- A.Setting price based on the customer's perceived value rather than cost — captures the maximum the customer is willing to pay.
- B.Two retail pricing philosophies — Everyday Low Pricing (consistent low prices) vs High-Low (regular price with frequent promotions). ✓
- C.Setting price by adding a standard markup to product cost — simple but ignores customer willingness to pay and competitor prices.
- D.Two retail pricing philosophies — Everyday Low Pricing (consistent low prices) vs High-Low (regular price with frequent promotions).
EDLP vs Hi-Lo Pricing is two retail pricing philosophies — Everyday Low Pricing (consistent low prices) vs High-Low (regular price with frequent promotions). The other options describe related but distinct concepts in Pricing — see the deep-dive guide for the full distinction.
How to think about questions like this
Each suits different customer types and operational models. Questions like this test whether you can distinguish EDLP vs Hi-Lo Pricing from neighboring concepts. The most common trap is choosing a closely-related concept that sounds similar but applies in a different context.
When you see a definition question on an exam, do two things: (1) translate the question into your own words, then (2) generate the answer in your own words before reading the options. This avoids the cognitive bias of recognizing a familiar phrase as correct just because it is familiar.