Motorola Introduced a New Personal Communicator Priced at a Significant

question 51

Multiple Choice

Motorola introduced a new personal communicator priced at a significant premium over competing models. Initially, Motorola will concentrate on the business user but the firm plans to reduce the price later and capture a share of the consumer market. This policy of beginning with a high price and then moving to a lower price is referred to as:

• A)product differentiation.
• B)market segmentation.
• C)price administration.
• D)time segmentation.
• E)life cycle pricing.

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Definitions:

Income Effect

Adjustments in the income of a person or the economy and how these adjustments affect the need for certain goods or services.

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

The impact of a change in an individual's income on their purchasing behavior, specifically how it affects the quantity of goods or services they buy.

Warren Buffet

A highly successful investor and philanthropist known for his value investing approach and as the principal shareholder and CEO of Berkshire Hathaway.