Penetration Pricing Means Charging a Relatively Low Price for a Product

question 40

Multiple Choice

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,which of the following BEST describes penetration pricing in this case?

• A) It tends to lower production costs.
• B) It recoups product development costs quickly.
• C) It tempts competitors to enter the market.
• D) It provides a large profit per unit sold.

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Definitions:

Total Opportunity Cost

The sum of all the benefits that could have been received from the next best alternative option that was not chosen.

JIT Point

A strategy where materials, goods, and even labor are delivered or acquired just in time to be used, reducing storage and inventory costs.