CPM Promotional Pricing & Discount Management 1

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

A non-cumulative quantity discount is applied to a single large order, incentivizing larger individual purchases rather than total volume over time.

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

Seasonal discounts are used to shift demand from peak to off-peak periods, helping balance production and inventory loads.

Question 3

The 'waterfall effect' in pricing refers to:

Accepted Answer

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

Answer

The price waterfall illustrates how list price is eroded by successive discounts, allowances, and off-invoice items to reach the actual pocket price.

Question 4

A 'pocket price' is defined as:

Accepted Answer

The actual revenue received after all discounts and concessions are deducted

Answer

Pocket price is the true net revenue a seller receives after subtracting all discounts, rebates, freight, and other off-invoice items from the invoice price.

Question 5

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

Accepted Answer

Cumulative quantity discounts

Answer

Cumulative quantity discounts reward total purchases over a period, encouraging customers to consolidate buying with one supplier to reach threshold tiers.

CPM - Certified Pricing Manager Practice Test

CPM - Certified Pricing Manager Practice Test

CPM Promotional Pricing & Discount Management 1