AMA AMA Pricing Strategy & Revenue Management

Question 1

Which pricing strategy sets prices based on the perceived value of the product to the customer rather than on cost?

Accepted Answer

Value-based pricing

Answer

Value-based pricing determines price according to how much customers believe the product is worth, not what it costs to produce.

Question 2

A company launching a new product sets an initially low price to quickly gain market share. This strategy is called:

Accepted Answer

Penetration pricing

Answer

Penetration pricing uses a low initial price to attract customers quickly and build market share before potentially raising prices later.

Question 3

Price elasticity of demand measures:

Accepted Answer

How sensitive consumer demand is to changes in price

Answer

Price elasticity of demand quantifies the percentage change in quantity demanded resulting from a percentage change in price.

Question 4

Which psychological pricing tactic is exemplified by pricing a product at $9.99 instead of $10.00?

Accepted Answer

Odd-even pricing

Answer

Odd-even pricing uses prices ending in odd numbers (e.g., $9.99) to create a perception of a lower price point in consumers' minds.

Question 5

A price skimming strategy is most appropriate when:

Accepted Answer

Launching a differentiated product to a price-insensitive early adopter segment

Answer

Price skimming works best for innovative products where early adopters are willing to pay a premium before prices are reduced for mass market segments.

(AMA) American Marketing Association Certification Practice Test

(AMA) American Marketing Association Certification Practice Test

AMA AMA Pricing Strategy & Revenue Management