BUS5113 Marketing Management Units 5-8 Test Bank — Pricing,
Distribution, Digital Marketing, and Global Strategy
Course:
BUS5113 Marketing Management — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Comprehensive Test Bank — 60 Q&A with Verified Answers
BUS5113 Units 5-8 Test Bank
60 Questions with Verified Correct Answers | 100% Complete Solutions
Question 1 — Unit 5:
A software company launches a new project management tool and initially sets the price
significantly higher than competitors to target early adopters who value the unique features. Over
time, the company plans to lower the price to reach broader segments. Which pricing strategy is
being employed?
A) Penetration pricing
B) Price skimming
C) Value-based pricing
D) Competitive parity pricing
Answer: B
Explanation:
Price skimming involves setting a high initial price to "skim" revenues layer by layer from the
market segments willing to pay the higher price. It is highly effective for innovative products where
early adopters are less price-sensitive, allowing the firm to recover R&D costs quickly before
lowering prices to attract the mass market.
,Question 2 — Unit 5:
When a manufacturer calculates the total cost of producing a product and adds a standard
percentage markup to determine the selling price, they are using which pricing method?
A) Target-return pricing
B) Perceived-value pricing
C) Cost-plus pricing
D) Going-rate pricing
Answer: C
Explanation:
Cost-plus pricing is a straightforward approach where a standard markup is added to the
product's cost. While simple to implement and ensuring cost recovery, it often ignores demand
and competitor prices, potentially leading to suboptimal pricing in dynamic markets.
Question 3 — Unit 5:
A local coffee shop notices that its sales volume drops by 15% when it raises the price of its
signature latte by 5%. Based on this data, the demand for the signature latte is:
A) Perfectly inelastic
B) Unitary elastic
C) Inelastic
D) Elastic
Answer: D
Explanation:
Demand is elastic when the percentage change in quantity demanded is greater than the
percentage change in price. Here, a 5% price increase led to a 15% drop in demand (price
elasticity = 3), indicating consumers are highly sensitive to price changes for this product.
Question 4 — Unit 5:
A premium watch brand prices its timepieces artificially high to signal superior quality and
exclusivity to consumers. This approach is best described as:
A) Prestige pricing
B) Loss-leader pricing
C) Penetration pricing
, D) Captive-product pricing
Answer: A
Explanation:
Prestige pricing uses high prices to promote an image of luxury and exclusivity. Consumers often
use price as a heuristic for quality, especially when they lack the expertise to evaluate the product
objectively, making the high price an integral part of the product's value proposition.
Question 5 — Unit 5:
An airline uses complex algorithms to continuously adjust ticket prices based on seat availability,
time until departure, and historical demand patterns. This dynamic adjustment is an example of:
A) Everyday low pricing
B) Yield management
C) Product-bundle pricing
D) Target costing
Answer: B
Explanation:
Yield management (or revenue management) involves dynamic pricing to maximize revenue from
fixed, perishable capacity (like airline seats or hotel rooms). By segmenting customers and
predicting demand, firms can charge different prices to different customers based on their
willingness to pay at a given time.
Question 6 — Unit 5:
Gillette sells its razor handles at a low price but charges a premium for the replacement blades.
This strategy is known as:
A) Two-part pricing
B) Product-line pricing
C) Captive-product pricing
D) By-product pricing
Answer: C
Explanation:
Captive-product pricing involves pricing products that must be used with the main product. The
primary product (razor handle) is priced low to attract customers, while the high margins are made
Distribution, Digital Marketing, and Global Strategy
Course:
BUS5113 Marketing Management — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Comprehensive Test Bank — 60 Q&A with Verified Answers
BUS5113 Units 5-8 Test Bank
60 Questions with Verified Correct Answers | 100% Complete Solutions
Question 1 — Unit 5:
A software company launches a new project management tool and initially sets the price
significantly higher than competitors to target early adopters who value the unique features. Over
time, the company plans to lower the price to reach broader segments. Which pricing strategy is
being employed?
A) Penetration pricing
B) Price skimming
C) Value-based pricing
D) Competitive parity pricing
Answer: B
Explanation:
Price skimming involves setting a high initial price to "skim" revenues layer by layer from the
market segments willing to pay the higher price. It is highly effective for innovative products where
early adopters are less price-sensitive, allowing the firm to recover R&D costs quickly before
lowering prices to attract the mass market.
,Question 2 — Unit 5:
When a manufacturer calculates the total cost of producing a product and adds a standard
percentage markup to determine the selling price, they are using which pricing method?
A) Target-return pricing
B) Perceived-value pricing
C) Cost-plus pricing
D) Going-rate pricing
Answer: C
Explanation:
Cost-plus pricing is a straightforward approach where a standard markup is added to the
product's cost. While simple to implement and ensuring cost recovery, it often ignores demand
and competitor prices, potentially leading to suboptimal pricing in dynamic markets.
Question 3 — Unit 5:
A local coffee shop notices that its sales volume drops by 15% when it raises the price of its
signature latte by 5%. Based on this data, the demand for the signature latte is:
A) Perfectly inelastic
B) Unitary elastic
C) Inelastic
D) Elastic
Answer: D
Explanation:
Demand is elastic when the percentage change in quantity demanded is greater than the
percentage change in price. Here, a 5% price increase led to a 15% drop in demand (price
elasticity = 3), indicating consumers are highly sensitive to price changes for this product.
Question 4 — Unit 5:
A premium watch brand prices its timepieces artificially high to signal superior quality and
exclusivity to consumers. This approach is best described as:
A) Prestige pricing
B) Loss-leader pricing
C) Penetration pricing
, D) Captive-product pricing
Answer: A
Explanation:
Prestige pricing uses high prices to promote an image of luxury and exclusivity. Consumers often
use price as a heuristic for quality, especially when they lack the expertise to evaluate the product
objectively, making the high price an integral part of the product's value proposition.
Question 5 — Unit 5:
An airline uses complex algorithms to continuously adjust ticket prices based on seat availability,
time until departure, and historical demand patterns. This dynamic adjustment is an example of:
A) Everyday low pricing
B) Yield management
C) Product-bundle pricing
D) Target costing
Answer: B
Explanation:
Yield management (or revenue management) involves dynamic pricing to maximize revenue from
fixed, perishable capacity (like airline seats or hotel rooms). By segmenting customers and
predicting demand, firms can charge different prices to different customers based on their
willingness to pay at a given time.
Question 6 — Unit 5:
Gillette sells its razor handles at a low price but charges a premium for the replacement blades.
This strategy is known as:
A) Two-part pricing
B) Product-line pricing
C) Captive-product pricing
D) By-product pricing
Answer: C
Explanation:
Captive-product pricing involves pricing products that must be used with the main product. The
primary product (razor handle) is priced low to attract customers, while the high margins are made
