PCM Pricing Strategy & Management Flashcards

Charging different prices for the same product in different geographic regions is known as:

Answer: Geographic pricing

Geographic pricing reflects differences in shipping costs, taxes, local competition, and consumer purchasing power across regions.

A retailer runs a 'buy one, get one 50% off' promotion for two weeks. This is an example of:

Answer: Promotional pricing

Promotional pricing uses temporary price reductions to stimulate short-term sales volume or clear seasonal inventory.

A printer sold cheaply while ink cartridges are priced at a premium is an example of:

Answer: Captive product pricing

Captive product pricing prices the core product low while generating margin on the consumables or accessories required to use it.

What does the 'price floor' represent in a pricing strategy?

Answer: The minimum price needed to cover all costs and remain viable

The price floor is the lowest sustainable price—selling below it means losing money on every unit sold.

Which pricing strategy deliberately sets high prices to signal superior quality and exclusivity?

Answer: Prestige pricing

Prestige pricing (also called premium or luxury pricing) uses high prices as a signal of quality, targeting consumers who associate price with status.

When a company charges different prices to different customer segments for the same product based on willingness to pay, this is called:

Answer: Price discrimination

Price discrimination (or differential pricing) captures more consumer surplus by aligning price with each segment's maximum willingness to pay.