Advanced Pricing Strategies: Random Discounts, Penetration, Signaling | True or False Questions with Answers
1. Pricing is the only element of the marketing mix that directly generates revenue.
✅ True
2. Cost-plus pricing always ensures competitive market pricing.
✅ False
3. Inelastic demand means customers are less sensitive to price changes.
✅ True
4. Penetration pricing is suitable when the company wants to quickly build market share.
✅ True
5. Value-based pricing focuses primarily on the firm’s internal cost structure.
✅ False
6. Skimming pricing works well for innovative products with low initial competition.
✅ True
7. Competitive pricing strategies ignore customer willingness to pay.
✅ True
(Mostly benchmark competitors, not customers)
8. Customers always choose the lowest-priced product.
✅ False
9. Psychological pricing relies on perceived value rather than product features.
✅ True
10. Contribution margin is computed as Selling Price minus Fixed Costs.
✅ False
(CM = Price – Variable Cost)
11. Freemium pricing depends on converting a fraction of free users into paid users.
✅ True
12. Price elasticity measures how quantity demanded changes with supply fluctuations.
✅ False
(Quantity change relative to price)
13. In value-based pricing, price is set after understanding customer perceived benefits.
✅ True
14. Price wars typically increase industry profitability.
✅ False
15. For luxury brands, price cuts can damage long-term brand equity.
✅ True
16. Loss-leader pricing aims to increase footfall by selling certain items below cost.
✅ True
17. Bundle pricing always increases margins.
✅ False
18. Competition-based pricing is most effective in highly differentiated markets.
✅ False
(Better for homogeneous products)
19. Surge pricing is an example of dynamic pricing.
✅ True
20. Price discrimination is illegal in every market.
✅ False
(Illegal only under specific regulatory contexts)
21. Odd pricing (e.g., ₹999) is proven to increase sales due to psychological anchors.
✅ True
22. Predatory pricing involves temporarily lowering prices to eliminate competition.
✅ True
23. Cost-based pricing ignores competitor pricing completely.
✅ True
24. Premium pricing positions the product as high-value and exclusive.
✅ True
25. Break-even analysis helps determine the minimum price needed to cover fixed costs.
✅ False
(It determines output units needed)
26. A company should always lower prices when elasticity is high.
✅ False
(May increase price depending on strategy)
27. Peak-load pricing helps manage demand during rush periods.
✅ True
28. Customers always perceive bundle pricing as better value.
✅ False
29. Psychological pricing strategies use cognitive biases in consumers.
✅ True
30. Dynamic pricing relies on real-time data and algorithms.
✅ True
31. In B2B markets, pricing is usually more relationship-dependent.
✅ True
32. Price skimming leads to slow recovery of R&D costs.
✅ False
(It speeds up recovery)
33. Elastic demand implies quantity changes significantly after price changes.
✅ True
34. In monopolistic competition, firms compete primarily on price.
✅ False
(Product differentiation is key)
35. Penetration pricing attracts price-sensitive customers.
✅ True
36. A higher price always signals higher quality to customers.
✅ False
(Only sometimes; depends on category)
37. SaaS businesses often use value-based pricing via feature tiers.
✅ True
38. Predatory pricing is legal in India under all circumstances.
✅ False
39. Surge pricing is commonly used by ride-hailing companies.
✅ True
40. Loss aversion suggests customers hate losing money more than gaining.
✅ True
41. Cost leadership strategy always requires lowering prices.
✅ False
(It requires lowering costs, not necessarily price)
42. A higher contribution margin improves pricing flexibility.
✅ True
43. Captive pricing involves low initial product price and high accessory fees.
✅ True
(e.g., printers & cartridges)
44. Companies using penetration pricing usually avoid heavy promotional spending.
✅ False
45. Odd-even pricing aims to improve rational price comparison.
✅ False
(It exploits irrational perceptions)
46. Competitor-based pricing is risky in a fragmented market.
✅ True
47. “Pay-what-you-want” is an example of participative pricing.
✅ True
48. Dumping is selling products abroad at lower than domestic cost.
✅ True
49. High switching costs reduce price elasticity for customers.
✅ True
50. Value-based pricing requires deep customer insight and segmentation.
✅ True
51. A product with many substitutes will generally have elastic demand.
✅ True
52. Cost-based pricing is the best strategy in markets with high uncertainty in customer value.
✅ False
53. Reference pricing refers to the internal price consumers expect based on past experience.
✅ True
54. Anchoring can influence customers to choose higher-priced options.
✅ True
55. Price ceilings are the maximum legal prices set by companies.
✅ False
(They are set by regulations)
56. Commoditized markets usually require differentiation-based premium pricing.
✅ False
57. Price floors prevent firms from setting unsustainably low prices.
✅ True
58. The long tail strategy involves selling fewer units of many niche products at high price.
✅ False
(Long tail = large variety sold in small quantities, usually low to mid pricing)
59. Odd pricing works because customers perceive ₹999 as significantly lower than ₹1000.
✅ True
60. Penetration pricing is risky if competitors can easily retaliate.
✅ True
61. Elasticity can vary across different customer segments.
✅ True
62. Competitor price cuts always require a firm to follow with price cuts.
✅ False
63. Psychological pricing is based purely on cost and margin calculations.
✅ False
64. In a monopoly, pricing power is the highest.
✅ True
65. Intertemporal pricing charges different prices at different times.
✅ True
66. A high fixed-cost business often benefits from lower pricing to drive volume.
✅ True
67. Price transparency reduces the effectiveness of price discrimination.
✅ True
68. Luxury brands rarely use penetration pricing because it dilutes exclusivity.
✅ True
69. Captive pricing is illegal in most countries.
✅ False
70. Dynamic pricing is impossible without digital tools and algorithms.
✅ False
(It existed historically in auctions & bazaars)
71. High switching costs decrease customers’ sensitivity to price increases.
✅ True
72. A kinked demand curve model explains pricing rigidity in oligopolies.
✅ True
73. Surge pricing can lead to short-term customer dissatisfaction.
✅ True
74. A price war always benefits consumers in the long run.
✅ False
75. Marginal cost is the cost to produce one additional unit.
✅ True
76. Predatory pricing is sustainable as a long-term strategy.
✅ False
77. The freemium model works best when marginal cost of serving new users is near zero.
✅ True
78. In price skimming, early adopters are generally less price sensitive.
✅ True
79. Price bundling helps reduce customer comparison between components.
✅ True
80. Break-even pricing is primarily a competitive strategy.
✅ False
(It is an internal financial tool)
81. A high contribution margin allows firms to absorb more discounting.
✅ True
82. Differential pricing always requires segmentation.
✅ True
83. Customer lifetime value (CLV) directly influences pricing decisions.
✅ True
84. Cost-based pricing ensures maximum profit.
✅ False
85. Promotional pricing often creates short-term demand spikes.
✅ True
86. Peak-load pricing is effective in utilities and transportation sectors.
✅ True
87. Partitioned pricing shows customers a single combined price.
✅ False
(Partitioned = separate listing of components)
88. Companies should never increase prices in a competitive market.
✅ False
89. A Veblen good sees demand increase as prices rise.
✅ True
90. End-benefit effect explains why customers tolerate high prices for core products.
✅ True
91. Transaction utility refers to the perceived fairness of a price.
✅ True
92. Geographical pricing charges different prices based on shipping costs only.
✅ False
(It includes regional buying power, competition, regulations)
93. High involvement products are generally more price sensitive.
✅ False
(They’re less price sensitive)
94. Subscription pricing increases predictability of revenue.
✅ True
95. Surge pricing benefits both customers and companies equally.
✅ False
96. Consumer surplus represents the gap between willingness to pay and actual price.
✅ True
97. A firm with excess capacity may reduce price to boost utilization.
✅ True
98. Penetration pricing is more effective when network effects exist.
✅ True
99. Price leadership is common in oligopolistic markets.
✅ True
100. High elasticity means the firm can increase price without losing customers.
✅ False
pricing strategy true false questions, pricing true false MBA, marketing pricing T/F questions, MBA pricing strategy quiz, pricing strategy exam questions, value-based pricing T/F, elasticity true false questions, competitive pricing true false, psychological pricing questions, MBA marketing MCQ bank, pricing decision making quiz, pricing models true false, strategic pricing questions
