CPM Promotional Pricing & Discount Management

Question 1

Which type of discount is granted to a buyer who purchases a large quantity in a single order?

Accepted Answer

Non-cumulative quantity discount

Answer

Cumulative quantity discount

Answer

Seasonal discount

Answer

Trade discount

Question 2

A company offers a 10% price reduction during off-peak months to stimulate demand. This is best described as a:

Accepted Answer

Seasonal discount

Answer

Cash discount

Answer

Trade discount

Answer

Promotional allowance

Question 3

The 'waterfall effect' in pricing refers to:

Accepted Answer

The cumulative impact of discounts, allowances, and concessions eroding the invoice price

Answer

Prices declining naturally as products age

Answer

A cascade of price cuts triggered by a single competitor's move

Answer

Revenue flowing down through distribution channels

Question 4

A 'pocket price' is defined as:

Accepted Answer

The actual revenue received after all discounts and concessions are deducted

Answer

The price listed in a company's public price book

Answer

The minimum acceptable price set by management

Answer

The price paid by the end consumer at retail

Question 5

Which discount structure is most effective at locking in long-term customer volume commitments?

Accepted Answer

Cumulative quantity discounts

Answer

Non-cumulative quantity discounts

Answer

Promotional allowances

Answer

Cash discounts

Question 6

A 2/10 net 30 cash discount term means the buyer receives 2% off if they pay:

Accepted Answer

Within 10 days of the invoice date

Answer

Within 2 days of the invoice date

Answer

Within 2% of the full invoice amount

Answer

After 30 days with a 2% penalty

Question 7

From a profitability standpoint, why are off-invoice discounts often considered more problematic than on-invoice discounts?

Accepted Answer

They are harder to track, leading to underestimation of true price erosion

Answer

Off-invoice discounts are taxed at a higher rate

Answer

They require regulatory approval unlike on-invoice discounts

Answer

Customers prefer on-invoice discounts so off-invoice ones fail to drive volume