Apple Computer Inc. introduced its computers to the Japanese market at a low introductory price to appeal to a broader segment of the market and to increase the company's market share. If the original price was below its production costs, and Apple planned to raise prices in Japan later to recoup earlier losses, it would have engaged in:
A) trading down.
B) cost-plus pricing.
C) trading up.
D) predatory pricing.
E) value-pricing.

Question

Quizplus · Accepted Answer

This strategy is known as predatory pricing, where a company sets prices below production costs with the intent to eliminate competition or to establish a strong market position, planning to raise prices later to recoup losses.