The Pricing Strategy for 3M's Post-It Flag Highlighters Was to

question 121

Multiple Choice

The pricing strategy for 3M's Post-it Flag Highlighters was to

• A) match its principal competitors' highlighters' prices.
• B) charge a price that would be reasonable to the target customer segment and provide a profit to distributors and itself.
• C) set an initially low price with the intent of bringing down the price even further later if sales were less than anticipated.
• D) place the product in discount office supply retailers to make it easier to purchase.
• E) use the same pricing strategy as its 3M's Post-it Flag and Post-it Note offerings.

Apply the relative sales value method to allocate joint costs between products.

Analyze cost and revenue information to make profit-maximizing decisions for product modifications or sales strategies.

Determine the profitability of special orders including considerations of capacity, production costs, and variable selling costs.

Understand the concept of idle capacity and its impact on special order decisions and profits.

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Definitions:

Substitution Effects

The substitution effect occurs when consumers replace more expensive items with less costly alternatives as prices rise.

Income Effect

The change in an individual's consumption resulting from a change in their income.

Normal Good

A good for which demand increases as the income of the consumer increases, showing a positive relationship between income and demand.

Income Effect

The impact of income fluctuations on an individual or an economy on the quantity of goods or services that is demanded.