Promotional Pricing & Discount Management Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Promotional Pricing & Discount Management flashcards as text
Which metric best measures the financial return on a promotional price investment?
Answer: Promotional return on investment (ROI), comparing incremental margin to promotional cost
Promotional ROI compares the incremental gross margin generated by the promotion to its total cost, providing a true measure of financial effectiveness.
A 'price pack' promotion offers consumers:
Answer: Extra quantity of the product for the same price as the standard pack
A price pack (or bonus pack) provides consumers with more product for the standard price, delivering value while keeping shelf price stable.
The concept of 'pull-forward demand' in promotional pricing means that:
Answer: Future demand is destroyed as customers stock up during promotions
Pull-forward demand occurs when promotions cause customers to accelerate planned purchases, reducing future sales once the promotion ends rather than generating truly incremental volume.
In channel pricing, 'price maintenance' policies are designed to:
Answer: Ensure resellers do not sell below a specified minimum price
Minimum advertised price (MAP) and resale price maintenance policies protect brand value and channel margins by preventing resellers from discounting below specified thresholds.
Which of the following is NOT a typical objective of a promotional pricing strategy?
Answer: Maximizing long-term price premium for the brand
Maximizing long-term price premium is typically undermined by promotional pricing, which is used for short-term tactical objectives like trial, inventory clearance, or competitive response.
The Robinson-Patman Act most directly affects B2B pricing by prohibiting:
Answer: Selling the same product to competing buyers at different prices without cost justification
The Robinson-Patman Act prohibits price discrimination between competing buyers of the same commodity unless differences are cost-justified or reflect changing market conditions.
A company tracks a 'discount leakage' problem when:
Answer: Discounts are granted beyond policy levels without corresponding business justification
Discount leakage occurs when discounts exceed authorized policy levels due to inconsistent enforcement, unauthorized exceptions, or poor visibility, eroding pocket price and profitability.