Pricing Strategies | MCQ with Answer
Q1. What is the primary goal of Penetration Pricing?
- A. To maximize short-term profits
- B. To quickly gain market share
- C. To make the product appear more premium
- D. To discourage customers from buying competitor products
Answer: B. To quickly gain market share
Q2. Which pricing strategy involves setting a high initial price and then gradually lowering it over time?
- A. Psychological Pricing
- B. Value Pricing
- C. Market Skimming
- D. Penetration Pricing
Answer: C. Market Skimming
Q3. In which of the following strategies is the product priced below cost to attract customers, hoping they will purchase additional items?
- A. Loss Leader
- B. Absorption Pricing
- C. Contribution Pricing
- D. Cost-Plus Pricing
Answer: A. Loss Leader
Q4. What is the key feature of Value Pricing?
- A. Prices are set high to suggest quality
- B. Pricing is based on production costs
- C. Prices reflect customer-perceived value
- D. Prices are dynamically adjusted online
Answer: C. Prices reflect customer-perceived value
Q5. A company that uses Tender Pricing usually operates in which of the following markets?
- A. Retail
- B. Auction-based
- C. Government contracts
- D. Subscription services
Answer: C. Government contracts
Q6. Psychological Pricing is most effective when:
- A. Customers are highly price-sensitive
- B. There is intense competition
- C. The target market values emotional appeal
- D. Competitors use cost-plus pricing
Answer: C. The target market values emotional appeal
Q7. What is the primary objective of Destroyer Pricing?
- A. To drive competitors out of the market
- B. To attract price-sensitive customers
- C. To maintain premium product perception
- D. To match competitor pricing
Answer: A. To drive competitors out of the market
Q8. In which strategy does a company add a specific profit margin to the cost of producing the product?
- A. Cost-Plus Pricing
- B. Dynamic Pricing
- C. Value Pricing
- D. Psychological Pricing
Answer: A. Cost-Plus Pricing
Q9. A pricing approach where different customers are charged different prices for the same product is called:
- A. Subscription Pricing
- B. Price Discrimination
- C. Dynamic Pricing
- D. Contribution Pricing
Answer: B. Price Discrimination
Q10. Which pricing model is used to encourage trial use and adoption by setting low initial prices?
- A. Market Skimming
- B. Penetration Pricing
- C. Absorption Pricing
- D. Going Rate Pricing
Answer: B. Penetration Pricing
Q11. Which pricing strategy involves setting a low price for a new product to attract a large number of customers and gain market share quickly?
- A. Value-Based Pricing
- B. Psychological Pricing
- C. Penetration Pricing
- D. Skimming Pricing
Answer: C. Penetration Pricing
Q12. In which pricing strategy does a firm charge the same price as its competitors?
- A. Target Pricing
- B. Going Rate Pricing
- C. Cost-Plus Pricing
- D. Marginal Cost Pricing
Answer: B. Going Rate Pricing
Q13. What is a key benefit of the Dynamic Pricing model?
- A. Helps maintain consistent prices
- B. Allows prices to respond to market demand in real-time
- C. Simplifies pricing strategy
- D. Makes the product appear premium
Answer: B. Allows prices to respond to market demand in real-time
Q14. Which of the following pricing strategies is commonly used in highly competitive industries and involves pricing at the cost level with minimal markup?
- A. Penetration Pricing
- B. Psychological Pricing
- C. Absorption Pricing
- D. Marginal Cost Pricing
Answer: D. Marginal Cost Pricing
Q15. The main goal of Skimming Pricing is to:
- A. Drive competitor prices lower
- B. Recover development costs quickly
- C. Build customer loyalty
- D. Establish a low-cost leadership
Answer: B. Recover development costs quickly
Q16. Which pricing strategy involves calculating a price that covers fixed and variable costs plus a predetermined profit margin?
- A. Value-Based Pricing
- B. Cost-Plus Pricing
- C. Absorption Pricing
- D. Competitive Pricing
Answer: B. Cost-Plus Pricing
Q17. Price Discrimination is considered legal under which circumstance?
- A. It’s used to undermine competition
- B. It is applied universally to all markets
- C. It is based on demand elasticity among different segments
- D. It is implemented to boost premium product appeal
Answer: C. It is based on demand elasticity among different segments
Q18. Which strategy sets the price based on the customer’s willingness to pay?
- A. Cost-Plus Pricing
- B. Value-Based Pricing
- C. Contribution Pricing
- D. Absorption Pricing
Answer: B. Value-Based Pricing
Q19. A subscription pricing model is typically beneficial for products that:
- A. Have a short product life cycle
- B. Rely on infrequent purchases
- C. Require ongoing customer engagement
- D. Operate in a monopolistic market
Answer: C. Require ongoing customer engagement
Q20. Which pricing strategy involves setting prices that end in 9, creating the impression of a bargain?
- A. Penetration Pricing
- B. Psychological Pricing
- C. Target Pricing
- D. Loss Leader Pricing
Answer: B. Psychological Pricing
Q21. In the Stage-Gate model of product development, pricing decisions are typically addressed:
- A. After the final stage
- B. At the initial concept stage
- C. At each gate to ensure profitability
- D. Only during commercialization
Answer: C. At each gate to ensure profitability
Q22. Which pricing approach adjusts prices for each customer segment or individual buyer?
- A. Marginal Cost Pricing
- B. Price Discrimination
- C. Penetration Pricing
- D. Tender Pricing
Answer: B. Price Discrimination
Q23. A major advantage of the Contribution Pricing model is:
- A. It ensures break-even on every product sold
- B. It maximizes profit on each sale
- C. It allows for fixed cost recovery on high volume sales
- D. It focuses on the variable cost to cover fixed expenses
Answer: D. It focuses on the variable cost to cover fixed expenses
Q24. In Dynamic Pricing, prices are most commonly adjusted based on:
- A. Competitor strategies only
- B. Cost fluctuations
- C. Real-time demand and supply
- D. Pre-determined seasonal schedules
Answer: C. Real-time demand and supply
Q25. Absorption Pricing is also known as:
- A. Cost-Plus Pricing
- B. Marginal Cost Pricing
- C. Full-Cost Pricing
- D. Contribution Pricing
Answer: C. Full-Cost Pricing
Q26. Penetration Pricing is a good strategy when:
- A. The market is saturated
- B. There are high entry barriers
- C. Economies of scale can be achieved
- D. The brand is well-established
Answer: C. Economies of scale can be achieved
Q27. Which pricing strategy involves setting prices just below the major competitor to gain a price advantage?
- A. Skimming Pricing
- B. Competitive Pricing
- C. Psychological Pricing
- D. Tender Pricing
Answer: B. Competitive Pricing
Q28. What is the primary objective of Skimming Pricing?
- A. To penetrate the market quickly
- B. To recover high initial costs by targeting price-insensitive customers
- C. To eliminate low-margin competitors
- D. To maximize the number of units sold
Answer: B. To recover high initial costs by targeting price-insensitive customers
Q29. Price discrimination can increase a firm's profitability by:
- A. Lowering production costs
- B. Tailoring prices to different customer segments based on willingness to pay
- C. Offering the same product at a universal price
- D. Setting a single high price for all customers
Answer: B. Tailoring prices to different customer segments based on willingness to pay
Q30. Target Pricing is primarily focused on:
- A. Achieving a specific profit margin
- B. Maximizing customer loyalty
- C. Minimizing costs
- D. Driving out competitors
Answer: A. Achieving a specific profit margin
Q31. What is the primary purpose of Loss Leader Pricing?
- A. To attract customers by offering a low price on a popular product and encourage purchase of higher-margin items
- B. To set a high price initially and reduce it over time
- C. To charge customers differently based on willingness to pay
- D. To recover fixed costs over a short period
Answer: A. To attract customers by offering a low price on a popular product and encourage purchase of higher-margin items
Q32. Which of the following best describes the Decoupling model in digital pricing?
- A. Separating product pricing from service fees
- B. Bundling multiple services under a single price
- C. Offering subscription-based pricing
- D. Charging based on consumer income level
Answer: A. Separating product pricing from service fees
Q33. Penetration Pricing is often used to:
- A. Maximize short-term profits
- B. Discourage new entrants by establishing a low price expectation in the market
- C. Build a luxury brand image
- D. Increase the perceived value of a product
Answer: B. Discourage new entrants by establishing a low price expectation in the market
Q34. Which pricing approach seeks to communicate value in a way that aligns directly with customers' perceived benefits?
- A. Cost-Based Pricing
- B. Psychological Pricing
- C. Value-Based Pricing
- D. Dynamic Pricing
Answer: C. Value-Based Pricing
Q35. Which model in new product forecasting involves estimating adoption based on early and late adopters?
- A. Target Pricing
- B. Contribution Pricing
- C. Bass Diffusion Model
- D. Cost-Plus Pricing
Answer: C. Bass Diffusion Model
Q36. A significant disadvantage of the Cost-Plus Pricing model is:
- A. It focuses on competitor pricing
- B. It does not consider consumer demand or price sensitivity
- C. It is difficult to implement
- D. It reduces profitability in the long term
Answer: B. It does not consider consumer demand or price sensitivity
Q37. Which pricing strategy is often used in auctions and involves the buyer determining the final price?
- A. Contribution Pricing
- B. Tender Pricing
- C. Psychological Pricing
- D. Target Pricing
Answer: B. Tender Pricing
Q38. The psychological pricing tactic of ending prices in ".99" is primarily aimed at:
- A. Appealing to luxury buyers
- B. Increasing perceived value
- C. Creating a sense of affordability
- D. Making the product appear exclusive
Answer: C. Creating a sense of affordability
Q39. Which model is frequently used for new product sales forecasting to estimate the point at which sales growth starts to slow?
- A. S Curve
- B. Contribution Pricing
- C. Cost-Plus Pricing
- D. Competitive Pricing
Answer: A. S Curve
Q40. Which of the following is a key characteristic of Penetration Pricing?
- A. Targeting high-income segments
- B. Setting a high initial price to recoup costs quickly
- C. Encouraging mass market entry by setting a low price
- D. Applying a premium to enhance perceived value
Answer: C. Encouraging mass market entry by setting a low price
Q41. Value-Based Pricing is most effective when:
- A. Product quality cannot be differentiated
- B. Customer perception of value is high and unique to the product
- C. Competitor prices are significantly lower
- D. The cost of production is high
Answer: B. Customer perception of value is high and unique to the product
Q42. Absorption Pricing ensures:
- A. Only variable costs are covered
- B. Fixed and variable costs are covered within the price
- C. Prices are based solely on competitor levels
- D. The product appears as a bargain
Answer: B. Fixed and variable costs are covered within the price
Q43. What type of pricing involves charging a high price initially and reducing it over time as competition increases?
- A. Penetration Pricing
- B. Dynamic Pricing
- C. Skimming Pricing
- D. Cost-Plus Pricing
Answer: C. Skimming Pricing
Q44. Which strategy allows companies to temporarily reduce prices to increase market share?
- A. Predatory Pricing
- B. Psychological Pricing
- C. Tender Pricing
- D. Target Pricing
Answer: A. Predatory Pricing
Q45. The digital pricing model where consumers pay a periodic fee to access products is known as:
- A. Subscription Pricing
- B. Dynamic Pricing
- C. Psychological Pricing
- D. Decoupling Model
Answer: A. Subscription Pricing
Q46. Which of the following pricing strategies can negatively impact a company’s profitability in a highly elastic market?
- A. Cost-Plus Pricing
- B. Penetration Pricing
- C. Value-Based Pricing
- D. Skimming Pricing
Answer: A. Cost-Plus Pricing
Q47. Which of these pricing strategies is used to position a product as a premium or luxury offering?
- A. Skimming Pricing
- B. Absorption Pricing
- C. Penetration Pricing
- D. Contribution Pricing
Answer: A. Skimming Pricing
Q48. The purpose of the Target Pricing strategy is to:
- A. Match competitor prices to gain market share
- B. Focus on variable cost recovery only
- C. Achieve a desired profit margin by managing costs and price
- D. Set prices based on consumer perception of value
Answer: C. Achieve a desired profit margin by managing costs and price
Q49. What is the advantage of using a Market Skimming Pricing strategy for new technology products?
- A. It attracts a high volume of early adopters
- B. It helps recoup research and development costs
- C. It quickly penetrates the market
- D. It creates cost advantages over competitors
Answer: B. It helps recoup research and development costs
Q50. When using the Value-Based Pricing approach, firms primarily focus on:
- A. Achieving cost efficiency in production
- B. Setting prices based on competitor benchmarks
- C. The perceived benefits and value of the product to customers
- D. Offering the lowest possible price in the market
Answer: C. The perceived benefits and value of the product to customers
Q51. In which situation is Competitive Pricing typically the most effective?
- A. When a company has a strong brand advantage
- B. When competitors’ prices are stable and products are similar
- C. When a company is launching a luxury product
- D. In highly differentiated markets
Answer: B. When competitors’ prices are stable and products are similar
Q52. Which of the following pricing strategies is often considered unethical if used to drive competitors out of the market?
- A. Predatory Pricing
- B. Contribution Pricing
- C. Marginal Cost Pricing
- D. Tender Pricing
Answer: A. Predatory Pricing
Q53. Price elasticity is most relevant to which pricing strategy?
- A. Skimming Pricing
- B. Penetration Pricing
- C. Value-Based Pricing
- D. Psychological Pricing
Answer: B. Penetration Pricing
Q54. Which pricing model specifically accounts for the relationship between price and perceived quality?
- A. Price Discrimination
- B. Value Pricing
- C. Marginal Cost Pricing
- D. Dynamic Pricing
Answer: B. Value Pricing
Q55. In the context of digital products, which pricing method dynamically changes based on demand and user behavior?
- A. Penetration Pricing
- B. Subscription Pricing
- C. Dynamic Pricing
- D. Psychological Pricing
Answer: C. Dynamic Pricing
Q56. What is the primary objective of Tender Pricing?
- A. To maintain market share
- B. To achieve a target return on investment
- C. To secure contracts based on competitive bidding
- D. To generate high profits
Answer: C. To secure contracts based on competitive bidding
Q57. What strategy involves pricing based on a percentage markup over production costs?
- A. Psychological Pricing
- B. Marginal Cost Pricing
- C. Cost-Plus Pricing
- D. Target Pricing
Answer: C. Cost-Plus Pricing
Q58. In which stage of the product lifecycle is Skimming Pricing most appropriate?
- A. Introduction
- B. Growth
- C. Maturity
- D. Decline
Answer: A. Introduction
Q59. Price discrimination is effective when:
- A. Consumers have uniform willingness to pay
- B. There is high price elasticity of demand
- C. Consumers have varying willingness to pay
- D. All competitors adopt uniform pricing
Answer: C. Consumers have varying willingness to pay
Q60. Which of the following is a potential drawback of a Penetration Pricing strategy?
- A. Loss of profit in the initial stages
- B. Difficulty in gaining market entry
- C. Inability to adapt to demand changes
- D. Risk of creating an unappealing product image
Answer: A. Loss of profit in the initial stages
Q61. When is Absorption Pricing most likely to be ineffective?
- A. When the product is in high demand
- B. In a highly competitive market with thin margins
- C. For products with low fixed costs
- D. In an oligopolistic market structure
Answer: B. In a highly competitive market with thin margins
Q62. Which pricing strategy is most suitable for seasonal products with fluctuating demand?
- A. Contribution Pricing
- B. Psychological Pricing
- C. Dynamic Pricing
- D. Marginal Cost Pricing
Answer: C. Dynamic Pricing
Q63. Price bundling is a technique where:
- A. Prices are based on customer location
- B. Products are offered together at a reduced rate
- C. Prices vary based on the season
- D. Prices are based on customer negotiation
Answer: B. Products are offered together at a reduced rate
Q64. What is a major risk associated with the Destroyer Pricing strategy?
- A. Reduction in perceived product quality
- B. Increased production costs
- C. Legal repercussions and anti-trust issues
- D. Poor brand differentiation
Answer: C. Legal repercussions and anti-trust issues
Q65. In the 3Cs of pricing, what does "Customer" primarily refer to?
- A. Customer purchasing power
- B. Customer segmentation and pricing sensitivity
- C. Customer location and accessibility
- D. Customer income level
Answer: B. Customer segmentation and pricing sensitivity
Q66. Penetration Pricing is typically more effective for products:
- A. With low elasticity of demand
- B. In a mature market stage
- C. With high elasticity of demand
- D. In the decline phase of the product lifecycle
Answer: C. With high elasticity of demand
Q67. Which of the following is a limitation of the S Curve model in forecasting sales?
- A. It assumes constant growth rates
- B. It does not account for inflection points
- C. It lacks a scientific basis
- D. It can be challenging to identify the model parameters early on
Answer: D. It can be challenging to identify the model parameters early on
Q68. Subscription pricing in digital products is primarily designed to:
- A. Generate high short-term revenue
- B. Encourage one-time purchases
- C. Build long-term, recurring revenue
- D. Offer competitive price-matching options
Answer: C. Build long-term, recurring revenue
Q69. In Marginal Cost Pricing, what is the primary objective?
- A. To recover fixed costs quickly
- B. To break even on variable costs only
- C. To generate long-term profits
- D. To maximize perceived product value
Answer: B. To break even on variable costs only
Q70. Which of these pricing strategies can potentially attract a niche market segment by creating exclusivity?
- A. Penetration Pricing
- B. Market Skimming Pricing
- C. Contribution Pricing
- D. Absorption Pricing
Answer: B. Market Skimming Pricing
Q71. The main benefit of Target Pricing is:
- A. Competitor benchmarking
- B. Simplifying cost-plus calculations
- C. Achieving desired profit margins through cost management
- D. Setting low prices to capture market share
Answer: C. Achieving desired profit margins through cost management
Q72. When using Dynamic Pricing, the price can change based on:
- A. A fixed percentage of the competitor's price
- B. Real-time supply and demand data
- C. Monthly production costs
- D. Seasonal factors only
Answer: B. Real-time supply and demand data
Q73. A company looking to gain quick market share and minimize competition would most likely adopt which strategy?
- A. Market Skimming Pricing
- B. Absorption Pricing
- C. Penetration Pricing
- D. Value-Based Pricing
Answer: C. Penetration Pricing
Q74. Contribution Pricing focuses on:
- A. Variable costs only
- B. Targeting the highest margin possible
- C. Covering both fixed and variable costs
- D. Pricing based on competitor benchmarks
Answer: A. Variable costs only
Q75. What type of pricing relies on creating urgency or time sensitivity?
- A. Dynamic Pricing
- B. Psychological Pricing
- C. Seasonal Pricing
- D. Target Pricing
Answer: C. Seasonal Pricing
Q76. Price Elasticity of Demand is critical in which of these pricing strategies?
- A. Cost-Plus Pricing
- B. Skimming Pricing
- C. Penetration Pricing
- D. Contribution Pricing
Answer: C. Penetration Pricing
Q77. Pricing that varies based on customer purchase history is a hallmark of:
- A. Dynamic Pricing
- B. Marginal Cost Pricing
- C. Contribution Pricing
- D. Subscription Pricing
Answer: A. Dynamic Pricing
Q78. Which of these is NOT typically a goal of psychological pricing?
- A. Enhancing the perceived value of a product
- B. Targeting higher-income customers exclusively
- C. Creating a perception of a bargain
- D. Increasing sales volume through strategic price presentation
Answer: B. Targeting higher-income customers exclusively
Q79. In price discrimination, charging different prices in different markets for the same product is known as:
- A. Product-line pricing
- B. Market-based pricing
- C. Geographic pricing
- D. Time-based pricing
Answer: C. Geographic pricing
Q80. Subscription pricing primarily aims to:
- A. Attract high-value, one-time sales
- B. Create recurring revenue streams
- C. Enhance brand exclusivity
- D. Minimize short-term costs
Answer: B. Create recurring revenue streams
