CPM CPM Value-Based Pricing & Customer Segmentation 2 — Questions and Answers
Question 1: Which method estimates the maximum price a customer will pay by measuring attribute trade-offs?
- Conjoint analysis (Correct answer)
- Regression pricing
- Cost-plus analysis
- Standard deviation pricing
Correct answer: Conjoint analysis
Conjoint analysis asks respondents to choose among product profiles, revealing implicit willingness-to-pay for each attribute.
Question 2: In value-based pricing, 'differentiation value' refers to:
- The monetary worth of features superior to the next best alternative (Correct answer)
- The gap between list price and street price
- The difference between fixed and variable costs
- Brand equity measured in awareness scores
Correct answer: The monetary worth of features superior to the next best alternative
Differentiation value is the positive (or negative) dollar value your product delivers beyond what the next best alternative offers.
Question 3: A company using 'good-better-best' product architecture primarily aims to:
- Segment customers by value perception and maximize total revenue (Correct answer)
- Reduce SKU complexity
- Lower per-unit production cost
- Satisfy regulatory requirements
Correct answer: Segment customers by value perception and maximize total revenue
Good-better-best ladders allow a firm to serve multiple willingness-to-pay tiers while upgrading customers over time.
Question 4: Which of the following best describes 'price sensitivity' in CPM methodology?
- The degree to which demand changes in response to price changes (Correct answer)
- The speed at which prices are updated in a pricing system
- The variance in invoice prices across customers
- The difference between MSRP and cost
Correct answer: The degree to which demand changes in response to price changes
Price sensitivity measures how responsive buyers are to price changes, closely related to the price elasticity of demand.
Question 5: Segment-specific pricing is legally permissible when:
- Price differences reflect cost differences or do not harm competition (Correct answer)
- All customers are in the same geographic market
- The firm holds a monopoly
- Prices are set above marginal cost
Correct answer: Price differences reflect cost differences or do not harm competition
Under the Robinson-Patman Act, price differences between buyers of like goods must be justified by cost differences or competitive necessity.
Question 6: The Van Westendorp Price Sensitivity Meter identifies prices that are:
- Too cheap, bargain, expensive, and too expensive according to buyers (Correct answer)
- Below cost, at cost, above cost, and premium
- Introductory, standard, premium, and luxury
- Wholesale, retail, MAP, and MSRP
Correct answer: Too cheap, bargain, expensive, and too expensive according to buyers
The Van Westendorp model uses four survey questions to map consumer price perceptions and pinpoint an acceptable price range.
CPM CPM Value-Based Pricing & Customer Segmentation 2
Which method estimates the maximum price a customer will pay by measuring attribute trade-offs?