AMA Pricing Strategy & Revenue Management Flashcards

A loss leader pricing strategy involves:

Answer: Pricing a product below cost to attract customers who will then purchase additional profitable items

Loss leader pricing sacrifices margin on a specific product to drive store traffic and increase overall basket size with higher-margin purchases.

Geographic pricing accounts for differences in price based on:

Answer: Location-based costs such as shipping, tariffs, and local taxes

Geographic pricing adjusts product prices based on location-specific factors including transportation costs, import duties, and local market conditions.

Which concept describes the reference price a consumer uses to evaluate whether a current price is fair?

Answer: Price anchor

A price anchor is a reference point (often the first price seen) that consumers use to judge whether subsequent prices represent good value.

Revenue management (yield management) optimizes revenue by:

Answer: Selling the right product to the right customer at the right time for the right price

Revenue management uses data and analytics to maximize revenue by dynamically adjusting prices and availability based on demand patterns.

A freemium pricing model provides:

Answer: A basic version for free with premium features available for a fee

Freemium pricing offers a no-cost basic tier to attract users while monetizing a subset who upgrade to premium paid features.

Transfer pricing refers to the prices set for transactions between:

Answer: Divisions or subsidiaries within the same parent organization

Transfer pricing determines the internal prices at which goods, services, or assets are exchanged between related entities within the same corporate group.