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Self-test Questions
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1

Full cost pricing and marginal cost pricing are two examples of:
A)direct cost pricing.
B)marginal cost pricing.
C)going rate pricing.
D)cost-orientated pricing.
E)competitive bidding.
2

Going rate pricing and competitive bidding are examples of marketing orientated pricing.
A)TRUE
B)FALSE
3

Why should a product’s price be set in line with the marketing strategy?
A)It is easier to explain to the sales staff.
B)To avoid confusion in the customers mind and in the market place.
C)Profits can be assessed before a product is launched.
D)Price lists can be printed at the same time as brochures.
E)Sales people can advise on a price that is likely to sell well.
4

In relation to a product launch strategy a company engaged in high levels of promotion whilst selling at a high price is following a:
A)slow penetration strategy.
B)rapid penetration strategy.
C)rapid skimming strategy.
D)slow skimming strategy.
5

In setting the price of a product by its perceived value the company decides on the value of the product by estimating costs.
A)TRUE
B)FALSE
6

In an industrial marketing price setting, the initials E.V.C stand for:
A)Economic viability to the customer analysis.
B)Economic value to the company analysis.
C)External valuation of the competition analysis.
D)Enhanced value to the customer analysis.
E)Economic value to the customer analysis.
7

An established company with respected brands might introduce which one of the following options to compete against low priced rivals?
A)Value pricing.
B)A fighter brand.
C)Special sales promotions.
D)Price cuts.
E)Higher quality products.
8

To overcome the problems associated with the Price Waterfall marketing orientated companies might protect profitability by building what into their quoted prices?
A)Negotiating margins.
B)Sales staff bonuses.
C)Legal fees.
D)Fees to cover hospitality for DMU members in the purchasing company.
E)Directors’ bonuses.
9

Three key issues associated with initiating price changes are, the circumstances, the tactics and:
A)raw material costs.
B)sales targets.
C)bad publicity.
D)stock levels.
E)competitor reactions.
10

Competitor price increases are more likely to be followed when they are due to:
A)falling sales.
B)general rising costs.
C)increased advertising.
D)supplier bankruptcies.
E)price wars.
11

The short-term practice of price fixing occurs when a supplier offers a buyer a better price for the same product - resulting in an unfair competitive advantage.
A)TRUE
B)FALSE
12

Product dumping, when used to sell off faulty goods will damage a company’s reputation and possibly lead to legal action against the company.
A)TRUE
B)FALSE
13

When faced with elastic demand marketers know that a price drop will not increase demand appreciably.
A)TRUE
B)FALSE
14

A situation where potential suppliers quote a confidential price to the buyer is called:
A)price fixing.
B)competitive bidding.
C)rapid penetration.
D)slow skimming.
15

Value to the customer, explicability, price quality relationships and marketing strategy are some of the factors that need to be considered when adopting the __________ approach to pricing.
A)cost-orientated
B)direct cost
C)competitor-orientated
D)market-orientated
16

Predatory pricing is where a firm raises its prices with the aim of pricing the competition out of the market.
A)TRUE
B)FALSE
17

When determining prices for existing products if a company sets its prices lower than the competition, which of the following strategic objectives are they most likely to be pursuing?
A)Build
B)Hold
C)Harvest
D)Reposition
18

Which of the following is not a condition for charging low prices?
A)Consumers have high ability to pay.
B)Only feasible alternative.
C)Market presence.
D)Experience curve effect.
19

If a firm uses product profiles (product features and price) to determine preferred product profiles they are using ___________ analysis measures.
A)EVC
B)demand curve
C)buy-response
D)trade-off
20

Which of the following is not an ethical pricing issue?
A)Product dumping.
B)Predatory pricing.
C)Price fixing.
D)Slow Skimming.
21

____________ involves distributors such as retailers buying products in one country (where prices are low) and then selling them in another country (where prices are high) at a low price.
A)Counter trade
B)Parallel importing
C)Transfer pricing
D)Counter purchase





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