Companies sometimes initiate price cuts in a drive to dominate the market through lower costs. A price-cutting strategy involves possible traps. One of these "traps" is
A) consistent high quality consumer.
B) shallow-pockets.
C) secure target market customer.
D) dependence on a firm market.
E) loyal customer market.

Question

Quizplus · Accepted Answer

The trap mentioned in the statement is "shallow-pockets" which refers to the possibility that the company's profit margin may decrease due to the price cut, and the company may not have enough financial resources to sustain the lower prices in the longer run. Therefore, this trap is associated with companies that have limited financial resources or with a weak financial position. The other options (A, C, D, E) are not related to the trap explained in the statement.

Companies Sometimes Initiate Price Cuts in a Drive to Dominate