CMA Product Development & Pricing Strategy 2

Question 1

What is 'price elasticity of demand'?

Accepted Answer

A measure of how sensitive consumer demand for a product is to changes in price

Answer

The flexibility a company has in changing its pricing

Answer

The range of prices a product has had over its lifetime

Answer

The cost of changing a product's price in advertising

Question 2

Which new product development stage involves creating a small-scale version of the product to test functionality?

Accepted Answer

Prototype development

Answer

Idea screening

Answer

Concept testing

Answer

Commercialization

Question 3

What is 'cannibalization' in product portfolio management?

Accepted Answer

A new product in a company's portfolio reducing the sales of an existing product in the same portfolio

Answer

Competitors stealing your customers

Answer

A pricing strategy to undercut competitors

Answer

A marketing tactic to attract competitor customers

Question 4

What is 'competitive pricing' strategy?

Accepted Answer

Pricing products based on what competitors are charging

Answer

Setting prices significantly above all competitors

Answer

Setting prices based solely on production costs

Answer

Pricing products based on customer willingness to pay

Question 5

In the context of product development, what is 'concept testing'?

Accepted Answer

Testing a product idea with potential customers to evaluate appeal and viability before development

Answer

A legal review of a product concept

Answer

A financial feasibility analysis

Answer

A technical review of manufacturing processes

Question 6

What is a 'loss leader' pricing strategy?

Accepted Answer

Pricing a product below cost to attract customers who will then buy other profitable products

Answer

Selling a high-margin product first

Answer

Selling products only at a loss during clearance

Answer

A strategy exclusively used for luxury products