Scenario 12.2 Use the Following to Answer the Questions

question 227

Multiple Choice

Scenario 12.2
Use the following to answer the questions.
Ray-Ban is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical glasses sold through department stores, and would be priced higher than other brands in the store. A lower price line than the current Ray-Ban lines that are sold through more selective stores. In determining the price for this sunglass line, Ray-Ban wants to gather information about all brands sold in department stores and about customers' perceptions of those brands.
-Refer to Scenario 12.2. Ray-Ban has decided to promote the new sunglasses line as an "affordable luxury" and plans significant promotional expenditures. With these objectives, which of the following should Ray-Ban use to price its product line?

• A) competition-based pricing
• B) cost-plus pricing
• C) markup pricing
• D) demand-based pricing
• E) differential pricing

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Definitions:

Price-volatile

Characteristic of a financial instrument whose price can undergo significant fluctuations in a short period.

Higher Credit Rating

Indicates a stronger likelihood that a borrower, either a corporation or government entity, will meet its debt obligations, signifying lower credit risk.

Realized Rate

The actual return earned on an investment over a specific period, including interest, dividends, and capital gains.

Investment Horizon

Investment horizon refers to the total length of time that an investor expects to hold a security or a portfolio.