Tag: pricing

Questions Related to pricing

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

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

  1. Charging high price

  2. Charging low price

  3. Charging competitive price

  4. None of the above

Show answer
Correct Option: B
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.

Which of the following is not concerned with the Price?

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

  1. Advertising

  2. List price

  3. Margins

  4. Discounts

Show answer
Correct Option: A
Explanation:

Advertising is the part of promotion mix not a price mix in marketing mix.

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

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

  1. Standard price method

  2. Replacement method

  3. LIFO method

  4. Weighted average cost method

  5. FIFO method

Show answer
Correct Option: B
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.

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 _____________.

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

  1. 0.039

  2. 0.078

  3. 0.127

  4. 0.156

  5. 0.254

Show answer
Correct Option: C
Explanation:

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

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

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

  1. cultural relativism

  2. money laundering

  3. facilitating payments

  4. price discrimination

Show answer
Correct Option: D
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.

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

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

  1. Price

  2. Product

  3. Cost

  4. Package

Show answer
Correct Option: A
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.  

Price of the product also depends upon the target customer.

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

  1. True

  2. False

Show answer
Correct Option: A
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. 

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

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

  1. The utility and demand

  2. Cost of the product

  3. Extent of competition in the market

  4. Social culture

Show answer
Correct Option: D
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. 

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

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

  1. True

  2. False

Show answer
Correct Option: B
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.

Which of the following is not a pricing objective?

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

  1. Surviving in competitive market

  2. Attaining product quality

  3. Obtaining market share leadership

  4. Informing the masses about the product

Show answer
Correct Option: D