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Marketing Pricing Strategies

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Questions and Answers

What is the primary goal of premium pricing?

To convey the quality of the brand (correct)
To charge the lowest price possible
To change prices according to demand
To match competitors' prices

What is a characteristic of competitive pricing?

Prices are changed frequently to reflect demand conditions
The business is positioned as exclusive or luxury
Prices are set at a higher level than competitors
Consumers cannot easily compare prices between different products (correct)

Which of the following companies is an example of a business that uses competitive pricing?

Airlines
Richer Sounds (correct)
Theatres
Utility companies

What is dynamic pricing used for?

To change prices according to demand conditions (D) Signup and view all the answers

When is dynamic pricing commonly used?

When demand for the product or service is high (C) Signup and view all the answers

What is the primary advantage of dynamic pricing with online ordering?

It allows businesses to track real-time availability and demand to adjust prices. (C) Signup and view all the answers

What is the purpose of contribution pricing?

To set prices above variable costs to contribute to fixed costs and profits. (B) Signup and view all the answers

What is the contribution made by each sale in a restaurant that charges $25 per meal with a variable cost of $12?

$13 (B) Signup and view all the answers

Which type of product is often priced significantly above its variable cost of production?

Fashion clothing (C) Signup and view all the answers

What is the condition for a business to be profitable using contribution pricing?

Making a large number of sales to cover fixed costs. (C) Signup and view all the answers