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

A price waterfall maps each discount layer — promotional, trade, logistical — between list price and the actual net realized price.

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 is a permanent price reduction to liquidate aging or discontinued inventory, unlike promotions which are temporary traffic drivers.

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

A price index above 100 means the retailer's price is higher than the benchmark competitor's price by that percentage difference.

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

Value-based pricing anchors the price to what consumers believe the product is worth, which can exceed cost-based or competitive benchmarks.

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

When a price decrease produces a proportionally smaller increase in quantity demanded (elasticity < 1), the product is considered inelastic.

(CRA) Certified Retail Analyst Practice Test