Manufacturer of a New Kind of Fat-Free Ice Cream That

question 125

Multiple Choice

manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue against using a penetration pricing strategy for the tasty fat-free ice cream?

• A) The ice cream market is highly elastic.
• B) A large portion of the market has inelastic demand for ice cream-over a fairly broad range of prices.
• C) Economies of scale in production would be substantial.
• D) Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category.
• E) Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.

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