Fernand's Fabrics has a large inventory of fabric for home crafters and seamstresses but carries very few craft supplies and is finding it difficult to compete with the large chain fabric stores as a result. In order to bring more customers into the store, Fernand lowers the price of fabric below his cost for a month, hoping that once customers come to his store, they will return. This is called ___ pricing.
A)survival
B)competitive
C)profit maximization
D)investment

Question

​Fernand's Fabrics has a large inventory of fabric for home crafters and seamstresses but carries very few craft supplies and is finding it difficult to compete with the large chain fabric stores as a result. In order to bring more customers into the store, Fernand lowers the price of fabric below his cost for a month, hoping that once customers come to his store, they will return. This is called ___ pricing.
A)​survival
B)​competitive
C)​profit maximization
D)investment

Quizplus · Accepted Answer

This strategy is known as survival pricing, as Fernand is willing to temporarily operate at a loss in order to attract customers and stay in business.

​Fernand's Fabrics Has a Large Inventory of Fabric for Home

Fernand's Fabrics Has a Large Inventory of Fabric for Home