Which of the Following Is the Primary Objective of Penetration

question 9

Multiple Choice

Which of the following is the primary objective of penetration pricing?

• A)to increase profit by increasing prices
• B)to gain higher margins by reducing market share
• C)to build sales volume in a market
• D)to increase product differentiation
• E)to increase price in order to reduce volumes

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Definitions:

Acquiring Firm

A company that gains control over another company by purchasing its shares or assets.

Real Options

Occur when managers can influence the size and risk of a project’s cash flows by taking different actions during the project’s life. They are referred to as real options because they deal with real as opposed to financial assets. They are also called managerial options because they give opportunities to managers to respond to changing market conditions. Sometimes they are called strategic options because they often deal with strategic issues. Finally, they are also called embedded options because they are a part of another project.

NPV Method

Net Present Value method, a process for evaluating and comparing investments by calculating the difference between the present value of cash inflows and outflows over a period of time.

Capital Budget

A spending plan for a company's long-term investments in assets and projects, intended to maintain or grow the business.