Pine River Equipment has developed a distinctly new product that offers considerable promise. By exploiting the experience effect, management believes that there are opportunities for a substantial reduction in production costs as volume expands. While the market is quite large, there is a strong threat of imminent competition. The firm should likely use:

Question

Quizplus · Accepted Answer

A penetration approach to pricing is suitable here as it allows the firm to quickly gain market share by setting a low price, which can deter competitors and take advantage of the experience effect to reduce costs as production volume increases.

Pine River Equipment Has Developed a Distinctly New Product That