CRA Retail Pricing Strategy & Optimization 3

Question 1

A price waterfall analysis in retail pricing is used to:

Accepted Answer

Identify all the discounts, allowances, and deductions that erode the list price to the net realized price

Answer

Forecast how prices will decline over a product's lifecycle

Answer

Compare prices across all competitors in a given market

Answer

Schedule promotional markdowns in sequential waves

Question 2

Clearance pricing is strategically different from promotional pricing primarily because:

Accepted Answer

Clearance pricing is intended to permanently liquidate end-of-life inventory, not drive repeat traffic

Answer

Clearance pricing requires vendor funding while promotional pricing does not

Answer

Clearance pricing must be approved by category managers while promotions are set by buyers

Answer

Clearance items are always priced below cost

Question 3

Price indexing against competitors involves calculating a ratio of your price to the competitor's price. A price index of 105 means:

Accepted Answer

Your price is 5% higher than the competitor's price

Answer

Your price is 5% lower than the competitor's price

Answer

Your price matches the competitor's price exactly

Answer

Your product's quality score is 5 points above the competitor's

Question 4

Value-based pricing sets retail prices primarily based on:

Accepted Answer

The perceived value that customers place on the product or experience

Answer

The retailer's cost of goods plus a standard markup

Answer

The lowest price offered by any competitor in the market

Answer

The manufacturer's suggested retail price (MSRP)

Question 5

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:

Accepted Answer

Inelastic

Answer

Perfectly elastic

Answer

Highly elastic

Answer

Unit elastic

Question 6

When a retailer uses decoy pricing, they typically introduce a third option primarily to:

Accepted Answer

Make one of the other options appear more attractive by comparison

Answer

Replace the existing best-seller with a premium alternative

Answer

Reduce inventory complexity by consolidating SKU counts

Answer

Signal to competitors that a price war is imminent

Question 7

In a retail pricing optimization tool, which input is most critical for accurately modeling the price-demand relationship for a given SKU?

Accepted Answer

Historical sales volume at multiple past price points

Answer

The SKU's current planogram position

Answer

The number of unique vendors supplying that SKU

Answer

The product's average customer review rating