CPP Competitive Intelligence & Price Benchmarking 2

Question 1

A company is a 'price follower.' What does this mean in competitive strategy terms?

Accepted Answer

It adjusts its prices in response to changes made by the market price leader

Answer

A price follower lacks sufficient market power to set prices independently and instead reacts to the pricing moves of the dominant competitor.

Question 2

The 'price sensitivity' of a market segment is MOST directly measured by:

Accepted Answer

Price elasticity of demand for the segment

Answer

Price elasticity of demand (% change in quantity / % change in price) directly quantifies how responsive a segment's purchasing behavior is to price changes.

Question 3

When performing a competitive win/loss analysis, which factor MOST indicates that pricing was the primary reason for a lost deal?

Accepted Answer

The buyer explicitly cited competitor price and matched specs as the deciding factor

Answer

When buyers cite price on comparable offerings as the tipping point, pricing is the primary driver — differentiating true price losses from value or execution losses.

Question 4

A CPP analyst observes that a competitor reduced price by 10% with no change in product. Under an oligopoly, the BEST initial response is typically to:

Accepted Answer

Analyze whether the move is a signal, mistake, or competitive assault before responding

Answer

Knee-jerk price matching can trigger destructive price wars; first diagnosing the intent and context of the competitor's move leads to better-calibrated responses.

Question 5

In price benchmarking, 'like-for-like' comparisons require:

Accepted Answer

Controlling for product configuration, terms, and quantity to ensure valid comparisons

Answer

Valid price comparisons must normalize for differences in specifications, volume tiers, payment terms, and service inclusions to avoid misleading conclusions.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Competitive Intelligence & Price Benchmarking 2