CPM Product Development & Pricing Strategy Flashcards
6 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 6 CPM Product Development & Pricing Strategy flashcards as text
What is the primary goal of 'value-based pricing'?
Answer: Pricing based on the perceived value to the customer
Value-based pricing aligns price with what customers believe the product is worth, rather than cost or competition.
Which of the following best describes a 'line extension'?
Answer: Adding a new variant to an existing product line under the same brand
A line extension adds a new variety, size, flavor, or form to an existing product line, leveraging established brand equity.
The 'augmented product' in Kotler's product levels refers to:
Answer: Additional services and benefits beyond the core product
The augmented product includes warranties, after-sales service, delivery, and installation that exceed customer expectations.
Which pricing tactic involves setting the price of a core product low while charging more for consumables or accessories?
Answer: Captive product pricing
Captive product pricing (e.g., razors and blades, printers and ink) profits from the necessary accessories rather than the core item.
A product that is in the 'decline' stage of its life cycle would most likely receive which strategic recommendation?
Answer: Harvest or divest the product
In the decline stage, companies typically harvest remaining profits or divest to reallocate resources to more promising products.
What does the term 'cannibalization' mean in product portfolio management?
Answer: A new product reduces sales of the company's own existing products
Cannibalization occurs when a new product or variant erodes the sales of an existing product within the same company's portfolio.