True or False

1) Pricing strategies tend to change and evolve as the average product passes through its life cycle.( )Page Ref: 314

2) For market skimming to be successful, the cost of producing a smaller quantity of goods should not be higher than the prices charged.( )Page Ref: 315

3) When The Candy Store sets a low initial price in order to get its “foot in the door” and to quickly attract a large number of buyers, the company is practicing market-skimming pricing.

( )Page Ref: 315

4) Pricing is difficult because various products have related demand and costs, and producers face different degrees of competition.( )Page Ref: 315

5) In product line pricing, the price steps should account for differences in customer perceptions of the value of different features.( )Page Ref: 316

6) Thinking Cap Corp. prices its various cap designs at different price levels, ranging from $2.05 to $5.95. This is an example of optional product pricing.( )Page Ref: 316

7) In addition to its customary services, On the Spot, a house mover, also sells the boxes and padding that are used when moving household furniture. This is an example of customer-segmented pricing.( )Page Ref: 316

8) When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product’s price to make it more competitive.( )Page Ref: 317

9) Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.( )Page Ref: 317

10) When using product bundle pricing, sellers combine several of their products and offer the bundle at an increased price for increased profit.( )Page Ref: 317

11) Consumers who have no past experience with a product are especially likely to judge it by its price.( )Page Ref: 319

12) A seasonal discount is a price reduction to buyers who buy merchandise while the products are in season.( )Page Ref: 318

13) Online flash sales are used to create buying urgency and make buyers feel lucky to have gotten in on the deal.( )Page Ref: 321

14) If used infrequently, price promotions create “deal-prone” customers who wait until brands go on sale before buying them.( )Page Ref: 322

15) Constantly reduced prices can erode a brand’s value in the eyes of customers.

( )Page Ref: 322

16) In segmented pricing, the difference in prices is based on differences in costs.

( )Page Ref: 318

17) For segmented pricing to be an effective strategy, the prices should reflect real differences in customers’ perceived value.( )Page Ref: 319

18) Sellers cannot influence or use consumers’ reference prices when setting prices.

( )Page Ref: 319

19) Customers located close to a firm are less likely to benefit from FOB-origin pricing than customers located further away.( )Page Ref: 322

20) The uniform-delivered pricing strategy means that the goods sold are placed free on board a carrier with the customer paying the freight from the factory to the destination.

( )Page Ref: 322

21) Dynamic pricing is least prevalent online.( )Page Ref: 323

22) Excess capacity leads to companies initiating an increase in price.( )Page Ref: 325

23) Launching a fighter brand is an effective way to deal with a situation in which the market segment being lost is price sensitive and will not respond to arguments of higher quality.

( )Page Ref: 329

24) Price discrimination is permissible if the seller manufactures different qualities of the same product for different retailers and can prove that the price difference is proportional.

( )Page Ref: 330-331

25) The widespread use of scanner-based computer checkouts has eradicated complaints of retailers overcharging their customers.( )Page Ref: 331

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