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  1. Home
  2. CIPS Certification
  3. L3M3 Exam
  4. CIPS.L3M3.v2024-05-04.q32 Dumps
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Question 31

What do we call it when a seller sets a low introductory price to win customers, or to discourage competitors owing to the low margins achievable in the marketplace? Choose one.

Correct Answer: D
The seller tries to penetrate the market, to build market share, depriving competitors of those sales, and hoping to retain the customers for future sales. This is penetration pricing.
'Cost mark-up' would be based on cost - add a certain amount to create the selling price. For exam-ple, in UK clothing retail often simply 100% added to the cost of the goods - simple, fast and hope-fully sufficient to coverall costs, as well to enable the goods to sell. This approach hinges on effec-tive buying, at the right cost.
Promotional pricing is a temporary price drop to encourage purchases of a particular product or range.
Competitive pricing would simply mean pricing at around the market level - monitoring market and competitor prices.
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Question 32

Where all does not go well on a contract and there are significant increased costs of implementation, a contract clause may exist whereby both buyer and contractor share the unanticipated additional costs using a pre-agreed formul a. What is the expression which describes such an arrangement?

Correct Answer: A
The contract clause may refer to or include both gainshare and painshare elements. If all goes well, gains to be shared; if things go badly, pain to be shared. The ratio does need to be 5050 - the parties can discuss / negotiate as they wish / agree.
One is actively discouraged from talking about penalties, which contain a notion of punishment, de-spite the rather odd fact that your syllabus contains the term 'penalty clauses'.
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