A target return figure of zero implies:
A) setting negligible sales targets.
B) setting a price level that will just recover costs.
C) setting a price that helps attain previous year's high profitability.
D) setting a price that would match the industry standard profit margin.
E) setting a price at which competition will be zero.

Question

Quizplus · Accepted Answer

Setting a target return figure of zero means that the price level is set to only recover costs, without any additional profit. This could be a strategy used by businesses launching new products or entering new markets, where the focus is on gaining market share rather than generating immediate profits. Setting negligible sales targets (A) or a price to match industry standard profit margins (D) would not necessarily result in a target return figure of zero. Setting a price to attain previous year's high profitability (C) or at which competition will be zero (E) are not relevant to the concept of target return figure of zero.

A Target Return Figure of Zero Implies