A Low-Cost Leader Translates Its Low-Cost Advantage Over Rivals into Superior

question 4

Multiple Choice

A low-cost leader translates its low-cost advantage over rivals into superior profit performance by:

• A) cutting its price to levels significantly below the prices of rivals.
• B) either using its lower-cost edge to under-price competitors and attract price-sensitive buyers in great enough numbers to increase total profits or maintain the present price,and using the lower-cost edge to earn a higher profit margin on each unit sold,thereby raising total profits and overall return on investment.
• C) going all out to use its cost advantage to capture a dominant share of the market.
• D) spending heavily on advertising to promote its cost advantage and the fact that it charges the lowest prices in the industry it can,and then using this reputation for low prices to build very strong customer loyalty,gain repeat sales year after year,and earn sustained profits over the long term.
• E) out-producing rivals and thus having more units available to sell.

Understand the concept of attitude formation and change in consumer behavior.

Identify the various hierarchies of effects and their applications in marketing strategies.

Distinguish between high and low involvement decision-making processes and their impact on consumer behavior.

Recognize the importance of cognitive consistency in attitude formation.

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Definitions:

Transfer Payments

Monetary payments made by governments that do not correspond to the provision of goods or services in exchange, such as welfare benefits.

Welfare Payments

Government-provided financial assistance to individuals or families in need to support their basic life necessities.

Housing Credits

Housing credits are tax incentives or financial subsidies provided to developers or homeowners to encourage the development or purchase of affordable housing.

Threshold

The minimum level of stimulus or condition required to activate a process or cause a specific effect.