Pricing Strategies Quiz

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What is Loss Leader Pricing?

Pricing products based on their brand reputation.

Creating a pricing strategy that eliminates competition.

Setting very low prices for some products to attract customers. (correct)

Setting prices above market rates to maximize profits.

Every Day Low Pricing leads to more predictable consumer demand than Hi-Lo Pricing.

True

What is the primary intention behind Price Bundling?

To get customers to buy more and increase sales of higher margin items.

Hi-Lo pricing often results in a large ______ segment that enjoys discounts.

Cherry-pickers Signup and view all the answers

Match the following pricing strategies with their characteristics:

Every Day Low Pricing = Constant low price and lower fixed costs Hi-Lo Pricing = Frequent short-term sales and lower variable costs Loss Leader Pricing = Attracts customers with low prices on certain products Price Bundling = Encourages the purchase of multiple items together Signup and view all the answers

Which of the following is NOT a benefit of Everyday Low Pricing?

Higher overall price levels. Signup and view all the answers

The primary goal of Hi-Lo Pricing is to create predictable consumer demand.

False Signup and view all the answers

What are two main components of Price Bundling?

Pure Bundling and Mixed Bundling. Signup and view all the answers

Which of the following is NOT a factor that reduces price sensitivity?

Buyers can easily compare the quality of substitutes Signup and view all the answers

Which of the following is a drawback of markup pricing?

It ignores competition Signup and view all the answers

Small changes in price have little effect on sales and profit.

False Signup and view all the answers

What is the primary objective of price elasticity?

To measure the responsiveness of quantity demanded to a change in price. Signup and view all the answers

Markups are typically lower for specialty items.

False Signup and view all the answers

A product is assumed to have more quality, prestige, or __________, which reduces price sensitivity.

exclusiveness Signup and view all the answers

What is the formula for calculating Break-Even Quantity (BEQ)?

BEQ = FC / (Price - UVC) Signup and view all the answers

Starting at the highest possible price in the introduction stage of a new product and lowering the price later is called ____________ Pricing.

Skimming Signup and view all the answers

Match the psychological pricing strategies with their descriptions:

Odd pricing = Setting prices just below round numbers Even pricing = Setting prices at whole numbers Price anchoring = Using a higher priced item to make others appear cheaper Price lining = Offering a product line at different price points Signup and view all the answers

Which pricing objective focuses on achieving the lowest possible price point to stay in business?

Survival Signup and view all the answers

Match the following pricing strategies with their descriptions:

Bait Pricing = Pricing an item low to sell a higher-price item Captive Pricing = Low pricing for a basic product, high for related items Price Skimming = High initial price reduced over time Penetration Pricing = Low initial price to attract customers quickly Signup and view all the answers

What does Break-Even Price (BEP) equate to?

UVC + Quantity Signup and view all the answers

What defines reference prices in consumer pricing psychology?

Prices that consumers use to evaluate the fairness or value of a product's price. Signup and view all the answers

Variable costs include fixed costs like rent and salaries.

False Signup and view all the answers

Bait-and-Switch advertising is legal as long as the bait item is sold out.

False Signup and view all the answers

List two advantages of price skimming over penetration pricing.

Higher initial profits, Allows for investment recovery. Signup and view all the answers

Pricing Strategies Quiz

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Questions and Answers

What is Loss Leader Pricing?

Every Day Low Pricing leads to more predictable consumer demand than Hi-Lo Pricing.

What is the primary intention behind Price Bundling?

Hi-Lo pricing often results in a large ______ segment that enjoys discounts.

Match the following pricing strategies with their characteristics:

Which of the following is NOT a benefit of Everyday Low Pricing?

The primary goal of Hi-Lo Pricing is to create predictable consumer demand.

What are two main components of Price Bundling?

Which of the following is NOT a factor that reduces price sensitivity?

Which of the following is a drawback of markup pricing?

Small changes in price have little effect on sales and profit.

What is the primary objective of price elasticity?

Markups are typically lower for specialty items.

A product is assumed to have more quality, prestige, or __________, which reduces price sensitivity.

What is the formula for calculating Break-Even Quantity (BEQ)?

Starting at the highest possible price in the introduction stage of a new product and lowering the price later is called ____________ Pricing.

Match the psychological pricing strategies with their descriptions:

Which pricing objective focuses on achieving the lowest possible price point to stay in business?

Match the following pricing strategies with their descriptions:

What does Break-Even Price (BEP) equate to?

What defines reference prices in consumer pricing psychology?

Variable costs include fixed costs like rent and salaries.

Bait-and-Switch advertising is legal as long as the bait item is sold out.

List two advantages of price skimming over penetration pricing.

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