: PRICING STRATEGIES & PROGRAMS

Question 1

communicates the intended value positioning of a
product or brand to the market

Answer 1

Price

Question 2

is the element of the marketing mix that produces
revenue; and the easiest to adjust.

Answer 2

Price

Question 3

Among the 4Ps, this is the first to be adjusted

Answer 3

Price

Question 4

The highest amount a retailer may charge to a
consumer for a medicine placed under price regulation

Answer 4

MAXIMUM DRUG RETAIL PRICE (MDRP) IN THE
PHILIPPINES

Question 5

MDRRP: Prices of medicines were reduced at a median of __________%
from current retail prices. Reductions were up to as
much as ___________%

Answer 5

40; 93

Question 6

MDRRP EO

Answer 6

Executive Order 821, s. 2009

Question 7

T/f: On top of the MDRP, senior citizens and persons-with
disability (PWDs) are still eligible to avail of special
discounts

Answer 7

True

Question 8

Violation/Penalty of RA 9502 or Cheaper Medicines Act

Answer 8

Php 50,000 to Php 5,000,000

Question 9

drugs that are
included in the maximum retail price on 5 drug
molecules

Answer 9

Amlodipine, Atorvastatin, Zzithromycin,
Cytarabine, Doxorubicin.

Question 10

EO 821 has been repealed by

Answer 10

EO 155 s.
2021

Question 11

CRITERIA FOR DETERMINING MDRP

Answer 11

1. Public health priorities
2. High price differentials compared to international
   prices
3. Limited competition or lack of generic counterparts
4. Expensive and commonly prescribed drugs

Question 12

PRICING CONCEPTS

Answer 12

1. Reference Prices
2. Price-Quality Inferences
3. Price Endings

Question 13

comparing an observed price to an internal reference
price they remember or an external frame of reference
such as a posted “regular retail price”.

Answer 13

REFERENCE PRICES

Question 14

Types of Reference Prices

Answer 14

Fair
Typical
Upper-Bound
Lower-bound

Question 15

price based on customer feelings

Answer 15

Fair

Question 16

usual price of a product in the
market

Answer 16

Typical

Question 17

maximum price that consumers
would pay; also called reservation
price

Answer 17

Upper bound

Question 18

minimum price that consumers
would pay; also called lower
threshold price

Answer 18

Lower-Bound

Question 19

is a pricing concept where price is used as an indicator
of a product’s quality

Answer 19

PRICE-QUALITY INFERENCES

Question 20

is a pricing concept based on consumer psychology
where price is determined based on the numerical
structure of a product’s price.

Answer 20

PRICE ENDINGS

Question 21

EXAMPLES OF PRICE ENDING PRICING:

Answer 21

Odd number pricing
9 endings
0 and 5 endings

Question 22

LIMITATIONS OF PRICE ENDING PRICING

Answer 22

Only useful when consumer knowledge is poor
Not usually effective for items that are not bought
frequently
Not usually effective if product design changes
frequently

Question 23

Steps in Setting a Product’s Price
1. Selecting the ___________
2. Determining ___________
3. Estimating ___________
4. Analyzing Competitors’ ___________
5. Selecting a ___________
6. Selecting the ___________

Answer 23

1. Selecting the Pricing Objective
2. Determining Demand
3. Estimating Costs
4. Analyzing Competitors’ Costs, Prices, and Offers
5. Selecting a Pricing Method
6. Selecting the Final Price

Question 24

The company first decides where it wants to position its
market offering

Answer 24

Selecting the pricing objective

Question 25

5 Pricing Objectives.

Answer 25

Survival Maximum Current Profit Maximum Market Share Market Skimming Product-Quality Leadership

Question 26

intense competition, changing market wants, overcapacity (just enough to cover fixed costs and some variable costs)

Answer 26

Survival

Question 27

maximum profit based on demand and cost estimation

Answer 27

Maximum Current Profit

Question 28

setting a lower price to capture/penetrate most of the market (if market is price sensitive

Answer 28

Maximum Market Share

Question 29

price starts very high and goes down slowly over time (only if product communicates premium quality)

Answer 29

. Market Skimming

Question 30

best-in-class quality products can set the highest price (Ex. Innovator drug brands often set the highest price

Answer 30

Product-Quality Leadership

Question 31

Price and demand normally has an _________ relationship.

Answer 31

inverse

Question 32

pertains to the reaction of a market to changes in price

Answer 32

Price Sensitivity

Question 33

Consumers tend to be less price sensitive when: 1. The product has __________ competitors 2. They are __________ to change their buying habits 3. They think the price increase is __________ 4. Price increase is too __________ to notice

Answer 33

1. The product has no or few competitors 2. They are slow to change their buying habits 3. They think the price increase is justified 4. Price increase is too small to notice

Question 34

sets the maximum (Ceiling price); price above ceiling price

Answer 34

demand

Question 35

sets the minimum (Floor price); price below floor price

Answer 35

Costs

Question 36

also called as overhead are costs that remain constant in producing a product

Answer 36

Fixed costs

Question 37

are costs that change depending on production output

Answer 37

Variable costs

Question 38

T/F: increasing the price of a product should always be the last resort of any business

Answer 38

True

Question 39

Ways on how to avoid price increase:

Answer 39

Decreasing the amount of product per usual price Using cheaper raw and packaging materials Removing product features Removing existing variants of a brand Offering cheaper, less premium products

Question 40

Also called Nophreal’s Marketing

Answer 40

Decreasing the amount of product per usual price

Question 41

4 General Methods in Pricing

Answer 41

○ Markup Pricing ○ Target-Return Pricing ○ Perceived Value Pricing ○ Value Pricing

Question 42

the amount added to the cost it took to make the product and is the source of a company’s profit.

Answer 42

markup

Question 43

the company decides on the price that would give back the target rate of return on investmen

Answer 43

target-return pricing

Question 44

The company delivers its promised features and values and the customers perceive the value which justifies the price

Answer 44

Perceived-Value Pricing

Question 45

Is a pricing approach where a company optimizes its production system so well that it can produce a product so efficiently that it can offer it at a very low price

Answer 45

Value Pricing

Question 46

Price Adaptation Strategies

Answer 46

■ Geographical Pricing ■ Price Discounts ■ Promotional Pricing ■ Differentiated Pricing

Question 47

a price reduction for buyers who pay promptly

Answer 47

Discount

Question 48

a price reduction for buyers who buy more

Answer 48

Quantity Discount

Question 49

also called trade discount; offered to a buyer (drugstore) that also performs a specific function

Answer 49

Functional Discount

Question 50

a price reduction given for products that are outside peak season

Answer 50

Seasonal Discount

Question 51

offering a well-known brand at a cheaper price to stimulate customer traffic

Answer 51

Loss-leader pricing

Question 52

offering special prices to “club” members.

Answer 52

Special customer pricing

Question 53

offering a usually high- priced product at a very low price (usually done for near-expiry products that are still within acceptable shelf life)

Answer 53

Psychological pricing

Question 54

occurs when a company sells a product or service at two or more prices that do not reflect a proportional difference in costs

Answer 54

Price discrimination

Question 55

offering the same product but at different prices to different customer segment

Answer 55

Customer-segment pricing

Question 56

offering same product at different prices as different forms

Answer 56

Product-form pricing

Question 57

offering the same product at different price based on location

Answer 57

Channel pricing