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Scenario 20

question 104

Multiple Choice

Scenario 20.1 Use the following to answer the questions.
Suppose that 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, but 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 20.1. Ray-Ban has decided to promote the new sunglass 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?

Definitions:

Variable Costs

Expenses that directly fluctuate in proportion to the production or service activity level.

Activity

Any action or operation within a business or process.

Committed Fixed Costs

Long-term fixed costs that an organization has committed to, which are not easily changed, such as lease payments or insurance costs.

Short Term

Referring to a time frame typically less than one year, often relating to immediate goals, financial obligations, or investments.