PCM PCM Pricing Strategy & Management 1

Question 1

What pricing strategy involves setting a high initial price and gradually lowering it as competition increases?

Accepted Answer

Price skimming

Answer

Price skimming targets early adopters willing to pay a premium before reducing the price to attract more price-sensitive customers.

Question 2

A company launches a new product at a very low price to quickly gain market share. This is called:

Accepted Answer

Penetration pricing

Answer

Penetration pricing uses a low introductory price to build market share rapidly, often raising prices once customer loyalty is established.

Question 3

Price elasticity of demand measures:

Accepted Answer

How sensitive customer demand is to price changes

Answer

Price elasticity of demand quantifies the percentage change in quantity demanded relative to a percentage change in price.

Question 4

Which pricing approach sets price primarily based on the perceived value a product delivers to customers?

Accepted Answer

Value-based pricing

Answer

Value-based pricing anchors price to what customers believe the product is worth rather than to internal costs or competitor benchmarks.

Question 5

A 'loss leader' pricing strategy involves:

Accepted Answer

Selling a product below cost to draw customers who then buy profitable items

Answer

A loss leader sacrifices margin on one item to generate store traffic and increase overall basket size with higher-margin purchases.

(PCM) Professional Certified Marketer Practice Test