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Test: Pricing Decision- 2 - B Com MCQ


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10 Questions MCQ Test - Test: Pricing Decision- 2

Test: Pricing Decision- 2 for B Com 2024 is part of B Com preparation. The Test: Pricing Decision- 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Pricing Decision- 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Pricing Decision- 2 below.
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Test: Pricing Decision- 2 - Question 1
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What pricing strategy aims to keep costs of marketing and promotion at a minimum, offering a no-frills, low price for a product?

Detailed Solution for Test: Pricing Decision- 2 - Question 1
Economy Pricing is about offering products at a low price with minimal marketing and promotional costs. This strategy targets cost-conscious customers and aims to compete based on price. Supermarkets often have economy brands for various products, and budget airlines are known for adopting this approach by minimizing costs and providing lower prices for flights.
Test: Pricing Decision- 2 - Question 2
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Which pricing strategy involves charging a high price due to a substantial competitive advantage, but this advantage may not be sustainable in the long run?

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Premium Pricing involves setting a higher price for a product due to a unique competitive advantage. However, this advantage may not last as new competitors enter the market, leading to price reductions. Examples include luxury products like Cunard Cruises and first-class air travel, where customers are willing to pay more for a premium experience.
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Test: Pricing Decision- 2 - Question 3
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Which pricing strategy involves initially setting a low price to gain market share and then gradually increasing the price?

Detailed Solution for Test: Pricing Decision- 2 - Question 3
Penetration Pricing is a strategy where products are initially priced low to attract a larger market share, and then the price is increased over time. This approach helps in quickly capturing customers and establishing a strong presence in the market. Companies like France Telecom and Sky TV have used this strategy to gain a substantial customer base before gradually raising prices.
Test: Pricing Decision- 2 - Question 4
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Which pricing strategy involves charging a relatively low price for the initial product and then making profits from complementary products?
Detailed Solution for Test: Pricing Decision- 2 - Question 4
Captive Product Pricing involves setting a low price for the main product and then generating profits from related complementary products. For instance, printer manufacturers often sell printers at a low cost and then make profits from selling replacement ink cartridges, which can be relatively expensive. This strategy takes advantage of the need for complementary products after the initial purchase.
Test: Pricing Decision- 2 - Question 5
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What pricing strategy aims to attract customers based on emotional response rather than rational decision-making?
Detailed Solution for Test: Pricing Decision- 2 - Question 5
Psychological Pricing aims to evoke emotional responses from customers through pricing strategies. For example, using $0.99 instead of $1.00 can create the perception of a lower price, even though the difference is minimal. Consumers often associate certain price points with value, and psychological pricing leverages these perceptions to influence buying decisions.
Test: Pricing Decision- 2 - Question 6
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Which pricing strategy involves combining multiple products in a single package to promote sales?
Detailed Solution for Test: Pricing Decision- 2 - Question 6
Product Bundle Pricing is about offering several products together in a package. This strategy is used to promote the sale of items that might not sell as well individually. For instance, bundling video games with gaming consoles or selling items at auction with a mix of attractive and less interesting products are examples of product bundle pricing.
Test: Pricing Decision- 2 - Question 7
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When a company sets prices based on variations in different parts of the world due to factors like rarity value or shipping costs, what pricing strategy is being used?
Detailed Solution for Test: Pricing Decision- 2 - Question 7
Geographical Pricing involves setting different prices for the same product in different geographical regions. This can be due to factors like shipping costs, taxes, import regulations, and local market conditions. Prices may vary based on the economic and legal landscape of each region.
Test: Pricing Decision- 2 - Question 8
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What pricing strategy involves offering value products and services during periods of recession or increased competition?
Detailed Solution for Test: Pricing Decision- 2 - Question 8
Value Pricing aims to offer products and services that provide good value for money. During times of economic challenges or heightened competition, companies may adopt this strategy to attract and retain customers. Value pricing doesn't necessarily mean lowering the price, but rather focusing on delivering value that matches or exceeds the price paid.
Test: Pricing Decision- 2 - Question 9
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When a company initially sets a high price to capitalize on a unique brand advantage, what pricing strategy is being used?
Detailed Solution for Test: Pricing Decision- 2 - Question 9
Premium Pricing involves charging a higher price for a product due to a unique brand advantage. This strategy targets customers who are willing to pay more for a premium experience, quality, or exclusivity. Examples include luxury hotels, high-end fashion brands, and premium services.
Test: Pricing Decision- 2 - Question 10
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Which external factor affecting pricing involves considering the economic conditions in the market, such as recession or inflation?
Detailed Solution for Test: Pricing Decision- 2 - Question 10
Economic Conditions, such as the state of the economy, inflation, and recession, play a significant role in pricing decisions. During a recession, consumers may have limited purchasing power, leading companies to adjust their prices to remain competitive and maintain sales. Economic factors influence consumer behavior and their willingness to spend on products.
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