Pricing Strategy Coursera Quiz Answers – Networking Funda

All Weeks Pricing Strategy Coursera Quiz Answers

Pricing Strategy Week 01 Coursera Quiz Answers

Quiz 1: Practice Quiz on the Importance of Pricing

Q1. Imagine you are the marketing manager of ACME & Sons. Currently you are selling 4,000 units of your product at a price of 10€. You also know that the variable cost and fixed cost of production are 5.50€ per unit and 15,000€ respectively.

By what percentage could the sales volume drop to make a 5% price increase and still make the same profit? (Assuming that no additional fixed cost will be incurred and variable cost remain stable)

• 10%
• 5%
• 2.5%
• 15%

Quiz 2: Practice Quiz on Price Elasticity

Q1. By increasing the price by 5%, unit sales drop by 7%. What is the price elasticity? Is the demand elastic or inelastic?

• -1.4
• 1.4
• 0.7
• -0.7

Q2. A product has a price elasticity of -1.3. What is the unit sales variation going to be due to a price increase of 10%?

• -13%
• -7.8%
• 13%
• -1.3%

Q3. A product is being sold at a price of €110. After a price increase to €130, the number of units sold drops from 5,000 units to 4,500 units. What is the price elasticity?

• -0.55
• -5.5
• -1.8
• -0.18

Quiz 3: Practice Quiz for Optimal Price

Q1. Roofing INC. sells roof shingles and supplies. Historically, its market has been in Madrid. Roofing INC. is now considering entering the market in Barcelona as well. The estimated demand for both markets is as follows:

If you want to maximize profits, how would you price the product if fixed costs are €5 million, variable costs are €5 per square yard, and it costs an extra €2 per square yard to ship items to Barcelona?

• €35
• €20
• €25
• €30
• €10
• €15

Quiz 4: Module 1 Graded Assessment

Q1. Imagine a retailer considering a 33-percent-off sale on blenders currently priced at $54. The retailer pays $29 per blender from the manufacturer. How much has the volume to increase for the sale to maintain profits?

• 248%
• 24%
• 496%
• 49%

Q2. Consider a wind turbine manufacturer. Currently, a 1.5 MW wind turbine has a price of $1.7M and $1.3M in variable cost. If the manufacturer considers raising the price by 3%, what would be the allowable volume loss to at least maintain profits? (Please provide your answer in percentage without including the % sign. You can add an approximate or up to 1 decimal point)

Answer: 11.31

Q3. Wild Blue Preserves makes 15 different jams and jellies. They set up a small shop in a local mall to sell their products alongside other prepared foods. A jar of wild blueberry jelly costs $1.50 per 250 ml jar to produce. The mark-up pricing percentage Wild Blue Preserves plans to use is 100 per cent. What would be the final price using cost-based pricing?

Answer: 3.00

Q4. An established producer of beef jerky decides to use market penetration pricing at a local convenience store. A study of other convenience stores shows a price range for jerky of $2.00 to $3.00 per 100 g package. Considering the seller would like to enter the market aggressively to gain market share, what would be the appropriate price for a 100 g package?

• Less than $2
• More than $3
• Between $2 and $3

Q5. What is the price elasticity if an increase in price of 10% leads to a unit sales drop of 5%?

• -0.5
• 0.5
• -2
• 2

Q6.Assume that a product has a price elasticity of -0.7. In order to reduce unit sales by 20%, what would the necessary price increase be? (Give your answer either as an estimate or to within one decimal place. The answer should be as a percentage, but do not include the % sign)

Enter answer here

Q7. A product is being priced at 100€ and is being sold 3,000 times. The price elasticity is estimated to be -2.0. By how much would the revenues change when increasing the price by 5%? (Negative if a decrease and positive if an increase)

Enter answer here

Q8. Let’s imagine you own a Porsche dealership that has been authorized to sell the new 911, which has a suggested retail price of $70,000. Dealerships commonly adjust price substantially upwards or downwards in response to local demand conditions. You think the demand for the 911 looks as follows in your market:

Given that you can purchase the Porsche 911 for $60.000, how would you price the Porsche 911 to maximize profits?

• $60,000
• $70,000
• $80,000
• $90,000
• $100,000

Week 2

Quiz 1: Practice Quiz on Price Experiments

Q1. A German mobile phone manufacturer conducted an experiment with new car purchasers who bought (or didn’t buy) a certain mobile phone. They tested these sales at three different price points: €1,200 , €900 and €600 as shown in the chart below :

Assuming that the production of the mobile phone is €300, and that your objective is to maximize profits, which would be the appropriate price? You can assume a total market size of 100 car purchasers.

• €600
• €1,200
• €900

Quiz 2: Module 2 Graded Assessment

Q1. Which of the following is correct about profit?

• Profit = Revenues – Variable Costs – Fixed Costs
• Profit = (Units Sold * Price) – (Units Sold * Variable Cost) – Fixed Cost
• All of the mentioned
• Profit = Revenues – Costs

Q2. If our company raises prices while the competition maintains prices, what will happen most likely with our sales volume?

• Increase
• Other
• Drop
• Remain unchanged

Q3. As the marketing manager for the Samsung S6 you are responsible for setting prices in the Spanish market. You have decided that using market data to find the profit maximizing price is the right approach. You therefore ask your marketing research department for the necessary information.

After a couple of days they inform you that the fixed cost of production is €200,000 and that the variable cost is €200 per phone. They also have been able to collect sales data for the past year. It seems the price had changed four times over the past year.

With this information, which would be the optimal price to sell the Samsung S6?

• €460
• €400
• €450
• €425
• €490

Q4. As far as you can remember, there has always been a rivalry between Mercedes and BMW. Thus, as the pricing manager at Mercedes, you always have to keep an eye on BMW’s prices and sales figures. This is especially important when revising the prices at Mercedes.

Your boss has asked you to analyze whether the current price still is at optimal levels or whether it should be changed. In order to answer this question you received the following data from your colleagues in the marketing department.

You are also told that the total luxury car market in the US has a volume of 1.626.667 cars sold. The price you currently charge is $34.745. Should this price be changed if it is your objective to maximize revenues? If so, to what price?

• It should be changed to $33,200
• No, it should stay at $34,745
• It should be changed to $35,900
• It should be changed to $33,500

Q5. As a marketing manager at Toyota you are being charged with setting the price for the new Auris. You conducted a Gabor Granger exercise and got the following information:

You know that your market has a potential of 100.000 cars. You are interested in finding the price which maximizes your revenues. What would be the correct price?

• €25,000
• €27,000
• €29,000
• Another price

Week 3

Quiz 1: Practice Quiz on Bundling

Q1. AT&T offers Internet, mobile phone services, landline phone services and digital TV. Assume that there are two customer segments: Millennial and Traditional, for a total of 50 million customers. Their willingness to pay and share of the market is:

• $1,425,000,000
• $4,025,000,000
• $5,450,000,000
• $10,500,000,000

Q2. AT&T offers Internet, mobile phone services, landline phone services and digital TV. Assume that there are two customer segments: Millennial and Traditional, for a total of 50 million customers. Their willingness to pay and share of the market is:

If AT&T has a price menu of three packages: Mobile + Internet for $95, Phone + TV for $115 and Mobile + Internet + Phone + TV for $144, what would be the total revenue under this model?

• $5,040,000,000
• $6,465,000,000
• $1,425,000,000
• $11,950,000,000

Quiz 2: Module 3 Graded Assessment

Q1. Disney offers both hotel rooms and entrance to their theme parks at their resorts. Consider four different market segments with willingness to pay for rooms and theme park, as well as market shares shown below. Assume a market size of 5,000 individuals per day.

Disney prices the Room at $300 and Theme Park at $150. These are not bundled, and can be purchased separately.

What is the total revenue earned under this scenario for one day?

• $600,000
• $1,275,000
• $1,350,000
• $975,000

Q2. Consider now a scenario in which Disney considers selling a bundle. You still have the four different market segments and a total market size of 5,000 individuals per day. Here again the data as in the previous question:

Disney prices the Room at $325, Theme Park for $200 and Room + Theme Park for $350. Customers can only choose one of the packages.

What is the total revenue earned under this scenario for one day?

• $1,350,000
• $975,000
• $1,375,000
• $1,275,000

Q3. Lets consider again the willingness to pay for a hotel room and theme park entrance for the four market segments. Also assume as before a market size of 5,000 individuals per day.

Which would be the optimal price to maximize revenue for the Room and Theme Park, without considering the possibility of bundling?

• Room: $200
  • Theme Park: $150
• Room: $300
  • Theme Park: $150
• Room: $200
  • Theme Park: $200
• Room: $300
  • Theme Park: $200

Q4. Assume that before the launch of iPhone in 2007, Apple had conducted an experiment examining 2,400 consumers to assess the potential demand of iPhones across different price points. First, they divided them among iPod owners (1,200 of them, half the sample), and non-iPod owners. They were all offered the opportunity to pre-order one 4GB iPhone at a specified price. One third of the participants were offered a price of $299 (low); one third a price of $399 (medium); and one third a price of $499 (high). In the table below you’ll see what percentage of each group pre-ordered the corresponding iPhone.

Each cell represents 400 participants.

Assuming that the production cost of the 4GB iPhone is $150 per unit, that the target market size is 100 million customers, that the previous study is representative of the total market, that 50% of the target population owns an iPod and that Apple wants to maximize profits, which would be the optimal price for each segment?

• $299 for iPod non-owners
  • $399 for iPod owners
• $499 for iPod non-owners
  • $299 for iPod owners
• $299 for iPod non-owners
  • $299 for iPod owners
• $399 for iPod non-owners
  • $499 for iPod owners
• $399 for iPod non-owners
  • $399 for iPod owners
• $299 for iPod non-owners
  • $499 for iPod owners
• $499 for iPod non-owners
  • $399 for iPod owners

Q5. Assume the following willingness to pay for three customer segments for their first five visits to a movie theater:

Which would be the revenue if we could optimize the price for each visit?

• $49.00
• $64.50
• $67.50
• $40.00

Q6. You just recently joined American Express in their credit card business. More specifically you have assumed the responsibility for the Spanish market. One of the responsibilities is to decide how many versions of a credit card to offer and at what price. Everything is on hold until you decide what to do. To help you with your decision, you obtained estimates of the market potential for the different versions under consideration and the respective cost of launching the product in the market and deliver the necessary service.

Find below the corresponding segments and their willingness to pay for each of the versions of the credit cards

Assume further that the Standard American Express has a marketing expense of €50,000 and a variable cost of €5, and that the Gold American Express has a marketing expense of €150,000 and a variable cost of €15.

What would be the optimal price for each version?

• Standard: €20
  • Gold: €70
• Standard: €20
  • Gold: €40
• Standard: €30
  • Gold: €70
• Standard: €30
  • Gold: €40

Q7. You just recently joined American Express in their credit card business. More specifically you have assumed the responsibility for the Spanish market. One of the responsibilities is to decide how many versions of a credit card to offer and at what price. Everything is on hold until you decide what to do.

To help you with your decision, you obtained estimates of the market potential for the different versions under consideration and the respective cost of launching the product in the market and deliver the necessary service.

Find below the corresponding segments and their willingness to pay for each of the versions of the credit cards

Assume further that the Standard American Express has a marketing expense of €50,000 and a variable cost of €5, and that the Gold American Express has a marketing expense of €150,000 and a variable cost of €15.

If you would have to launch only one product, which one would you launch? At what price?

• Gold: €70
• Gold: €40
• Standard: €20
• Standard: €30

Week 4

Quiz 1: Module 4 Graded Assessment

Q1. Are consumers more likely to rely on price as a quality indicator for products or services?

• Products
• Services

Q2. Imagine you are the marketing manager overseeing television sets. Currently you have two products in your portfolio: one at a price of $399 and another at $499. In order to drive sales of the existing products, at what price would you launch a third television set?

• A television set at $449
• A television set at $699
• A television set at $249

Q3. You have just recently been hired as a sales representative and today you will have your first meeting with a client. Your company offers multiple products at different prices – from cheap to expensive. When presenting to the client the overall product portfolio, how to best present the options?

• Start with one that is mid-priced
• Start at the highest priced item
• Start at the lowest priced item

Q4. Assume that Apple is currently offering the following two versions of the iPod:

• According to the theory of the decoy effect customers are likely to chooose B
• According to the theory of the decoy effect customers are likely to chooose A
• According to the theory of the decoy effect customers are likely to chooose C

Q5. According to prospect theory, do consumers prefer winning $5 twice or $10 once?

• $5 Twice
• $10 Once

Q6. According to prospect theory, do consumers prefer a $5 discount on a $500 product or $50 product?

• $500
• $50

Q7. According to the relationship between price and demand, at what price would you expect to sell the largest volume of a product?

• $64
• $59
• $54

Q8. Why do price endings influence consumers in their decision-making?

• Due to the image effect
• Due to the level of effect
• Due to the level and image effect

Q9. In case we would like our customers to feel less pain of paying should we encourage cash or credit card payments?

• Cash payments
• Credit card payments

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