Chapter 10 Price The Online Value Test Bank

CHAPTER TEN PRICE: THE ONLINE VALUE

Multiple Choice

1. Broadly speaking, the definition of price includes all of the following values except ________.
2. money
3. time
4. physical cost
5. psychic cost
6. ________ refers to the idea that both buyers and sellers can view all competitive prices for items sold online.
7. Price transparency
8. Dynamic pricing
9. Online pricing
10. None of the above
11. The phenomenon that some people may actually pay a higher price for auctioned products than they would pay an online retailer is known as ________.
12. seller control
13. buyer control
14. dynamic pricing
15. the winner’s curse
16. ________ power is based largely on the huge quantity of information and product availability on the web.
17. Buyer
18. Seller
19. Market
20. All of the above
21. ________ is the most common profit-oriented objective for pricing.
22. Competition-based pricing
23. Dynamic pricing
24. Current profit maximization
25. Segmented pricing
26. Which of the following attributes of the internet puts upward pressure on prices?
27. online customer service
28. affiliate programs
29. customer acquisition costs
30. all of the above
31. Which of the following attributes of the internet puts downward pressure on prices?
32. distribution
33. price dispersion
34. self-service order processing
35. all of the above
36. All of the following are types of markets recognized by economists except ________.
37. pure competition
38. oligopolistic monopoly
39. monopolistic competition
40. oligopolistic competition
41. A market is truly efficient when customers have equal access to information about ________.
42. products
43. prices
44. distribution
45. all of the above
46. ________ refers to the variability of purchase behavior with changes in price.
47. Price elasticity
48. Price transparency
49. Dynamic pricing
50. Competition-based pricing
51. Which of the following are possible explanations of online price dispersion?
52. delivery options
53. time-sensitive shopping habits
54. switching costs
55. all of the above
56. In general, marketers can employ which of the following types of pricing strategies both online and offline ________.
57. fixed pricing
58. auction pricing
59. dynamic pricing
60. all of the above
61. ________ and ________ are types of fixed pricing strategies.
62. Price leadership; promotional pricing
63. Price leadership; negotiation
64. Promotional pricing; segmented pricing
65. Negotiation; segmented pricing
66. ________ pricing uses the internet properties for mass customization, automatically devising pricing based on order size and timing, demand and supply levels, and other preset decision factors.
67. Promotional
68. Auction
69. Segmented
70. Negotiated
71. In order to avoid upsetting customers who learn they are getting different prices than their neighbors, e-marketers should use customer-accepted reasons. These reasons may include ________.
72. giving discounts to new customers
73. giving discounts to loyal customers
74. adjusting shipping fees due to outlying locations
75. all of the above
76. When using ________ segment pricing, a company may set different prices when selling a product in different states or regions.
77. value
78. distance
79. geographic
80. market
81. ________ suggests that 80% of a firm’s business typically comes from the top 20% of customers.
82. The Pareto principle
83. Customer loyalty
84. Value segmenting
85. Dynamic pricing
86. Which of the following customer group is of least value to a seller?
87. A+
88. A
89. B
90. C
91. Buyer power on the internet is the result of all the following except ________.
92. product availability
93. product costs
94. large amount of information
95. willingness of sellers to negotiate
96. Companies select market-oriented pricing on the internet to ________.
97. maximize profits
98. grow market share
99. increase return on investment (ROI)
100. all of the above

True/False

1. Today’s buyer must be quite sophisticated to understand even the simple dollar cost of a product.
2. True
3. False
4. The seller’s perspective on pricing includes both internal and external factors affecting pricing levels.
5. True
6. False
7. The objective of competition-based pricing is to price according to the company’s costs or demand.
8. True
9. False
10. Price dispersion is the observed spread between the highest and lowest price for a given product.
11. True
12. False
13. The internet is currently an efficient market.
14. True
15. False
16. Menu pricing is the strategy of offering different prices to different customers.
17. True
18. False
19. In terms of dynamic pricing, negotiation is most often initiated by the seller.
20. True
21. False
22. With value segment pricing the seller recognizes that not all customers provide equal value to the firm.
23. True
24. False
25. Giving high-value customers the first shot at discounts will reinforce their loyalty.
26. True
27. False
28. In a “flash sale,” a site member may be eligible to purchase a product at a deep discount for a limited time.
29. True
30. False
31. Online sellers are less willing to negotiate than offline sellers, giving more power to seller.
32. True
33. False
34. A key issue for companies who have an online and an offline presence is how to coordinate pricing between the two channels.
35. True
36. False

Essay Questions

1. In the narrowest sense, price is the amount of money charged for a product. However, a much broader definition of price may be more accurate. What factors are accounted for in a broader definition of price? Give real life examples of each.
2. There are several attributes of the internet that may allow for cost savings online. Define and give examples of at least four.
3. Define and distinguish between the four types of markets recognized by economists. What kind of market is the internet at this time?
4. What factors might explain the wide price dispersion on the internet? In your opinion, which of these factors has the biggest effect on the spread between online prices?
5. What are the three types of pricing strategies marketers can employ both online and offline? Give an example of a website that uses each of these strategies.
6. The internet is always considered a low cost option for selling products and services. From a firm’s perspective what are some factors that add to the expense of doing business on the internet and why?