A penetration pricing policy is MOST LIKELY to be effective when A)unit production and marketing costs fall dramatically as production volumes increase. B)customers are willing to buy immediately at the high initial price. C)lowering the price has only a minor effect on increasing sales volume and reducing unit costs. D)the high initial prices do not attract competitors. E)customers interpret high price as signifying high quality.

Question

Quizplus · Accepted Answer

A penetration pricing policy involves setting a low initial price to attract a large number of customers quickly. This strategy is most effective when unit production and marketing costs fall dramatically as production volumes increase, allowing the business to maintain profitability despite the lower prices. Thus, choice A is the best answer.

A Penetration Pricing Policy Is MOST LIKELY to Be Effective