Pricing Strategies

Question 1

What is the definition of price skimming?

Answer 1

Price skimming is a pricing strategy where a firm sets a high initial price for a new product and then gradually lowers the price over time.

Question 2

True or False: Penetration pricing involves setting a low price to attract customers and gain market share.

Answer 2

True

Question 3

Fill in the blank: The _______ pricing strategy is used to establish a product’s perceived value by setting a price that reflects its quality.

Answer 3

premium

Question 4

Which of the following is NOT a common pricing strategy? A) Cost-plus pricing B) Dynamic pricing C) Flat-rate pricing D) Random pricing

Answer 4

D) Random pricing

Question 5

What is the main goal of psychological pricing?

Answer 5

The main goal of psychological pricing is to create an illusion of greater value or affordability to influence consumer behavior.