When Faced with a Competitor Who Has Cut Its Product's

question 19

Multiple Choice

When faced with a competitor who has cut its product's price,which of the following is typically the most cost- effective way for a company to maintain its own price but raise the perceived value of its offer?

• A)distributing the product through less costly channels
• B)bundling the offer with add- ons
• C)improving the quality of the product
• D)introducing a higher- priced premium brand
• E)altering the company's marketing communications

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Definitions:

Collar

An options strategy involving the purchase of a put option and the sale of a call option to cap potential losses and gains.

Protective Put

A strategy involving the purchase of a put option on a security to protect against a decline in the market value of that security.

Selling A Straddle

A trading strategy involving the sale of both a put and a call option on the same asset, with the same strike price and expiration date, to profit from minimal movement in the asset's price.

Premium Income

Income earned by an insurer or an individual from selling insurance policies or options contracts.