The company you work for as a marketing director makes smartphones. About a year ago, the company's design team rolled out a new model that was comparable in every way to other brands retailing for $300 to $400, except that the phone could be manufactured for far less money. You decided to use a penetration strategy and set a retail price of $199, but sales have fallen well below your forecast. What is the most likely explanation for the shortfall?
A) There must be a problem in your distribution channel, and retailers are not promoting your product as much as they promote other brands.
B) Consumers in the market for a smartphone in the $300 to $400 range do not perceive your smartphone as having the same kind of quality and durability as other similar brands.
C) Your forecasting must have been extremely inaccurate and did not account for changes in the marketplace.
D) Your advertising campaign is not resonating with consumers.

Question

Quizplus · Accepted Answer

Consumers often associate price with quality, especially in markets like smartphones. A significantly lower price can lead to perceptions of inferior quality or durability, even if the product's specifications are comparable to higher-priced competitors. This can deter the target market from purchasing the product, leading to lower sales.

The Company You Work for as a Marketing Director Makes