One Popular Cost-Oriented Pricing Tactic Is Culling Low-Profit Margin Products

question 171

Multiple Choice

One popular cost-oriented pricing tactic is culling low-profit margin products from the product line.Which of the following statements does NOT describe a reason that a marketing manager would want to avoid this tactic?

• A)The tactic focuses special attention on the costs of producing each line and their contribution to overhead.
• B)The loss of one item in the line may reduce the economies of scale.
• C)The image of the rest of the product line may suffer if there is a "hole" in the line.
• D)Other items in the line will now have to cover more fixed costs.

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Definitions:

Public Warehousing

Storage facilities and services offered by a third party to various customers, usually on a short-term basis.

Contract Warehousing

A service provided by third parties in which companies rent space in a warehouse that is managed by another firm, allowing for flexibility and reduction in the costs of managing a private warehouse.

Distribution Center

A specialized facility used for receiving, storing, and distributing products to various destinations, often playing a critical role in supply chain operations.

SKUs

Stock Keeping Units, unique identifiers for each distinct product and service that can be purchased.