CMA practice question 12 of 35

Market-based pricing bases prices on

Full set: 1,331 questions

Answer options

A: The choice of products offered as accessions and those offered as standard features.

B: The products perceived value and the competitor’s actions. Correct answer

C: A relativity low ratio of price to quality delivered.

D: Differentiation of prices by geographic region.

Correct Answer:

B. The products perceived value and the competitor’s actions.

Explanation

Market-based (value-oriented) pricing starts with the customer and the competitive environment: the firm gauges the product’s perceived value and competitor prices, then sets its own price to reflect that external market information.

Why Incorrect

A. Deciding which features are optional relates to optional-product pricing, not market-based pricing.
C. A low price-to-quality ratio may result from pricing but is not the basis for setting price.
D. Geographic differentiation concerns zone or freight pricing strategies, not market-based pricing.

References

1. Nagle, Hogan & Zale, The Strategy and Tactics of Pricing, 6e, Ch.5, p.136 – market-driven pricing uses customer value and competitor actions.

2. Stanford GSB course “Pricing” (GSBMKTG 266) lecture slides, slide 12 – definition of market-based/value pricing focused on perceived value and competition.

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