TXT/Narrated PP: Penetration pricing makes sense if …… A. Potential competitors can be discouraged from entering the market the small profit cushion. B. An experience curve will cause costs per unit to drop significantly. C. The seller is operating in a price-sensitive market D. Economies of scale will lower production costs. E. All of the above. TXT/Narrated PP: The more expensive ($429) Williams-Sonoma bread maker probably served as a reference price to the $279-model (that sold well after the $429-model was introduced). T/F?. TXT: A 2014 MIT study found that passengers of premier airlines complain about service failures ten times more than do customers of low-cost airlines because premium airlines allow more checked bags per passenger. T F? CH 16: In cooperative advertising, the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. T/F? PP: Based on the Facebook Tutorial (You Tube link in a PowerPoint), the options for “objective for your campaign” include all EXCEPT … A. Send people to your website B. Increase conversions on your website C. Reach people near your business E. No Exceptions. All are included.
7) Correct answer is option E i.e All of the above
In a penetration pricing strategy a low price is charged initially in order to penetrate the market.This strategy is most useful when the market consists of price sensitive customers who give more importance to lower price than higher qualityor benefit.In a price sensitive market more and more customers are attracted towards lower price.As the initial price is set low ,the potential customers are discouraged to enter the market ,as the lower price will yield a lower profit for them.Gradually the demand for the product increases because of the lower price and the production also increase according to the increased demand to fulfill customer demand.As the production increases the materials are then bought in a larger quantity.So the economies of scale lowers the production cost.As the overall production cost decreases,the cost per unit also drop significantly with time