Which of the following statements regarding pricing constraints is most accurate?
A)When a product is in the introductory stage of the product life cycle,there is very little latitude in setting the initial price since consumers still don't know what the product can really do.
B)A company has more latitude in setting an initial price if the product is in the introductory stage of its life cycle and there is limited competition.
C)The greater the number of products in a company's product line,the less the product features of similar products can affect price.
D)The newest addition to a company's product line should always have the highest price in order to maintain the value of existing brands.
E)To avoid cannibalization,the newest product addition to a company's product line should never have a price lower than the other offerings in the line.

Question

Quizplus · Accepted Answer

In the introductory stage of a product's life cycle, there is typically limited competition and consumers may not yet be aware of the product's full capabilities. This provides more latitude for the company to set an initial price that reflects the product's value proposition and potential benefits. Option A is incorrect because limited consumer awareness does not necessarily mean there is little pricing latitude. Option C is incorrect because the differentiation of features among products in a company's line can still affect pricing even if there are multiple offerings. Option D is incorrect because the newest addition may not necessarily have the highest price - it depends on the value proposition and competitive landscape. Option E is incorrect because setting a lower price for the newest product can actually help attract more customers and increase overall sales, as long as it does not significantly cannibalize sales from other products in the line.

Which of the Following Statements Regarding Pricing Constraints Is Most