as the economy and social concerns. d$ "ompetition. ,nswer Ja$ 16$ "ommon price ob-ectives include the following> : elect the best set; a$ "urrent profit ma)imi.ation and promotional push strategies. !$ ,redatory pricing and soft sell strategies. c$ ,roduct 2uality leadership and promotional pull strategies. d$ "urrent profit ma)imi.ation and market share leadership. ,nswer Jd$ &7$ Most firms want to avoid pricing that turns their products into> a$ "ommodities !; ervice goods. c$ hopping goods. d$ pecialty goods. ,nswer Ja$ &1$ 1ccording to the te)t$ AAAAAAAAAA is a variation of target profit pricing. a; break-even pricing !$ buyer-based pricing c$ going-rate pricing d$ competition-based pricing ,nswer Ja$

&&$ >f price is used to say somethin" a!out the product other than in )ust economic terms' a pricin" method is !ein" used called: a; ,romotional pricing. !$ ,sychological pricing. c$ 'iscount and allowance pricing. d$ egmented pricing. ,nswer J!$ &($ AAAAA implies that the prices in the individual countries may only vary within a set ran"e. a$ 1 price corridor !$ *arter c$ tandardi.ed pricing d$ #ransfer pricing ,nswer Ja$ &*$ ?????? is a company.s power to maintain or even raise prices without losin" mar%et share. a$ #arget cost !$ 8ariable cost c$ Bnit cost d$ ,ricing power ,nswer Jd$ &+$ ????? pricin" is product driven. he company desi"ns what it considers to !e a "ood product' totals the e:penses of ma%in" the product' and sets a price that covers costs plus a tar"et profit. a$ 8alue-based !$ kimming c$ "ost-based d$ 8ariable ,nswer Jc$ &/$ Under ????????' the mar%et consists of a few sellers who are hi"hly sensitive to each other.s pricin" and mar%etin" strate"ies. a$ monopolistic competition !$pure competition c$ oligopolistic competition d$ a pure monopoly ,nswer J!$ &1$ >f demand hardly chan"es with a small chan"e in price' we say the demand is ????????. a$ 8ariable !$ !nelastic c$ at break-even pricing d$ value-based ,nswer J!$ &2$ 0hen companies set prices' the "overnment and social concerns are two ???????? affectin" pricin" decisions.

a$ e)ternal factors !$ demand curves c$economic conditions d$ temporary influences ,nswer Ja$ &6$ 0hich of the followin" is NB an o!)ective of discounts4 a$ %eward valuable customers !$ %eward "ompetitors c$ Move out of date stock d$ !ncrease short term sales ,nswer J! $ (7$ ,""ressive pricin" is associated with which of the followin" sta"e of product life cycle4 a$ !ntroduction !$ 7rowth c$ Maturity d$ 'ecline ,nswer Jc$ (1$ 0hich of the followin" is a pricin" techni8ue used !y retailers4 a$ "ost push pricing !$ "ost 4plus pricing c$ 'emand 4pull pricing d$ 'emand push pricing ,nswer J!$ (&$ , company wants prompt payment from the customers. 0hat type of discount will !e suita!le for the company4 a$ easonal discount !$ #rade discount c$ =uantity 'iscount d$ "ash 'iscount ,nswer Jd$ (($ 0hat is price s%immin"4 a$ !$ c$ d$ etting a low price to Cskim offD a large number of consumers. etting an initially 4 high price which falls as competitors enter the market. etting a high price which consumers perceive as indicating high 2uality etting price based on competitors pricing

,nswer J!$ (*$ Eettin" a price !elow that of the competition is called: a$ kimming !$ "ompetitive pricing c$ ,enetration pricing d$ "ost plus pricing

,nswer Jc$ (+$ , chan"e in total cost caused !y addin" one or more unit to the production total is called a$ 8ariable cost !$ Marginal cost c$ +i)ed cost d$ *asic cost ,nswer J!$ (/$ , cost which does not vary no matter how much is produced is called a$ Marginal cost !$ +i)ed cost c$ *asic cost d$ #otal cost ,nswer J!$ (1$ Calculatin" prices on the !asis of what the mar%et will pay is called a$ "ompetitive pricing !$ ,restige pricing c$ 'emand pricing d$ kimming pricing ,nswer Jc$ (2$ Gndin" prices with 66p is called a$ @dd 4even pricing !$ ,rice lining c$ ,restige pricing d$ kimming pricing ,nswer Ja$ (6$ @undle pricin" is a$ ,ackaging a group of products together !$ ,roviding a bundle of benefits for one price c$ ,roviding a group of prices for one product category d$ ,ackaging a product and giving a price to it ,nswer Ja$ *7$ 0hich of the followin" is not a reason for a company to initiate a price cut4 a$ to obtain prestige !$ to dominate the market c$ to boost sales d$ to influence falling demand ,nswer Ja$ *1$ >f price is used to say somethin" a!out the product other than in )ust economic term' a pricin" method is !ein" used called: a$ egmented pricing !$ ,sychological pricing

c$ ,romotional pricing d$ 'iscount and allowance pricing ,nswer J!$ *&$ heatres and sports teams often sell season tic%ets at less than the cost of a sin"le tic%et to promote lon"5term sales. his form of pricin" is most appropriately called: a$ *y product pricing !$ ,sychological pricing c$ ,roduct 4 bundle pricing d$ ealed 4 bid pricing ,nswer Jc$ *($ Mar%et5s%immin" pricin" would li%ely !e most effective in sellin" ????????. a$ anything easily copied by competitors. !$ an electronic device for which research and development must be recouped c$ most items at 3'/, retailers such as 6al-Mart d$ any convenience item ,nswer J!$ **$ hrou"hout most of history' prices were set !y ????????????. a$ !$ c$ d$ +i)ed-price policies constructed by sellers Negotiation between buyers and sellers 7overnments and regulatory agencies %uling monarchs

,nswer: J!$ *+$ heatres and sports teams often sell season tic%ets at less than the cost of a sin"le tic%et to promote lon"5term sales. his form of pricin" is most appropriately called: a$ *y product pricing !$ ,sychological pricing c$ ,roduct 4 bundle pricing d$ ealed 4 bid pricing ,nswer: Jc$ */$ >n mar%etin" terms' ??????????? refers to what we "et for what we pay: a$ %evenue !$ "ost c$ 8alue d$ ,roduct ,nswer: Jc$ *1$ ??????????? act as cues !y indicatin" to a potential customer that there is a !ar"ain to !e had. a$ @dd number pricing !$ ale signs c$ %elative price d$ ,rice surplus ,nswer: J!$

*2$ ?????????vary accordin" to the num!er of units of "oods made or services sold. a$ ,roduct assets !$ ,rice elasticity c$ +i)ed costs d$ 8ariable costs ,nswer:Jd$ *6$ he two dominant approaches to pricin" new propositions are: a$ negotiated pricing and discount pricing method !$ transfer pricing and relationship pricing method c$ the market skimming pricing and the market penetration pricing method. d$ value-in-use pricing and transfer pricing method ,nswer: Jc$ +7$ ???????????? is the amount of money char"ed for a product or service. a$ ,rice !$ 1ccountancy c$ 'emand d$ 8alue ,nswer: Ja$ +1$ ????????????? is the sum of the values that consumers e:chan"e for the !enefits of havin" or usin" the product or service. a$ ,rice !$ 3lasticity c$ 'emand d$ 8alue estimate ,nswer: Ja$ +&$ #hroughout most of history$ prices were set by AAAAAAAAAAAA. a$ fi)ed-price policies constructed by sellers !$ negotiation between buyers and sellers c$ governments and regulatory agencies d$ ruling monarchs ,nswer: J!$ +($ , ???????????? policy means that a firm sets one price for all !uyers in a "iven product or service line. a$ fi)ed-price !$ variable-price c$ dynamic-price d$ standard-price ,nswer: Ja$ +*$ 0hich of the followin" factors is spurrin" a new movement in pricin" toward dynamic pricin"4 a$ the federal government

!$ strong retailers c$ the !nternet d$ strong wholesalers ,nswer: J!$ ++$ ???????????? is the practice of char"in" different prices dependin" on individual customers and situations. a$ +i)ed-pricing !$ tandard-pricing c$ *arter-pricing d$ 'ynamic pricing ,nswer: Jd$ +/$ AAAAAAA is the only element of the marketing mi) that produces revenue. a$ ,roduct !$ ,rice c$ ,lace :distribution; d$ ,romotion ,nswer: J!$ +1$ *efore setting price$ the company must decide on its strategy for> a$ distribution. !$ promotion. c$ d$ the environment. the product. much capacity$ heavy

,nswer: Jd$ +2$ "ompanies set AAAAAAAAAAAAAA as their ma-or ob-ective if they are troubled by too competition$ or changing consumer wants. a$ current profit ma)imi.ation !$ survival c$ market share leadership d$ product 2uality leadership ,nswer: J!$ +6$ Pricin" to cover varia!le costs and some fi:ed costs' as in the case of some automo!ile distri!utorships that sell !elow total costs' is typical of which of the followin" pricin" o!)ectives4 a$ current profit ma)imi.ation !$ product 2uality leadership c$ market share leadership d$ survival ,nswer: Jd$ /7$ "hoosing a price based upon its short-term effect on current profit$ cash flow$ or return on investment reflects which of the following pricing ob-ectivesE a$ current profit ma)imi.ation !$ product 2uality leadership c$ market share leadership

d$ survival ,nswer: Ja$ /1$ !f a company believes that the company with the largest market share will en-oy the lowest costs and highest long-run profits$ that company will probably choose which of the following pricing ob-ectives as their primary course of actionE a$ current profit ma)imi.ation !$ product 2uality leadership c$ market share leadership d$ survival ,nswer: Jc$ /&$ 6hen a company sets a price for a new product on the basis of what it thinks the product should cost$ then develops estimates on what each component should cost to meet the proposed price with an acceptable profit margin$ the company is practicing> a$ predatory pricing. !$ target costing. c$ strategic pricing. d$ low cost leadership. ,nswer: J!$ /($ ?????????????? setJs$ the floor for the price that the company can char"e for its product. a$ upply !$ 'emand c$ "osts d$ Nonprofit factors ,nswer: Jc$ /*$ Companies with ??????????? can set lower prices that result in "reater sales and profits. a$ lower market share percentages !$ higher costs c$ lower costs d$ larger supply ratios ,nswer: Jc$ /+$ Costs that do not vary with production or sales levels are called: a$ fi)ed costs. !$ variable costs. c$ standard costs. d$ independent costs. ,nswer: Ja$ Difficulty: J1$ Pa"e: (+6 //$ >n industries such as aerospace' steel' railroads' and oil' companies often have a ??????????? to set the prices or to help others in settin" them. a$ 8ice-,resident of ,ricing

!$ ,ricing *oard c$ ,ricing 'epartment d$ ,+@ :,ricing and +inancial @fficer; ,nswer: Jc$ /1$ Non re"ulated monopolies are free to price at what the mar%et will !ear. 3owever' they do not always char"e the full price for a num!er of reasons. Bne of those reasons is the: a$ desire to skim profits is usually low. !$ desire to penetrate the market faster with a low price. c$ fear of global cultural reaction. d$ damage that high pricing does to corporate culture. ,nswer: J!$ /2$ he ????????????? is a curve that shows the num!er of units the mar%et will !uy in a "iven time period' at different prices that mi"ht !e char"ed. a$ price curve !$ cost curve c$ supply curve d$ demand curve ,nswer: Jd$ /6$ 0ith respect to the demand curve Jin the normal case$' demand and price are: a$ directly related. !$ parallel. c$ inversely related. d$ related only through Cthe invisible handD of the market place. ,nswer: Jc$ 17$ ???????????? is a measure of the sensitivity of demand to chan"es in price. a$ ,rice sensitivity !$ ,rice comparability c$ ,rice elasticity d$ ,rice response ,nswer: Jc$ 11$ !f the demand hardly changes with a small change in price$ we can say that the demand is classified as being> a$ neutral. !$ elastic. c$ kinked. d$ inelastic. ,nswer: Jd$ 1&$ !f demand is elastic rather than inelastic$ sellers will consider> a$ lowering their price. !$ raising their price. c$ ac2uiring competitors as a means of avoiding price competition. d$ maintaining the status 2uo.

,nswer: Ja$ 1($ 1ll of the following are considered to be forms of a cost-based approach to pricing 3?"3,#> a$ cost-plus pricing. !$ break-even analysis. c$ going-rate pricing. d$ target profit pricing. ,nswer: Jc$ 1*$ 1dding a standard markup to the cost of the product refers to> a$ cost-plus pricing. !$ break-even analysis. c$ target profit pricing. d$ perceived-value pricing. ,nswer: Ja$ 1+$ Markup pricing remains popular in the marketplace. 6hich of the following is a reason for this popularityE a$ "ost-plus pricing favors the best price. !$ tandard markups make the most sense. c$ "ost-plus pricing is fairer to both buyers and sellers. d$ #he method focuses on demand as its base. ,nswer: Jc$ 1/$ etting prices to break even on the costs of making and marketing a product or make the target profit it is seeking is called> a$ cost-plus pricing. !$ perceived-value pricing. c$ break-even pricing. d$ 7oing-rate pricing. ,nswer: Jc$ 11$ 0hich of the followin" would !e considered to !e one of the ma)or faults of !rea%5even analysis and tar"et profit pricin"4 a$ #hey do not take into account the price-demand relationship. !$ #hey are very complicated to calculate. c$ #here are serious time lags in the calculations. d$ Most managers do not have confidence in the methods. ,nswer: Ja$ 12$ #he pricing method that uses the buyerFs point of view regarding the worth of a product$ not the sellerFs cost$ is called> a$ cost-plus pricing. !$ value-based pricing. c$ break-even pricing. d$ going-rate pricing. ,nswer: J!$

16$ 6hen a coffee shop in an airport and a fine restaurant in a lu)ury hotel charge different prices for the same meal to customers who find the atmosphere in the hotel worth the difference in price$ we can say that AAAAAAAAAAAA was being used. a$ value-based pricing !$ cost-plus pricing c$ break-even pricing d$ going-rate pricing ,nswer: Ja$ 27$ 0hich of the followin" pricin" methods uses the idea that pricin" !e"ins with analy9in" consumer needs and value perceptions' and price is set to match consumer;s perceived value4 a$ cost-based pricing !$ service-based pricing c$ psychology-based pricing d$ value-based pricing ,nswer: Jd$ 21$ ????????????? is offerin" )ust the ri"ht com!ination of 8uality and "ood service at a fair price. a$ c$ 8alue pricing ervice pricing !$ "ost pricing d$ 'emand pricing ,nswer: Ja$ 2&$ ???????????? pricin" involves char"in" hi"her prices on an everyday !asis !ut runnin" fre8uent promotions to lower prices temporarily on selected items !elow the GDLP JGvery day Low Price $ level. a$ +air !$ /ow-high c$ 5igh-low d$ ,romotional ,nswer: Jc$ 2($ >f the customers !ase their )ud"ments of a product;s value on the prices that competitors char"e for similar products' then ??????????????????? is in place. a$ cost-plus pricing !$ value-based pricing c$ competition-based pricing d$ target profit pricing ,nswer: Jc$ 2*$ 0hen demand elasticity is hard to measure' and firms tend to price accordin" to the wisdomK of the industry' the pricin" method most li%ely to !e used is called: a$ cost-plus pricing. !$ break-even pricing. c$ sealed-bid pricing. Icollective

d$ going-rate pricing. ,nswer: Jd$ 2+$ Companies !rin"in" out a new product face the challen"e of settin" prices for the first time. choose !etween two !road strate"ies. 0hat are these two !road strate"ies4 a$ product mi) strategies and pricing mi) strategies !$ product line pricing and captive-product pricing c$ market-skimming pricing and market-penetration pricing d$ market-e)pansion pricing and market-harvesting pricing ,nswer: Jc$ 2/$ #he process of setting a high price for a new product to gain ma)imum revenues layer by layer from the segments willing to pay the high price is called> a$ Market - penetration pricing. !$ Market 4 layer pricing. c$ Market - skimming pricing. d$ Market - saturation pricing. ,nswer: Jc$ 21$ Mar%et s%immin" ma%es sense only under certain conditions. 0hich of the followin" 0BULD NB !e a reason for usin" mar%et s%immin" pricin"4 a$ #he market must be highly price sensitive. !$ #he productFs 2uality and image must support its higher price$ and enough buyers must want the product at that price. c$ #he costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. hey can

d$ "ompetitors should not be able to enter the market easily and undercut the high price. ,nswer: Ja$ 22$ etting a low initial price to attract a large number of buyers 2uickly and win a large market share is called> a$ market-penetration pricing. !$ market-skimming pricing. c$ market-loss pricing. d$ market-competitive pricing. ,nswer: Ja$ 26$ Market-penetration pricing refers to the practice of> a$ setting a high initial price and then penetrating the market with successive prices for each price sensitive layer. !$ setting a low initial price to penetrate the market 2uickly and attract a large number of buyers to win a large market share. c$ pricing to attract low volume in many segments so as to gradually penetrate the market as a whole. d$ pricing products very high to penetrate deeply and 2uickly into large profits for the ,nswer: J!$ 67$ 0hen Dell Computer runs an advertisement that !oosts IEuperior Quality' Euperior Eervice' and Un!elieva!le Price'K they are most li%ely usin" which of the followin" new product pricin" strate"ies4 a$ market-penetration pricing !$ market-skimming pricing company.

c$ market-loss pricing d$ market-competitive pricing ,nswer: Ja$ 61$ AAAAAAAAAAAAAAAA is setting the price steps between various products in a product line based on cost differences between the products$ customer evaluations of different features$ and competitorsF prices. a$ @ptional-product pricing !$ captive-product pricing c$ product line pricing d$ by-product pricing ,nswer: Jc$ 6&$ he use of price points for reference to different levels of 8uality for a company;s typical of which product5mi: pricin" strate"y4 a$ optional-product pricing !$ captive-product pricing c$ by-product pricing d$ product line pricing ,nswer: Jd$ Difficulty: J&$ Pa"e: (1( 6($ Usin" a low stic%er price on automo!iles to attract customers and then sellin" models with additional accessory features to meet customer needs is a form of which of the followin" pricin" strate"ies4 a$ optional-product pricing !$ captive-product pricing c$ by-product pricing d$ product line pricing ,nswer: Ja$ 6*$ AAAAAAAAAAAAAA is setting a price for products that must be used along with a main product$ such as blades for a ra.or. a$ @ptional-product pricing !$ "aptive-product pricing c$ *y-product pricing d$ ,roduct line pricing ,nswer: J!$ 6+$ "aptive-product pricing applies to services pricing. 6ith respect to services$ the captive-product strategy is called > a$ c$ demand pricing. two-part pricing. !$ slack pricing. d$ referral pricing. ,nswer: Jc$ 6/$ ???????????????? is settin" a price for !y5products in order to ma%e the main product;s price more competitive. a$ @ptional-product pricing !$ "aptive-product pricing related products is

c$ *y-product pricing d$ ,roduct line pricing ,nswer: Jc$ 61$ Com!inin" several products and offerin" them to"ether at a reduced price is called: a$ product-bundle pricing. !$ optional-product pricing. c$ captive-product pricing. d$ by-product pricing. ,nswer: Ja$ 62$ ,ll of the followin" are price5ad)ustment strate"ies GHCGP : a$ segmented pricing. !$ market-penetration pricing. c$ psychological pricing. d$ promotional pricing. ,nswer: J!$ 66$ 1 price reduction to buyers who buy in large volumes is called a> a$ 2uantity discount. !$ cash discount. c$ seasonal discount. d$ trade discount. ,nswer: Ja$ 177$ 1:n; AAAAAAAAA is a straight reduction in price on purchases during a stated period of time. a$ allowance !$ discount c$ pricing segment d$ reference price ,nswer: J!$ 171$ ,Jn$ ???????????????? is a price reduction to !uyers who pay their !ills promptly. a$ 2uantity discount !$ functional discount c$ cash discount d$ allowance ,nswer: Jc$ 17&$ >n an attempt to %eep production steady durin" an entire year' especially for products whose use is for only part of the year' sellers often use which of the followin"4 a$ cash discounts !$ 2uantity discounts c$ functional discounts d$ seasonal discounts ,nswer: Jd$ 17($ , functional discount is also called a ????????? discount.

a$ segmented !$ 2uantity c$ trade d$ service ,nswer: Jc$ 17*$ Promotional money paid !y manufacturers to retailers in return for an a"reement to feature the manufacturer;s products in some way is called aJn$: a$ discount. !$ allowance. c$ rebate. d$ off-retail price. ,nswer: J!$ 17+$ >f a state university char"es different tuition rates to in5state and out5of5state students' then the university is practicin" a form of: a$ promotional pricing. !$ institutional pricing. c$ segmented pricing. d$ psychological pricing. ,nswer: Jc$ 17/$ 0hen different versions of a product are priced differently !ut not in accordance to differences in their value' it is a form of: a$ c$ customer-segment pricing. location pricing. !$ product-form pricing. d$ time pricing. ,nswer: J!$ 171$ a$ Prices that !uyers carry in their minds and refer to when they loo% at a "iven product segmented prices. are called:

!$ reference prices. c$ relationship prices. d$ basing-point prices. ,nswer: J!$ 172$ 0ith respect to settin" pricin" amounts' the !elief that individual di"its in a product;s price have sym!olic and visual 8ualities that should !e considered in settin" price is lin%ed to: a$ c$ psychological pricing. symbolic pricing. !$ promotional pricing. d$ psychographic pricing. ,nswer: Ja$ 176$ 0hen the seller places products at no char"e with a carrier and the title and responsi!ility pass to the customer who pays the frei"ht' it is which type of pricin" strate"y4

a$ +@*-origin pricing !$ uniform-delivered pricing c$ .one pricing d$ basing-point pricing ,nswer: Ja$ 117$ ?????????????????? is a "eo"raphical pricin" strate"y in which the company price plus frei"ht to all customers' re"ardless of their location. a$ +@*-origin pricing !$ uniform-delivered pricing c$ .one pricing d$ basing-point pricing ,nswer: J!$ char"es the same