CPCM Course 5 Pricing Strategies and Analysis Techniques

CPCM Course 5 Pricing Strategies and Analysis Techniques Cost Based Pricing (or Cost-plus) -Answer-A pricing method in which the selling price is determined by evaluating all of the costs a company incurs and adding a markup. Value-Based Pricing -Answer-The method of setting a price by which a company calculates and tries to earn the differentiated worth of its product for particular customer segment when compared to its competitor. Competitive Pricing -Answer-A pricing method that utilizes competitor prices as a benchmark. Retailers use Key Value Items (KVIs), which are commonly purchased items in the marketplace that drive price perception in the minds of Shoppers. Everyday Low Pricing -Answer-Retail prices remain consistently low over a long period of time. Key Value items -Answer-The items that drive price perception in the mind of shoppers that retailers need to be competitive on. Pricing Zones -Answer-An approach to group stores together with a common set of pricing rules. Pricing Rules -Answer-Guidelines for retailers to follow when determining competitive pricing, sometimes within pricing zones. High Low Pricing -Answer-Temporary Price Reductions (TPR) are used to advertise products and draw traffic to the stores. B. Spending a given amount produces more consumer dissatisfaction than the satisfaction that results from saving the same amount -Answer-Kahnemann and Tversky's Prospect Value Theory states that: A. Psychological pricing methods increase the consumer's perception of the value of an item relative to its actual price B. Spending a given amount produces more consumer dissatisfaction than the satisfaction that results from saving the same amount C. Consumers are aware of the market values of certain items and these influence their buying behaviors D. Consumers are equally willing to shop elsewhere to save a given amount regardless of the product price C. Temporary price reductions create in-store excitement. -Answer-Which one of the following is NOT a feature of the Every Day Low Price (EDLP) strategy? A. Consistent pricing builds trust between the customer and the retailer. B. Makes the shopping process easier for the customer. C. Temporary price reductions create in-store excitement. D. Improves internal process efficiencies (forecasting. reduced out of stocks, reduced transport costs). B. pricing Rules -Answer-"Within x % of competition", "Within $.xx of competition" and "Lowest price of a certain set of competitors" are