CPM CPM Product Development & Pricing Strategy 2

Question 1

What is the primary goal of 'value-based pricing'?

Accepted Answer

Pricing based on the perceived value to the customer

Answer

Value-based pricing aligns price with what customers believe the product is worth, rather than cost or competition.

Question 2

Which of the following best describes a 'line extension'?

Accepted Answer

Adding a new variant to an existing product line under the same brand

Answer

A line extension adds a new variety, size, flavor, or form to an existing product line, leveraging established brand equity.

Question 3

The 'augmented product' in Kotler's product levels refers to:

Accepted Answer

Additional services and benefits beyond the core product

Answer

The augmented product includes warranties, after-sales service, delivery, and installation that exceed customer expectations.

Question 4

Which pricing tactic involves setting the price of a core product low while charging more for consumables or accessories?

Accepted Answer

Captive product pricing

Answer

Captive product pricing (e.g., razors and blades, printers and ink) profits from the necessary accessories rather than the core item.

Question 5

A product that is in the 'decline' stage of its life cycle would most likely receive which strategic recommendation?

Accepted Answer

Harvest or divest the product

Answer

In the decline stage, companies typically harvest remaining profits or divest to reallocate resources to more promising products.

(CPM) Certified Professional Marketer Practice Test