A producer of electrical parts in Kansas City wants to expand into the West Coast market-where price competition is tough. It probably should use:
A)F.O.B. mill pricing.
B) uniform delivered pricing.
C) zone pricing.
D) freight absorption pricing.

Question

Quizplus · Accepted Answer

Freight absorption pricing is a strategy where the seller absorbs some or all of the freight charges in order to enter a new market or match the competition's delivered prices, making it suitable for a producer looking to expand into a competitive market like the West Coast.

A Producer of Electrical Parts in Kansas City Wants to Expand