COMMERCE 1MA3 EXAM 2026 BANK MOST EXAM QUESTIONS WILL
COME FROM HERE /ALREADY GRADED A+
Importance of Pricing - ANSWER-- a strategic opportunity to create value
- not an after thought to the rest of the marketing mix
- pricing signals quality or lack of quality
The Role of Price in the Marketing Mix - ANSWER--Price is usually ranked as
one of the most important factors in purchase decisions
-Price is the only marketing mix element that generates revenue
- can be the most challenging of the 4Ps to manage, partly because it is the least
understood/misunderstood by managers
5 C's of Pricing - ANSWER-competition, costs, company objectives, customers,
channel members
5 C's of Pricing: Company objectives (3 types of orientation) - ANSWER-- profit
orientation
- Maximize profits
- target return pricing
- target profit pricing
- Sales orientation
- Competitor orientation
- customer orientation
1
,5 C's of Pricing: customers - ANSWER-- MOST IMPORTANT C!!!!
- its all about understanding consumers reactions to different prices
- consumers want value
- price is half of the value equation
Psychological pricing: odd vs even pricing - ANSWER-odd numbers convey a
bargain image --> 9.99$
Even numbers convey quality image --> 100$
Demand Curve and Pricing - ANSWER-- demand increases as price decreases
- demand decreases as price decreases
price elasticity of demand - ANSWER-- how do consumers respond to price
increases and decreases?
- this is measured by the price elasticity of demand
factors influencing price elasticity of demand: income effects - ANSWER--
generally, as ppl's income increases, their spending behavior changes
- demand shifts from lower-priced products to higher priced products
2
,Factors influencing price elasticity of demand: substitution effects - ANSWER--
the greater the availability of substitute products, the higher the price elasticity of
demand for any given product
5 C's of Pricing: costs (3 types of costs) - ANSWER-Variable costs
- vary with production volume
ex: gas, houses...
Fixed costs
- unaffected by production volume
ex: shoes
Total costs
- sum of variable and fixed costs
break-even analysis - definition? - ANSWER-a method of determining what sales
volume must be reached before total revenue equals total costs
Break Even Formula - ANSWER-Fixed costs / contribution per unit
Total variable cost = variable cost per unit x Quantity
Total cost = Fixed cost + total variable cost
3
, Total revenue = price x Quantity
The ZYX Company makes a product that has a MSRP of $10. Theactual street
price, however, is $9 and gives retailers a $4 profitmargin. The unit variable cost is
$3. Fixed costs include $17,000,000for consumer advertising, $5,000,000 for
consumer promotion,$12,000,000 for trade promotion, a $20,000,000 sales force
budget,and $6,000,000 for general and administrative expenses.
What is break even ? - ANSWER-idk
5 C's of Pricing: Competition (4 types) - ANSWER-
5 C's of Pricing: Channel Members - ANSWER-- manufacturers, wholesalers and
retailers can have different perspectives on pricing strategies
- manufacturers must protect against grey market transactions
Pricing methods & strategies (3 types) - ANSWER-
Pricing methods & strategies: cost based methods - ANSWER-- cost base pricing
methods start with cost
- all costs calculated on a per unit basis
- assumes costs don't vary for different levels of production
Pricing methods & strategies: competitor based methods - ANSWER-- set prices to
signal information of how product compares with competitors
- premium pricing
4
COME FROM HERE /ALREADY GRADED A+
Importance of Pricing - ANSWER-- a strategic opportunity to create value
- not an after thought to the rest of the marketing mix
- pricing signals quality or lack of quality
The Role of Price in the Marketing Mix - ANSWER--Price is usually ranked as
one of the most important factors in purchase decisions
-Price is the only marketing mix element that generates revenue
- can be the most challenging of the 4Ps to manage, partly because it is the least
understood/misunderstood by managers
5 C's of Pricing - ANSWER-competition, costs, company objectives, customers,
channel members
5 C's of Pricing: Company objectives (3 types of orientation) - ANSWER-- profit
orientation
- Maximize profits
- target return pricing
- target profit pricing
- Sales orientation
- Competitor orientation
- customer orientation
1
,5 C's of Pricing: customers - ANSWER-- MOST IMPORTANT C!!!!
- its all about understanding consumers reactions to different prices
- consumers want value
- price is half of the value equation
Psychological pricing: odd vs even pricing - ANSWER-odd numbers convey a
bargain image --> 9.99$
Even numbers convey quality image --> 100$
Demand Curve and Pricing - ANSWER-- demand increases as price decreases
- demand decreases as price decreases
price elasticity of demand - ANSWER-- how do consumers respond to price
increases and decreases?
- this is measured by the price elasticity of demand
factors influencing price elasticity of demand: income effects - ANSWER--
generally, as ppl's income increases, their spending behavior changes
- demand shifts from lower-priced products to higher priced products
2
,Factors influencing price elasticity of demand: substitution effects - ANSWER--
the greater the availability of substitute products, the higher the price elasticity of
demand for any given product
5 C's of Pricing: costs (3 types of costs) - ANSWER-Variable costs
- vary with production volume
ex: gas, houses...
Fixed costs
- unaffected by production volume
ex: shoes
Total costs
- sum of variable and fixed costs
break-even analysis - definition? - ANSWER-a method of determining what sales
volume must be reached before total revenue equals total costs
Break Even Formula - ANSWER-Fixed costs / contribution per unit
Total variable cost = variable cost per unit x Quantity
Total cost = Fixed cost + total variable cost
3
, Total revenue = price x Quantity
The ZYX Company makes a product that has a MSRP of $10. Theactual street
price, however, is $9 and gives retailers a $4 profitmargin. The unit variable cost is
$3. Fixed costs include $17,000,000for consumer advertising, $5,000,000 for
consumer promotion,$12,000,000 for trade promotion, a $20,000,000 sales force
budget,and $6,000,000 for general and administrative expenses.
What is break even ? - ANSWER-idk
5 C's of Pricing: Competition (4 types) - ANSWER-
5 C's of Pricing: Channel Members - ANSWER-- manufacturers, wholesalers and
retailers can have different perspectives on pricing strategies
- manufacturers must protect against grey market transactions
Pricing methods & strategies (3 types) - ANSWER-
Pricing methods & strategies: cost based methods - ANSWER-- cost base pricing
methods start with cost
- all costs calculated on a per unit basis
- assumes costs don't vary for different levels of production
Pricing methods & strategies: competitor based methods - ANSWER-- set prices to
signal information of how product compares with competitors
- premium pricing
4
