CPIM Practice Exam

What does it mean when an organization offers free or reduced cost shipping?

1. It reduces time value without adding place value.

2. It adds both place value and time value at reduced or no extra cost.

3. It incurs additional costs to the consumer.

4. It focuses solely on customer service without financial consideration.

The correct answer is: It adds both place value and time value at reduced or no extra cost.

When an organization offers free or reduced-cost shipping, it essentially enhances the customer experience by providing both time value and place value at a lower cost. Time value relates to the efficiency and speed of getting products to customers, while place value refers to the location convenience of having products delivered directly to the consumer, rather than requiring them to go to a store. By offering shipping at little to no cost, the organization is able to make the purchasing process more appealing, as customers save money on the shipping fees while still receiving their products in a timely manner. This service is considered an added value by the customer, improving their perception of the overall service without necessarily increasing their financial burden. This strategy can lead to increased sales, higher customer satisfaction, and enhanced loyalty for the organization. The other options do not accurately reflect the concept of free or reduced-cost shipping as they do not align with the value enhancement that such offers provide to the consumer.