CPP Customer Segmentation Techniques 3

Question 1

Which of the following is an example of a fencing mechanism used to enforce price segmentation?

Accepted Answer

Requiring proof of student status to access a discounted price

Answer

Fences are conditions customers must meet to access a lower price tier, such as proving student status, which prevents higher-willingness-to-pay customers from self-selecting into the discount.

Question 2

A software company charges small businesses $50/month and enterprises $500/month for the same core product. This pricing strategy relies on which segmentation principle?

Accepted Answer

Third-degree price discrimination

Answer

Third-degree price discrimination involves charging different prices to identifiable customer groups (e.g., SMB vs. enterprise) based on their different price elasticities.

Question 3

What does the concept of 'segment attractiveness' primarily evaluate when prioritizing which customer segments to target?

Accepted Answer

Size, growth rate, profitability, and competitive intensity

Answer

Segment attractiveness is a multi-factor assessment including size, growth potential, profitability, competitive intensity, and alignment with the company's capabilities.

Question 4

In value-based segmentation, which customer group should typically receive the highest price?

Accepted Answer

The segment that derives the greatest economic value from the product

Answer

Value-based pricing targets each segment at a price aligned with the economic value it receives; the segment extracting the most value can justifiably be charged the most.

Question 5

A company segments its market by ZIP code to offer different pricing in regions with higher average incomes. What type of segmentation is this?

Accepted Answer

Geodemographic segmentation

Answer

Geodemographic segmentation combines geographic location with demographic factors (like income) to identify segments with distinct purchasing power and willingness to pay.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Customer Segmentation Techniques 3