Quiz: Pricing Strategies

What is meant by price skimming?

• Setting a low price to attract customers

• Charging a high price when a product is first launched

• Matching competitor prices

• Charging different prices in different locations

Which product is most likely to use price skimming?

• Bread

• New smartphone

• Bottled water

• Petrol

A business uses a low price at launch to quickly enter a market. What pricing strategy is this?

• Penetration

• Skimming

• Competitor-based

• Psychological

Which of the following is an advantage of penetration pricing?

• High profit per unit

• Creates an exclusive image

• Helps gain market share quickly

• Easy to copy

Which pricing strategy is most suitable when products are very similar?

• Skimming

• Penetration

• Competitor-based

• Cost-plus

What is a disadvantage of price skimming?

• Low profits at the start

• Attracts competitors due to high profit margins

• Can lead to price wars

• Customers may expect permanently low prices

What is a risk of competitor-based pricing?

• The product may be seen as premium

• The business may ignore its own costs

• The price may be too high at launch

• Customers may become loyal too quickly

Penetration pricing is best used when…

• A new, unique product is launched

• The market is highly competitive

Which benefit is linked to skimming?

• Encourages customers to try the product

• Helps recover research and development costs quickly

• Prevents competitors from entering

• Guarantees long-term high sales

Competitor-based pricing works best when…

• The business wants to charge a premium

• The product is entering a new market

• Products are similar and customers compare prices

• The business wants to build brand loyalty