Question 1

The practice of advertising a low-priced model of a shopping good to lure shoppers into a store is called a bait-and-switch pricing.

Accepted Answer

A) True 
 B)False

Question 2

Mike's Appliances bought a refrigerator for $480.The initial price on the refrigerator was $950,but it was ultimately sold for $825.What were initial and maintained markups,respectively?

Accepted Answer

A)   36.3 percent; 57.0 percent
B)   46.3 percent; 58.2 percent
C)   49.5 percent; 41.8 percent
D)   50.5 percent; 58.2 percent
E)   63.7 percent; 43.0 percentF) B) and D)
G) A) and E)

Question 3

The practice of advertising a low-priced model of a shopping good which the retailer has no intention of selling,in order to lure shoppers into a store is called "trading up."

Accepted Answer

A) True 
 B)False

Question 4

A major advantage of the penetration objective is that it helps to establish a loyal customer base.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following situations is NOT a good reason for using a high markup percentage?

Accepted Answer

A)   The products have a high risk of a price reduction due to the seasonality of the goods
B)   The products have low fixed costs associated with their sale
C)   The products have a low elasticity of demand
D)   The products have high handling and storage costs
E)   The products are only sold through few retail outletsF) C) and E)
G) B) and D)

Question 6

Because odd prices are associated with low prices,they are typically used by retailers who sell at prices below the market or at the market.

Accepted Answer

A) True 
 B)False

Question 7

A _____ is a range of prices for a specific merchandise line that appeals to customers in a certain demographic group.

Accepted Answer

A)   price zone
B)   odd price
C)   price line
D)   price point
E)   price rangeF) All of the above
G) A) and E)

Question 8

As a rule,if a retailer wants to attract customers from a greater it must_____ its merchandise.

Accepted Answer

A)   lower the prices of
B)   double both its prices and promotion of
C)   deemphasize the services it provides with
D)   increase the services provided the customer and reduce the promotional activities associated with
E)   reduce the promotional activities associated withF) A) and D)
G) A) and E)

Question 9

A _____ objective is a pricing objective that states a specific level of profit,such a as percentage of sales or a return on capital invested,as an objective.

Accepted Answer

A)   profit maximization
B)   target-return
C)   percentage-of-sales
D)   competition-oriented
E)   skimmingF) A) and D)
G) B) and E)

Question 10

The maintained markup percentage equals the retailer's initial markup percentage minus its reduction percentage multiplied by 100 percent minus its initial markup percentage.

Accepted Answer

A) True 
 B)False

Question 11

A(n) _____ pricing policy is a policy that regularly discounts merchandise from the established market price in order to build store traffic,generate high sales,and enhance gross margin dollars per square foot of selling space.

Accepted Answer

A)   above-market
B)   flexible
C)   odd-pricing
D)   below-market
E)   loss leaderF) B) and E)
G) A) and B)

Question 12

Flowers tend to be priced higher when demand is greatest,around Mother's Day and Valentine's Day.This is an example of _____ pricing.

Accepted Answer

A)   flexible
B)   dynamic
C)   psychological
D)   variable
E)   customaryF) B) and E)
G) C) and D)

Question 13

Markdowns are always the result of buyer errors.

Accepted Answer

A) True 
 B)False

Question 14

For leader pricing to be effective,which of the following guidelines should be followed?

Accepted Answer

A)   Not many customers should actually want to buy the leader item.
B)   The leader item must have had a very high markup before being discounted.
C)   The leader item must have narrow appeal within the retailer's target market.
D)   The leader item must be an item frequently purchased by the consumer.
E)   It should never be sold below cost.F) A) and B)
G) A) and C)

Question 15

Your local bike shop offers a wide variety of bicycles at the following price levels: $99.99,$160.99,$320.95,$619.99,and $1039.99.The bike shop is using a _____ pricing strategy.

Accepted Answer

A)   variable
B)   price lining
C)   standard price mix
D)   stream lining
E)   flexibleF) A) and E)
G) B) and D)

Question 16

What factors should a retailer consider when deciding whether to price above the market,price at market levels,or price below the market?

Accepted Answer

Pricing Below the Market: A below-market...

Question 17

Retailers that wish to have greater pricing freedom are likely to carry private brands because consumers find it difficult to make exact comparisons between private brands and national brands.

Accepted Answer

A) True 
 B)False

Question 18

Retailers use multiple-unit pricing to encourage additional sales and to increase profits.

Accepted Answer

A) True 
 B)False

Question 19

A one-price policy speeds the amount of time needed to complete a customer transaction.

Accepted Answer

A) True 
 B)False

Question 20

Pricing policies are rules of action,or guidelines,that ensure uniformity of pricing decisions within a retail operation.

Accepted Answer

A) True 
 B)False

Exam 10: Merchandise Pricing

The maintained markup percentage equals the retailer's initial markup percentage minus its reduction percentage multiplied by 100 percent minus its initial markup percentage.

Correct AnswerverifiedShow Answer

Because odd prices are associated with low prices,they are typically used by retailers who sell at prices below the market or at the market.

Correct AnswerverifiedShow Answer

The practice of advertising a low-priced model of a shopping good which the retailer has no intention of selling,in order to lure shoppers into a store is called "trading up."

Correct AnswerverifiedShow Answer

A major advantage of the penetration objective is that it helps to establish a loyal customer base.

Correct AnswerverifiedShow Answer

Retailers that wish to have greater pricing freedom are likely to carry private brands because consumers find it difficult to make exact comparisons between private brands and national brands.

Correct AnswerverifiedShow Answer

Mike's Appliances bought a refrigerator for $480.The initial price on the refrigerator was $950,but it was ultimately sold for $825.What were initial and maintained markups,respectively?

Correct AnswerverifiedShow Answer

Retailers use multiple-unit pricing to encourage additional sales and to increase profits.

Correct AnswerverifiedShow Answer

Pricing policies are rules of action,or guidelines,that ensure uniformity of pricing decisions within a retail operation.

Correct AnswerverifiedShow Answer

A one-price policy speeds the amount of time needed to complete a customer transaction.

Correct AnswerverifiedShow Answer

A _____ is a range of prices for a specific merchandise line that appeals to customers in a certain demographic group.

Correct AnswerverifiedShow Answer

A _____ objective is a pricing objective that states a specific level of profit,such a as percentage of sales or a return on capital invested,as an objective.

Correct AnswerverifiedShow Answer

The practice of advertising a low-priced model of a shopping good to lure shoppers into a store is called a bait-and-switch pricing.

Correct AnswerverifiedShow Answer

What factors should a retailer consider when deciding whether to price above the market,price at market levels,or price below the market?

Correct AnswerverifiedPricing Below the Market: A below-market...View AnswerShow Answer

For leader pricing to be effective,which of the following guidelines should be followed?

Correct AnswerverifiedShow Answer

Markdowns are always the result of buyer errors.

Correct AnswerverifiedShow Answer

A(n) _____ pricing policy is a policy that regularly discounts merchandise from the established market price in order to build store traffic,generate high sales,and enhance gross margin dollars per square foot of selling space.

Correct AnswerverifiedShow Answer

Flowers tend to be priced higher when demand is greatest,around Mother's Day and Valentine's Day.This is an example of _____ pricing.

Correct AnswerverifiedShow Answer

Which of the following situations is NOT a good reason for using a high markup percentage?

Correct AnswerverifiedShow Answer

Your local bike shop offers a wide variety of bicycles at the following price levels: $99.99,$160.99,$320.95,$619.99,and $1039.99.The bike shop is using a _____ pricing strategy.

Correct AnswerverifiedShow Answer

As a rule,if a retailer wants to attract customers from a greater it must_____ its merchandise.

Correct AnswerverifiedShow Answer

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Pricing Below the Market: A below-market...
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