When a competitor cuts its price,a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.
A) stabilize its production costs
B) reduce its marketing costs
C) hold its current prices and profit margin
D) increase its marketing budget to raise the perceived value of the product
E) increase its production costs to improve the quality of the product

Question

Quizplus · Accepted Answer

If a company believes that cutting its own price in response to a competitor's price cut would not result in a significant increase in market share or would harm its profit margin, it is likely to continue selling its product at the same price point, maintaining its current profit margin. This strategy is known as price stability or price leadership, which involves maintaining prices in order to reduce price competition and promote stability in the market.

When a Competitor Cuts Its Price,a Company Is Most Likely