Landover Arms Inc. currently markets its rifles designed for competitive shooting in the Ontario market. It would like to expand into the western market, but the competition there is intense. Which geographic pricing tactic should the firearms manufacturer use?

Question

Quizplus · Accepted Answer

Freight absorption pricing can be an effective strategy for Landover Arms Inc. to penetrate the competitive western market. By absorbing the shipping costs, the company can offer its rifles at more competitive prices without altering the list price, making its products more appealing to buyers in new geographic areas despite the intense competition. This approach can help offset the disadvantage of geographical distance to the western market.