1) A pricing disadvantage of basing pricing solely on the prices set by competitors is that: a) gross profit margins will always be lower b) the price set may not cover costs c) it will not attract the target market d) consumers may feel it is unfair 2) Which of these pricing strategies is illegal under competition law? a) Advertising products to children b) Destroyer Pricing c) Price wars d) Sub-prime pricing 3) In which one of these markets are price wars most common? a) Petrol retailing b) Bespoke long-haul holidays c) Car insurance d) Luxury cars 4) A business that sets prices in line with the market average is said to be a... a) Me-too brand b) Risk-taker c) Price-taker d) Loss-leader 5) A luxury goods brand would generally adopt which pricing strategy? a) Competitor pricing b) Price skimming c) Psychological pricing d) Premium pricing 6) A key reason why a business would offer a loss-leader is to: a) maximise revenues from a new product b) attract customers to buy more profitable products c) use up the marketing budget d) build a reputation for quality 7) The cost-based pricing that is most commonly used in retailing is... a) Skimming pricing b) Supermarket pricing c) Competitor pricing d) Cost-plus pricing 8) Which of these products would be most likely to benefit from a price skimming strategy? a) Established product at a mature stage of the life cycle b) New product with unique features c) Product attractive to price-conscious customers d) Products that can be bulk bought 9) A business has a marketing objective to enter a new market and quickly build market share. The most effective pricing strategy is likely to be: a) Competitor pricing b) Price skimming c) Penetration pricing d) Premium pricing

N5 Pricing Decisions

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