CPM Promotional Pricing & Discount Management 3

Question 1

Which metric best measures the financial return on a promotional price investment?

Accepted Answer

Promotional return on investment (ROI), comparing incremental margin to promotional cost

Answer

Promotional ROI compares the incremental gross margin generated by the promotion to its total cost, providing a true measure of financial effectiveness.

Question 2

A 'price pack' promotion offers consumers:

Accepted Answer

Extra quantity of the product for the same price as the standard pack

Answer

A price pack (or bonus pack) provides consumers with more product for the standard price, delivering value while keeping shelf price stable.

Question 3

The concept of 'pull-forward demand' in promotional pricing means that:

Accepted Answer

Future demand is destroyed as customers stock up during promotions

Answer

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.

Question 4

In channel pricing, 'price maintenance' policies are designed to:

Accepted Answer

Ensure resellers do not sell below a specified minimum price

Answer

Minimum advertised price (MAP) and resale price maintenance policies protect brand value and channel margins by preventing resellers from discounting below specified thresholds.

Question 5

Which of the following is NOT a typical objective of a promotional pricing strategy?

Accepted Answer

Maximizing long-term price premium for the brand

Answer

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.

CPM - Certified Pricing Manager Practice Test

CPM - Certified Pricing Manager Practice Test

CPM Promotional Pricing & Discount Management 3