Master CIPS L3M3 Exam with Reliable Practice Questions
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In a reverse online auction:
Correct : C
Bidders compete against each other, reducing bid prices until one winner is found - this is the sub-mission of the lowest-priced bid (unless stated otherwise in the auction documentation).
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Which of the following are genuine pieces of legislation in the UK?
Correct : C
All of them.
This QUESTION NO : is a bit of a gift for you, but you may wish to just think about the dates and the nature of the legislation. If there is any UK bias in your CIPS examination, this may be time well spent. For students based in the UK: these Acts are powerful and significant. At managerial level at least, one would wish to be familiar with the broad thrust of each of these, plus the implications of The Equality Act.
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Win-win negotiation is not commonly described as a (choose the most appropriate):
Correct : D
Win-win negotiation is not a 'zero-sum game': the sum of the value achieved is greater than zero - fresh value is created. It is a 'positive sum game'.
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Assume you calculate a selling price by adding a profit element onto costs. Assume the profit ele-ment is equivalent to 100% of costs.
Is mark-up or margin being described here?
Correct : D
When price is discussed as a % of costs to be added on, the term is 'mark-up'.
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What is the term for a situation where a seller sets a high introductory price for a new product, to attract buyers who have a strong desire to get the product early, and who can afford it? The price then gets gradually reduced over time.
Correct : B
'Market skimming' is the correct answer.
An obvious example of this type of pricing behaviour is in the field of technology, where 'early adopters' will pay significantly more for a product, even although they know the price will drop subsequently. For commercially-used products, sometimes there is an urgent need for an organisa-tion to acquire - a topical example as I write (early 2022) is some new surveillance technology which is in the news and which some governments are desperate to have. In consumer markets, everyone's 'go-to' example is the next generation smartphone, especially Apple products.
Promotional pricing is a short-term price reduction (or 'two-4-one' type offer) to generate sales in the short-term, for example to clear stock, or because of a manufacturer financial support arrangement.
Price discrimination is where the seller sets different prices for different market segments. An ex-ample would be charging different rail fares in UK or mainland Europe based on customer age.
Contribution pricing is based on the notion that sales should cover costs, contributing to the busi-ness, without necessarily making a profit. For example, a large order may be accepted which will keep the workforce employed (retaining their skills as well as having a considerate / ethical outlook) to see the firm through a rough period.
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