Tag: pricing strategies

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Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

Which of the following pricing strategies are used when adopting a penetration pricing strategy?

  1. Charging high price

  2. Charging low price

  3. Charging competitive price

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Penetration pricing strategy is a strategy where initially the prices are set low to rapidly reach a vast section of the market. This strategy initiates word of mouth and also attracts target consumers with the help of the low price set by the company. It gives the marketer a competitive advantage and also inceases the customer base of the company.

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

If the material is priced at the value that is realizable at the time of issue such a pricing method is referred to as   _________________.

  1. Standard price method

  2. Replacement method

  3. LIFO method

  4. Weighted average cost method

  5. FIFO method
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If the material is priced at the value that is realizable at the time of issue, such pricing method is called replacement method. This method is also called constant market price method.

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

The capitalization rate of a company whose market price per share is Rs.28, net income is Rs.20 lakhs and the number of outstanding shares is 5.6 lakh is _____________.

  1. 0.039

  2. 0.078

  3. 0.127

  4. 0.156

  5. 0.254
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capitalization rate = earning per share / market price of the share
Earnings per share = 20 lakh / 5.6 lakh = Rs. 3.5714 per share.

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

When a firm charges different prices for different groups of customers, it may be accused of _________.

  1. cultural relativism

  2. money laundering

  3. facilitating payments

  4. price discrimination
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Price discrimination is a pricing strategy that charges customers different prices for the same product or service. In pure price discrimination, the seller charges each customer the maximum price he or she will pay. In more common forms of price discrimination, the seller places customers in groups based on certain attributes and charges each group a different price.
Price discrimination is most valuable when the profit from separating the markets is greater than the profit from keeping the markets combined. This depends on the relative elasticity of demand in the sub-markets. Consumers in the relatively inelastic sub-market pay a higher price, while those in the relatively elastic sub-market pay a lower price.

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

The _______ represents the sum of value exchange for the benefit of having or using the product.

  1. Price

  2. Product

  3. Cost

  4. Package
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Price is a value that will purchase a finite quantity, weight or other measure of a good or services. Price is a consideration given in exchange for transfer of ownership. Price forms the essential bases for commercial transactions. It may be fixed by a contract, left to be determined by an agreed upon formula at a future date, or discovered or negotiated during the course of dealings between the parties involved.  

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

Price of the product also depends upon the target customer.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Price is a value that will purchase a finite quantity, weight or other measure of a good or services. Price is a consideration given in exchange for transfer of ownership. The price of a product may increase when the demand increases or reduce when the demand decreases. When the marketer wants to target the niche market, offering a high end product, the price for that product would increase, Where as when the marketer wants to target the lower class or middle class consumers, the prices would be set low. 

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

Which of the following factors do not affect the fixation of the price of a product?

  1. The utility and demand

  2. Cost of the product

  3. Extent of competition in the market

  4. Social culture
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Price is a value that will purchase a finite quantity, weight or other measure of a good or services. Price is a consideration given in exchange for transfer of ownership. The price of a product may increase when the demand increases or reduce when the demand decreases. The cost of production plays the main role while fixing the price for a product as the price is almost always cost+ profit margin. To compete with the other companies in the market, price has to be around or lower than the price offered by the competitor. 

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

Government and legal regulations do not affect the price of a product.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Price is a value that will purchase a finite quantity, weight or other measure of a good or services. Price is a consideration given in exchange for transfer of ownership. The taxes and duties imposed on the goods and services by the government affects the final price of the goods that a consumer has to pay for the product.

Multiple choice commercial applications marketing mix - 4 p's meaning and objectives of pricing pricing strategies pricing

Which of the following is not a pricing objective?

  1. Surviving in competitive market

  2. Attaining product quality

  3. Obtaining market share leadership

  4. Informing the masses about the product
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Pricing objectives usually include profit maximization, market share, or survival. Informing the masses is a promotional objective, not a pricing one.