Several factors indicate that a penetration pricing policy would most likely to be effective when introducing a new product,including situations in which
A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost
B)the high initial price will not attract competitors
C)customers interpret the high price as signifying high quality
D)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable
E)many segments of the market are price sensitive

Question

Quizplus · Accepted Answer

The conditions favoring penetration pricing are the reverse of those supporting skimming pricing: (1)many segments of the market are price sensitive,(2)a low initial price discourages competitors from entering the market,and (3)unit production and marketing costs fall dramatically as production volumes increase.

Several Factors Indicate That a Penetration Pricing Policy Would Most