CFD Strategic Planning & Analysis 3 — Questions and Answers
Question 1: Which pricing strategy involves setting prices based on the perceived value to the customer rather than the cost of goods?
- Cost-plus pricing
- Value-based pricing (Correct answer)
- Penetration pricing
- Break-even pricing
Correct answer: Value-based pricing
Value-based pricing sets prices according to what customers believe the product or service is worth, often yielding higher margins.
Question 2: A floral designer is analyzing seasonal demand cycles. Which quarter typically requires the most proactive inventory and staffing strategy in the US?
- Q3 (July–September)
- Q1 (January–March)
- Q2 (April–June) (Correct answer)
- Q4 (October–December)
Correct answer: Q2 (April–June)
Q2 includes Mother's Day, prom season, Memorial Day, and the start of wedding season, creating peak demand across multiple customer segments.
Question 3: What does a break-even analysis tell a floral business owner?
- The point at which total revenue equals total costs, resulting in zero profit or loss (Correct answer)
- The maximum number of arrangements that can be made per day
- The best wholesale price for roses
- The optimal number of employees to hire
Correct answer: The point at which total revenue equals total costs, resulting in zero profit or loss
Break-even analysis identifies the exact sales volume needed to cover all fixed and variable costs before generating profit.
Question 4: A floral shop owner wants to reduce dependence on a single supplier. This is an example of which strategic risk management approach?
- Market penetration
- Supply chain diversification (Correct answer)
- Cost leadership
- Brand repositioning
Correct answer: Supply chain diversification
Supply chain diversification reduces the risk of disruption by spreading procurement across multiple vendors.
Question 5: When analyzing a competitor's strengths, a floral business owner notices they offer same-day delivery. The best strategic response is to:
- Immediately match the service without a cost analysis
- Assess whether same-day delivery aligns with your target market and financials before acting (Correct answer)
- Ignore it because delivery is not important to floral customers
- File a complaint with the local business bureau
Correct answer: Assess whether same-day delivery aligns with your target market and financials before acting
Strategic responses to competitor moves must be evaluated against your own capabilities, costs, and customer priorities before implementation.
Question 6: Which of the following best describes a 'blue ocean strategy' applied to a floral design business?
- Competing aggressively on price with existing shops
- Creating an uncontested market space, such as subscription wellness floral boxes for offices (Correct answer)
- Following the most popular design trends exactly
- Opening a second location in the same neighborhood
Correct answer: Creating an uncontested market space, such as subscription wellness floral boxes for offices
A blue ocean strategy creates new demand in an uncontested market space rather than competing in the existing market.
Question 7: A floral designer reviews her customer acquisition cost (CAC) and finds it is higher than lifetime customer value (LCV). What does this indicate?
- The business is highly profitable
- The business is spending more to gain customers than those customers generate in revenue over time (Correct answer)
- Supplier costs are too high
- The designer needs to hire more staff
Correct answer: The business is spending more to gain customers than those customers generate in revenue over time
When CAC exceeds LCV, the business is losing money on each customer acquired, signaling an unsustainable growth model.
CFD Strategic Planning & Analysis 3
Which pricing strategy involves setting prices based on the perceived value to the customer rather than the cost of goods?