If a Company Has as Its Objective to Reach a Market

question 39

Multiple Choice

If a company has as its objective to reach a market segment that is relatively price insensitive and thus willing to pay a premium price for the value received, it will most likely use a pricing strategy called:

• A) penetration pricing.
• B) everyday low pricing.
• C) value-based pricing.
• D) skimming pricing.
• E) oligopolistic pricing.

---

Definitions:

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated in the manufacturing process.

Fixed Manufacturing Overhead

Fixed manufacturing overhead consists of the production costs that do not vary with the volume of production, such as rent for the manufacturing facility, salaries of manufacturing managers, and depreciation of factory equipment.

Selling Price

The price at which a product or service is offered for sale to a buyer.

Markup

The addition to the cost price of items to include overhead expenses and profits.