Retail Pricing Strategy & Optimization Flashcards
7 cards from real CRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retail Pricing Strategy & Optimization flashcards as text
A price waterfall analysis in retail pricing is used to:
Answer: Identify all the discounts, allowances, and deductions that erode the list price to the net realized price
A price waterfall maps each discount layer — promotional, trade, logistical — between list price and the actual net realized price.
Clearance pricing is strategically different from promotional pricing primarily because:
Answer: Clearance pricing is intended to permanently liquidate end-of-life inventory, not drive repeat traffic
Clearance pricing is a permanent price reduction to liquidate aging or discontinued inventory, unlike promotions which are temporary traffic drivers.
Price indexing against competitors involves calculating a ratio of your price to the competitor's price. A price index of 105 means:
Answer: Your price is 5% higher than the competitor's price
A price index above 100 means the retailer's price is higher than the benchmark competitor's price by that percentage difference.
Value-based pricing sets retail prices primarily based on:
Answer: The perceived value that customers place on the product or experience
Value-based pricing anchors the price to what consumers believe the product is worth, which can exceed cost-based or competitive benchmarks.
A retail analyst notices that reducing the price of an item by 10% results in only a 5% increase in units sold. This item is best described as:
Answer: Inelastic
When a price decrease produces a proportionally smaller increase in quantity demanded (elasticity < 1), the product is considered inelastic.
When a retailer uses decoy pricing, they typically introduce a third option primarily to:
Answer: Make one of the other options appear more attractive by comparison
A decoy option is deliberately positioned to make the target option look like a better value, steering consumers toward the preferred choice.
In a retail pricing optimization tool, which input is most critical for accurately modeling the price-demand relationship for a given SKU?
Answer: Historical sales volume at multiple past price points
Historical sales data at various price points is the foundation for building an accurate price-demand curve for optimization modeling.