Penetration Pricing Policy Is MOST LIKELY to Be Effective When

question 388

Multiple Choice

penetration pricing policy is MOST LIKELY to be effective when: (1) a low initial price discourages competitors from entering the market; (2) unit production and marketing costs fall dramatically as production volume increases; and (3) __________.

• A) lowering the price has only a minor effect on increasing sales volume and reducing unit costs
• B) when the high initial prices do not attract competitors
• C) when customers interpret high prices as signifying high quality
• D) many segments of the market are price sensitive
• E) customers are willing to buy immediately at the high initial price

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Definitions:

Illusory

Pertaining to something that seems real or possible but proves to be false or unattainable.

Conditional Promise

A pledge to do or not do something that is contingent upon a certain event occurring or a condition being met.

Pre-Existing Duty

An obligation that a party is already legally obliged to perform, which is not considered sufficient to serve as consideration for a new contract.

Legal Sufficiency

The adequacy of evidence in meeting legal standards to support a finding or conclusion in a legal proceeding.