E-Marketing 6th Edition Strauss Test

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 CHAPTER TEN
PRICE: THE ONLINE VALUE

Multiple Choice

1. Broadly speaking, the definition of price includes all of the following values except
________.
a. money
b. time
c. physical cost
d. psychic cost
(c; Easy; LO1; Analytic Skills)

2. ________ refers to the idea that both buyers and sellers can view all competitive prices for
items sold online.
a. Price transparency
b. Dynamic pricing
c. Online pricing
d. None of the above
(a; Easy; LO1; Analytic Skills)

3. All of the following are cost savings enjoyed by shoppers online except ________.
a. the internet is convenient
b. the internet is fast
c. shipping costs are reduced
d. integration saves time
(c; Difficult; LO2; Analytic Skills)

4. The phenomenon that some people may actually pay a higher price for auctioned products
than they would pay an online retailer is known as ________.
a. seller control
b. buyer control
c. dynamic pricing
d. the winner’s curse
(d; Moderate; LO2; Analytic Skills)

5. ________ power is based largely on the huge quantity of information and product
availability on the Web.
a. Buyer
b. Seller
c. Market
d. All of the above
(a; Easy; LO2; Analytic Skills)

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6. ________ is the most common profit-oriented objective for pricing.
a. Competition-based pricing
b. Dynamic pricing
c. Current profit maximization
d. Segmented pricing
(c; Difficult; LO3; Analytic Skills)

7. Which of the following attributes of the internet puts upward pressure on prices?
a. online customer service
b. affiliate programs
c. customer acquisition costs
d. all of the above
(d; Moderate; LO4; Analytic Skills)

8. Which of the following attributes of the internet puts downward pressure on prices?
a. distribution
b. price dispersion
c. self-service order processing
d. all of the above
(c; Difficult; LO4; Analytic Skills)

9. All of the following are types of markets recognized by economists except ________.
a. pure competition
b. oligopolistic monopoly
c. monopolistic competition
d. oligopolistic competition
(b; Moderate; LO4; Analytic Skills)

10. A market is truly efficient when customers have equal access to information about
________.
a. products
b. prices
c. distribution
d. all of the above
(d; Easy; LO4; Analytic Skills)

11. ________ refers to the variability of purchase behavior with changes in price.
a. Price elasticity
b. Price transparency
c. Dynamic pricing
d. Competition-based pricing
(a; Moderate; LO1; Analytic Skills)

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12. Which of the following are possible explanations of online price dispersion?
a. delivery options
b. time-sensitive shopping habits
c. switching costs
d. all of the above
(d; Moderate; LO4; Analytic Skills)

13. ________ shopping agents guide the consumer through the process of quantifying benefits
and evaluating the value equation.
a. First-generation
b. Second-generation
c. Third-generation
d. Fourth-generation
(b; Easy; LO5; Analytic Skills)

14. In general, marketers can employ which of the following types of pricing strategies both
online and offline ________.
a. fixed pricing
b. auction pricing
c. dynamic pricing
d. all of the above
(d; Easy; LO3; Analytic Skills)

15. ________ and ________ are types of fixed pricing strategies.

a. Price leadership; promotional pricing
b. Price leadership; negotiation
c. Promotional pricing; segmented pricing
d. Negotiation; segmented pricing
(a; Moderate; LO1; Analytic Skills)

16. ________ 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.
a. Promotional
b. Auction
c. Segmented
d. Negotiated
(c; Difficult; LO1; Analytic Skills)

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17. 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 ________.
a. giving discounts to new customers
b. giving discounts to loyal customers
c. adjusting shipping fees due to outlying locations
d. all of the above
(d; Moderate; LO3; Analytic Skills)

18. When using ________ segment pricing, a company may set different prices when selling a
product in different states or regions.
a. value
b. distance
c. geographic
d. market
(c; Easy; LO3; Analytic Skills)

19. ________ suggests that 80% of a firm’s business typically comes from the top 20% of
customers.
a. The Pareto principle
b. Customer loyalty
c. Value segmenting
d. Dynamic pricing
(a; Easy; LO3; Analytic Skills)

20. Which of the following customer group is of least value to a seller?

a. A+
b. A
c. B
d. C
(d; Moderate; LO3; Analytic Skills)

21. Buyer power on the internet is the result of all the following except ________.
a. product availability
b. product costs
c. large amount of information
d. willingness of sellers to negotiate
(b; Moderate; LO2; Analytic Skills)

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22. Companies select market oriented pricing on the internet to ________.
a. maximize profits
b. grow market share
c. increase return on investment (ROI)
d. all of the above
(b; Moderate; LO1; Analytic Skills)

True/False

23. Today’s buyer must be quite sophisticated to understand even the simple dollar cost of a
product.
a. True
b. False
(a; Moderate; LO2; Analytic Skills)

24. The seller’s perspective on pricing includes both internal and external factors affecting
pricing levels.
a. True
b. False
(a; Difficult; LO3; Analytic Skills)

25. The objective of competition-based pricing is to price according to the company’s costs or
demand.
a. True
b. False
(b; Moderate; LO1; Analytic Skills)

26. Price dispersion is the observed spread between the highest and lowest price for a given
product.
a. True
b. False
(a; Easy; LO4; Analytic Skills)

27. The internet is currently an efficient market.

a. True
b. False
(b; Easy; LO4; Analytic Skills)

28. Menu pricing is the strategy of offering different prices to different customers.
a. True
b. False
(b; Difficult; LO1; Analytic Skills)

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29. In terms of dynamic pricing, negotiation is most often initiated by the seller.
a. True
b. False
(b; Difficult; LO1; Analytic Skills)

30. With value segment pricing the seller recognizes that not all customers provide equal
value to the firm.
a. True
b. False
(a; Moderate; LO3; Analytic Skills)

31. Giving high-value customers the first shot at discounts will reinforce their loyalty.
a. True
b. False
(a; Easy; LO5; Analytic Skills)

32. Tax benefits are the only likely benefit of bartering over other pricing strategies.
a. True
b. False
(a; Moderate; LO1; Analytic Skills)

33. Online sellers are less willing to negotiate than offline sellers, giving more power to seller.
a. True
b. False
(b; Easy; LO1; Analytic Skills)

34. A key issue for companies who have an online and an offline presence is how to
coordinate pricing between the two channels.
a. True
b. False
(b; Easy; LO5; Analytic Skills)

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Essay Questions

35. 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.
▪ Price is sum of all values both monetary and non-monetary. It may include
factors/values such as money, time, energy, and psychic cost.
▪ Monetary cost - what you pay at the grocery for milk
▪ Time - Buying Airline tickets on the net can take much more time, than dealing
with an agent
▪ Energy - Like time finding something on e-Bay can take a lot of energy
▪ Psychic Cos t- Buying clothing on the internet can involve high psychic cost. What
looks good in a picture alone, or on a model, may not look or feel good on you.
(Moderate; LO1; Analytic Skills)

36. There are several attributes of the internet that may allow for cost savings online. Define
and give examples of at least four.
▪ Convenience- Buy at any time and any place
▪ Speed of the Net- Typical transaction is very quick, once the buyer has made a
decision
▪ Self Service – Saves time and money. Customer performs job of sales rep and can
access information across the internet
▪ One Stop Shopping – Saves time and convenience.
▪ Integration – Saves time, Web Portals act as malls to pull product assortments
together
▪ Automation – Saves energy, keep track of previous purchases, automatic bidding
(Difficult; LO5; Analytic Skills)

37. Define and distinguish between the four types of markets recognized by economists.
What kind of market is the internet at this time?
▪ Pure Competition – Many buyers and sellers selling a non-differentiated product
like wheat or corn. Since it is a commodity with little product differentiation,
marketers spend little time on marketing.
▪ Monopolistic competition – Many buyers and sellers who trade over a range of
prices, because sellers can differentiate product and their offers.
▪ Oligopolistic competition – A few sellers who are highly price sensitive to the
competition.
▪ Pure Monopoly – One seller with price typically regulated by government
▪ Currently most companies on the internet operate in a monopolistic competition
environment.
(Moderate; LO3; Analytic Skills)

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38. 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?
▪ Branding
▪ Dynamic Pricing of goods online
▪ Delivery options impact pricing
▪ Time Sensitive Buyers
▪ Perceived Product Differentiation
▪ Switching Costs
▪ Shopping Agents
▪ The biggest factor on the internet currently is Branding
(Moderate; LO4; Analytic Skills)

39. What are the three types of pricing strategies marketers can employ both online and
offline? Give an example of a Web site that uses each of these strategies.
▪ Fixed Pricing www.walmart.com
▪ Dynamic Pricing www.priceline.com
▪ Segmented Pricing www.southwest.com
(Moderate; LO3; Analytic Skills)

40. 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?
▪ Online Customer Service – Personnel and training costs.
▪ Distribution – Shipping to individuals, Last mile factor.
▪ Affiliate – Payments of commissions.
▪ Site Development and maintenance – Need a highly developed site to remain
competitive and it is usually very expensive.
▪ Customer Acquisition Costs – Getting new customers is an expensive proposition
in the online environment.
(Difficult; LO3; Analytic Skills)

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall