In Response to Duracell's Introduction of the Duracell Ultra Battery,Energizer

question 189

Multiple Choice

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its batteries at a low initial price to attract the mass market.Was Energizer's pricing strategy to take market share from Duracell a success?

• A)No,because consumers are price-insensitive when it comes to batteries.
• B)Yes,because of the positive association with the "Energizer Bunny" marketing campaign.
• C)No,because consumers were unable to perceive the improved quality due to the low price.
• D)Yes,because consumers typically respond positively to cost-plus pricing.
• E)Yes,because the demand for batteries has unitary elasticity.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities they require, aiming to more accurately reflect the costs incurred.

Manufacturing Costs

Expenses related to the production of goods, including direct materials, direct labor, and manufacturing overhead.

Product Costs

All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. Also see Inventoriable costs.

ABC System

Activity-Based Costing (ABC) System is a method of allocating costs to products and services based on the activities that go into producing them.